Prosecutor: Massive Medicaid Fraud in Minnesota May Top $9 Billion
Federal prosecutors warned Thursday that an enormous share of the roughly $18 billion in federal funding directed to 14 Minnesota-administered programs since 2018 may have been siphoned off through fraud, calling the scope of the alleged theft unprecedented in size and complexity.
Speaking at a news conference in Minneapolis, First Assistant U.S. Attorney Joe Thompson said investigators are uncovering schemes that go far beyond routine billing abuses. Instead of inflated claims for real services, he said, some operators set up shell companies that provided nothing at all while billing Medicaid and spending the proceeds on international travel, luxury cars, and extravagant personal expenses.
“The magnitude cannot be overstated,” Thompson said. “What we see in Minnesota is not a handful of bad actors committing crimes. It’s staggering, industrial-scale fraud.”
According to Thompson, the losses are not abstract. He said the alleged fraud threatens critical services, including housing assistance for adults leaving addiction treatment programs and one-on-one therapy for children on the autism spectrum.
The latest disclosures come after years of federal investigations that began with the Feeding Our Future case, a $300 million scheme that prosecutors described as the largest COVID-era fraud involving child nutrition programs in the country. In that case, 57 defendants have already been convicted. Prosecutors say the nonprofit at the center of the operation exploited a state-run, federally funded program intended to provide meals to children.
From there, investigators began tracing money flows into other state programs. Thompson said the inquiry into Minnesota’s autism services grew directly out of the Feeding Our Future case.
“Roughly two dozen or so Feeding Our Future defendants were getting money from autism clinics,” Thompson said. “That’s how we learned about the autism fraud.”
On Thursday, prosecutors announced additional charges tied to the Early Intensive Developmental and Behavioral Intervention program, which is designed to support children with autism. Court filings allege that a newly charged defendant approached parents in the Somali community to “recruit their children” for a clinic and paid kickbacks to inflate enrollment. Prosecutors say the clinic later submitted $6 million in Medicaid claims. In a related case, a woman previously charged in the same scheme pleaded guilty Thursday morning after allegedly receiving $14 million in reimbursements.
Authorities also unveiled new charges in a separate housing services fraud. Five defendants were charged with stealing funds meant to help Medicaid recipients secure stable housing. Thompson said one of those defendants left the country after his company was served with a federal grand jury subpoena.
Two of the newly charged individuals are Philadelphia residents accused of what Thompson described as “fraud tourism,” saying they viewed Minnesota’s Housing Stability Services Program as a source of “easy money.” Prosecutors allege they submitted $3.5 million in fraudulent claims. Those defendants join eight others charged in September in connection with the same program, which has since been shut down entirely.
Investigators are now examining yet another state-run initiative, Integrated Community Supports, which is intended to help adults with disabilities live independently. Authorities served a search warrant Thursday as part of that probe. Prosecutors noted that payments to providers are projected to reach $180 million this year, a dramatic increase from the program’s early years, prompting concerns that it too has been exploited.
“Every day, we look under a rock and find a new $50 million fraud scheme,” Thompson said.
The findings have added fuel to President Donald Trump’s criticism of Minnesota’s leadership. He has repeatedly labeled the state a center of financial crime, pointing to the fraud cases under Gov. Tim Walz, who was the Democrats’ vice presidential nominee in last year’s election.
Trump has also focused his attacks on Minnesota’s Somali community, the largest Somali population in the United States. According to the U.S. Attorney’s Office for Minnesota, 82 of the 92 defendants charged across the child nutrition, housing, and autism-related cases are Somali Americans.
Last month, the rhetoric escalated after City Journal reported that taxpayer dollars from defrauded programs may have ended up benefiting al-Shabab, an al-Qaida affiliate. Thompson said funds sent overseas could have indirectly reached the group but stressed that investigators have found no evidence that defendants intentionally supported terrorism.
“There’s no indication that the defendants that we’ve charged were radicalized or seeking to fund al-Shabab or other terrorist groups,” Thompson said.
He added that large sums of fraudulently obtained money were sent abroad and used primarily for personal enrichment. Prosecutors said some defendants purchased real estate in Nairobi, Kenya, which has a large Somali diaspora. In other cases, one Feeding Our Future defendant spent hundreds of thousands of dollars on an aircraft in Nairobi, another wired $1.5 million to China and Kenya while texting that he had invested $6 million in Kenya, and another bought coastal property in Alanya, Turkey.
Despite Thompson’s statements, Trump has continued to use inflammatory language, referring to the Somali community as “garbage” and saying he does not want immigrants from Somalia in the United States. Community leaders say the comments have intensified fear and anger.
At the state level, Walz has taken steps to respond. In October, he ordered a third-party audit and paused payments to the 14 high-risk Medicaid programs for 90 days.
“We will not tolerate fraud, and we will continue to work with federal partners to ensure fraud is stopped and fraudsters are caught,” Walz said in a statement Thursday.
Last week, Walz appointed a statewide director of program integrity tasked with identifying and preventing fraud. Still, Republican lawmakers have continued to fault his administration, arguing that the failures allowed billions of taxpayer dollars to be misused before authorities intervened.
{Matzav.com}
