At least $9B billed across 14 Medicaid services in Minnesota may be fraudulent, top prosecutor says
A top prosecutor suggested on Thursday that the total amount of fraud in Minnesota could be $9 billion or more.
According to First Assistant U.S. Attorney Joe Thompson, 14 Medicaid services under audit and deemed "high risk" for fraud have cost the state $18 billion since 2018.
Thompson said a substantial amount of money billed across those programs is fraudulent, but the exact amount is still under investigation.
"I don't make these generalizations in a hasty way," he said. "When I say significant amount, I'm talking on the order of half or more. But we'll see. When I look at the claims data and the providers, I see more red flags than I see legitimate providers."
Minnesota Department of Human Services Inspector General James Clark released a statement, saying speculation of the amount of fraud occurring is "shocking."
"If there is evidence of Medicaid fraud, the state should be given the information so DHS can slam the door shut on payments to those individuals and businesses," Clark said. "We have been moving more aggressively than ever to suspend payments where we see evidence of fraud and refer criminals to law enforcement for prosecution. I've previously sent letters to the U.S. Attorney's Office asking them to share evidence of fraud and I'm requesting a meeting immediately to discuss how we can partner to stop criminals now."
Thompson said the scale of fraud in Minnesota outpaces that of other states and puts services at risk for people who really need them.
While prosecutors typically see fraud manifest as providers overbilling, Thompson said during a news conference in Minneapolis that companies have been created to provide zero services while pocketing federal funds for international travel, luxury vehicles and lavish lifestyles.
"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."
The investigators' new findings may bolster President Trump in his claims that Minnesota is a "hub of fraudulent money laundering activity" under Gov. Tim Walz, who was the Democrats' vice presidential nominee in last year's presidential election.
Trump has capitalized on the fraud cases to target the Somali diaspora in Minnesota, calling them "garbage" and saying he doesn't want immigrants from the East African country in the U.S.
More than 90% of the people charged in the major fraud cases announced before today were of Somali descent, according to the U.S. Attorney's Office for Minnesota.
Walz has denounced Trump's comments, saying an audit due for completion by late January should give a better picture on the extent of the fraud. He said his administration is taking aggressive action to prevent fraud in the future. A spokesperson for Walz did not immediately respond to an email seeking comment Thursday.
Five new defendants have been charged in connection with a Minnesota housing services fraud, Thompson said. Two of them pocketed $750,000 instead of helping Medicaid recipients find stable housing, he said. Prosecutors allege they used the proceeds to travel to international destinations, including London, Istanbul and Dubai.
One defendant submitted $1.4 million in fraudulent claims, using some of the funds to purchase cryptocurrency, Thompson said. Federal officials say he fled the country after receiving a subpoena.
The five charged include two Philadelphia residents who have been accused of "fraud tourism" after they registered as Minnesota providers, Thompson said, adding that for them the scheme was "easy money."
"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. "This is a deeply unsettling reality that all Minnesotans should understand."
The two men, Anthony Waddel Jefferson and Lester Brown, were accused of siphoning millions from federally funded programs administered by Minnesota officials that were meant to help the disabled and those suffering from addiction, according to court filings.
They allegedly fleeced the housing program in Minnesota despite "living on the other side of the country and having no network in or connections to Minnesota or its communities," the filings stated.
They join eight others charged in September for their alleged roles in the scheme to defraud the Minnesota Housing Stability Services Program.
Prosecutors also named a new defendant accused of defrauding another state-run, federally funded program that provides services for children with autism, alleging he submitted millions of dollars worth of claims for Medicaid reimbursement. One woman previously charged for exploiting that program pleaded guilty Thursday morning, officials said.
Asked who is to blame, Thompson said the state "has not done a good job of mining these programs."