Here's how Medicaid fraud schemes targeted Minnesota

Four years after Minnesota’s Feeding Our Future fraud scandal emerged, theft from government programs has become impossible for state leaders to ignore as allegations continue to arise.

Even after the initial pandemic-era meal fraud cases involving more than $250 million — with about $75 million recovered by federal authorities so far — allegations of kickback schemes, fraudulent claims from established businesses and even some from out of state still show vulnerabilities in federally funded state programs.

The more recent round of fraud cases, which center around Medicaid, are of a different nature than the Feeding Our Future scandal of the pandemic era, when providers often outright fabricated millions of records for meals served to children. The first raids in that case came in January 2022, and charges later that year.

Cases tied to Medicaid fraud are of a different nature. Since September last year, federal prosecutors have charged 30 people in cases totaling another $125 million in alleged theft in federal Medicaid dollars from state programs, and the U.S. Attorney’s Office for Minnesota has speculated fraud could run into the billions.

Charges against Medicaid providers come as most of the 79 defendants in Feeding Our Future have pleaded guilty or have been convicted, including so-called ringleader Aimee Bock, who received a 41-year prison sentence. Feeding Our Future money was administered through the state Department of Education.

In response, state officials have established an Office of the Inspector General with powers to investigate agencies, and they’ve created a revalidation process for high-risk Medicaid providers and tightened scrutiny of payments to stop those on suspicious claims before they are paid out.

Medicaid fraud

In the Medicaid cases, prosecutors allege some businesses taking money from Minnesota provided little or no services, as with the meal fraud cases. Still others center around more established operations accused of exploiting weaknesses in oversight at the state Department of Human Services.

And another category of fraud also emerged in recent charges — so-called fraud-tourism operations, where at least five people from out of state set up operations in Minnesota to rip off Medicaid programs to the tune of millions of dollars from a housing program for addicts and the disabled.

That fraud was in the now-shuttered Housing Stabilization Services program. Started in 2020, it was the first of its kind in the U.S. — a Medicaid-funded program to help people with disabilities and addiction issues at risk of homelessness pay for housing.

The attraction of “easy money” brought outside scammers to the state, former acting U.S. Attorney Joe Thompson said in December.

‘Fraud tourism’

When Minnesota launched its Housing Stabilization Services program, it was projected to cost $2.6 million. By 2024, it was paying out more than $105 million a year. Tens of millions paid out under that program are now subject to federal fraud allegations. The program had around 21,000 participants and more than 1,800 providers before the Department of Human Services shut it down in October 2025.

Sometime in late 2021, a group from Philadelphia tied together through church organizations learned from a shared associate that Minnesota’s Housing Stabilization Services program was a “good opportunity to make money,” according to federal prosecutors.

Despite having no connections to Minnesota communities, the group established a housing stabilization business that provided little or no service to clients, according to prosecutors. Between February 2022 and fall 2025, they claimed more than $10 million from the state.

Anthony Waddell Jefferson, 37, and Lester Brown, 53, a pastor at Authentic Life Church in Philadelphia, were the first to face charges in a group of cases the U.S. Attorney’s Office has since dubbed “fraud tourism.”

Jefferson and Brown, who had an office in Minneapolis, flew from Pennsylvania to Minnesota to find new clients and marketed services at shelters and Section 8 housing, according to prosecutors. Describing themselves as the “Housing Guys,” prosecutors say they falsified client documents and, at times, filed artificial intelligence-generated client notes to support phony claims.

In all, they allegedly took $3.5 million in Medicaid money from Minnesota and claimed to provide services for 230 clients. Both took plea agreements admitting to wire fraud, and court documents indicate they might cooperate with prosecutors in other cases. Attorneys for Jefferson and Brown declined to offer comment on the case.

