Federal investigators say the Minnesota Medicaid fraud...

Editor's note: ...schemes were enabled by "systemic weaknesses" (it's a little too late isn't it?) in provider enrollment and billing systems that allowed shell companies to be approved as legitimate service providers with minimal or no verification. Minnesota's Governor Walz is probably clueless about what has been going on. The mechanics of large scale industrial fraud: Once enrolled, these fabricated paper companies submitted large volumes of electronic Medicaid claims using valid billing codes (billing codes are public, standardized identifiers used by Medicaid to describe approved services) for services that were never delivered, inflated hours of care, or entirely fabricated client records, often supported by falsified or back‑dated documentation that was not immediately audited. Because reimbursements were processed automatically, funds were deposited directly into business bank accounts controlled by the operators, who then siphoned off the money through internal transfers to personal accounts, cash withdrawals, and high‑value purchases unrelated to patient care. In some cases, kickbacks were paid to recruit beneficiaries or families to generate billable claims, while the absence of real‑time analytics and delayed oversight allowed abnormal billing patterns to persist for months or years before detection, turning administrative gaps in the Medicaid payment infrastructure into a pipeline for large‑scale financial theft.
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Over $9 Billion Looted from Minnesota Medicaid Programs in Massive Fraud Scheme: Feds

By Melissa O'Rourke | December 20, 2025

Federal prosecutors alleged Thursday that Minnesota may have lost billions of dollars to fraud in its Medicaid program, the latest development in an ongoing investigation.

As much as half of the roughly $18 billion Minnesota has spent since 2018 on 14 Medicaid programs particularly vulnerable to abuse may have been siphoned off by fraudsters, according to U.S. Assistant Attorney Joe Thompson.

Thompson made the remarks as prosecutors announced additional charges in the ongoing investigation of the "staggering, industrial-scale" fraud engulfing the state.

"The fraud is not small. It isn't isolated. The magnitude cannot be overstated," Thompson said.

"What we see in Minnesota is not a handful of bad actors committing crimes. It's a staggering industrial-scale fraud. It's swamping Minnesota and calling into question everything we know about our state.”

Among those charged are Anthony Waddell Jefferson and Lester Brown, who are accused of submitting roughly $3.5 million in false claims to the state's Housing Stabilization Services (HSS) program. 

Federal officials allege the two men — both based in Philadelphia — set up companies to exploit Minnesota's Medicaid system, committing what Thompson labeled "fraud tourism."

"Minnesota has become a magnet for fraud, so much so that we have developed a fraud tourism industry — people coming to our state purely to exploit and defraud its programs," Thompson said.

Additional charges were filed against Hassan Ahmed Hussein and Ahmed Abdirashid Mohamed, who prosecutors say submitted approximately $750,000 in fraudulent HSS claims through their company.

The Minnesota Department of Human Services terminated the HSS program in October, citing widespread fraud.

The program, originally intended to help elderly individuals and people with disabilities secure and maintain housing, was projected in 2020 to cost taxpayers about $2.6 million annually. By 2024, however, spending had ballooned to roughly $104 million.

Separately, Abdinajib Hassan Yussuf was charged with wire fraud in connection with the Early Intensive Developmental and Behavioral Intervention Autism program.

Prosecutors allege Yussuf, the president and CEO of Star Autism Center LLC, and others recruited Somali children by offering kickbacks to parents in exchange for enrolling their children, then falsely billed Medicaid for services that were never delivered.

Please go to The Western Journal to continue reading.

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Editor's note: Oversight (there was no oversight so who is going to be held accountable?) of the Medicaid system is primarily the responsibility of the Minnesota Department of Human Services (DHS), led during the fraud period by Temporary Commissioner Shireen Gandhi, who was appointed in February 2025 to oversee the agency that administers Medical Assistance and other public programs. The DHS Office of Inspector General, headed by James Clark, is charged with identifying and preventing fraud, waste, and abuse in Medicaid and referring cases to prosecutors; Clark's office conducts investigations and withholds payments where credible fraud is found. Apparently, they didn't discover $9 billion in fraud. 

At the state level, the Minnesota Attorney General's Medicaid Fraud Control Unit, under Attorney General Keith Ellison, works with federal partners, including the U.S. Department of Health and Human Services Office of Inspector General (HHS‑OIG) and the FBI, to investigate and prosecute fraudulent billing and provider misconduct. Oversight is also shaped by the state legislature's Fraud Prevention and State Agency Oversight Policy Committee, chaired by Rep. Kristin Robbins, which has called for federal audits of DHS's Medicaid programs to "strengthen accountability" that are typical bureaucratic boiler plate responses. 

So, who is responsible? Incompetence, mismanagement and administrative failure are not crimes unless intent can be demonstrated. Despite the scale of this Medicaid fraud case that has been going on for years, only a small number of arrests have occurred so far because prosecutors typically begin with cases where intent and financial trails are easiest to prove, while broader administrative failures do not automatically meet the legal threshold for criminal charges. At least not yet. Oversight responsibility rested with the Minnesota Department of Human Services, including its Office of Inspector General, successive DHS commissioners, the Minnesota Attorney General's Medicaid Fraud Control Unit under Keith Ellison, and federal monitors at CMS and the U.S. Department of Health and Human Services Office of Inspector General. The available evidence points not to a proven criminal conspiracy within government, but to systemic oversight breakdowns, including weak provider vetting, delayed audits, fragmented accountability, and an over reliance on automated payment systems, conditions that allowed fraud to persist for years without intervention.

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