Court filings and social media presence indicate the cases were connected to three others based in Philadelphia who were charged with housing stabilization fraud in May. Cynthia Allen, 62, the wife of a Philadelphia church pastor, and Candice Langley, 46, are named in the same case charging them with health care fraud conspiracy.

They’re accused of claiming $3.5 million for 350 clients “far in excess of the services actually provided” through “fake and inflated bills.” Like Jefferson and Brown, they repeatedly flew to Minnesota to recruit clients, prosecutors said.

‘The criminals caught on’

Another Philadelphia-based defendant, 59-year-old Deborah Hodges, also is accused of fraudulently billing — $5.2 million through her nonprofit House of Heroes for services she never provided. For example, prosecutors allege Hodges billed for housing for a client who was at an inpatient program and couldn’t receive any services at the time.

The Philadelphia-based defendants aren’t the only ones accused of lying about claims. These cases that Thompson described as fraud tourism came after federal prosecutors charged eight individuals in September 2025 with fraudulently collecting nearly $10 million from the program through similar schemes. All were locally based.

Linda Miller, a former U.S. Government Accountability Office investigator and founder of the Program Integrity Alliance, said new programs often become targets because they rely heavily on provider reporting.

“These programs weren’t designed to catch this kind of sophisticated, organized fraud. They were designed to mostly take people’s word for it, and now you know that the problem is that the criminals caught on,” she said. “I’m not surprised that Minnesota saw a fraud-scheme uptick in that program.”

Autism services

Federal and state authorities had long suspected autism service programs were a hotbed for fraud. Spending on the Minnesota Early Intensive Developmental and Behavioral Intervention program grew from $38 million in 2020 to nearly $325 million in 2024.

The first charge came in September 2025: Asha Farhan Hassan, 28, who also faced a charge in the Feeding Our Future case, was accused of fraudulently billing $14 million to Medicaid for a children’s autism program that involved kickbacks tied to the Minneapolis-based Smart Therapy Center. Hassan pleaded guilty in December.

In May, the U.S. Attorney’s Office charged two more people — Shamso Ahmed Hassan and Hanaan Mursal Yusuf — with submitting millions in fraudulent claims to the state under the EIDBI program and delivering kickbacks to people who took part.

Shamso Hassan and Yusuf were part-owners of Smart Therapy Center and Star Autism Center in St. Cloud, businesses that submitted $46.6 million in fraudulent claims.

Federal prosecutors alleged Hassan, 55, and Yusuf, 25, set up a scheme to recruit parents to enroll children in their autism programs and paid them monthly kickbacks of anywhere from $300 to $1,500. One employee described parents picking up envelopes at one of their businesses, according to a search warrant.

The state reimbursed the pair for $21.1 million of those claims. Prosecutors say they diverted “hundreds of thousands to themselves” and their families, including real estate and wealth transfers overseas, including to Kenya.

Hassan and Yusuf have pleaded not guilty to health care fraud and money laundering charges. Their attorneys either couldn’t be reached or declined to comment on the cases.

More established operations

While existing available evidence and allegations in many of the recent Medicaid fraud cases indicate operations that provided few or no services, some fraud defendants ran more established operations.

Blue Earth-based Healey Homes, a care business run for 25 years by Charles Healey, 61, shut down late last year after receiving a correction order from the Department of Human Services accusing his business of improper training and record-keeping.

In May, the Minnesota U.S. Attorney’s Office charged Healey and business partner Katherin Suzan Larsen-Guthmiller, 66, with conspiracy to commit health care fraud and money laundering for allegedly claiming $22.7 million in reimbursement for services for 26 vulnerable adults while misleading the state about the setting in which they were providing care.

Prosecutors say Healey and Larsen-Guthmiller deceived state officials by claiming they offered housing below market rate to vulnerable adults in residences they owned using the Individualized Home Supports program. But under the program, the clients were supposed to live on their own. By offering cheaper housing in exchange for being able to bill Minnesota Medicaid, they defrauded the state, the government alleges.

Of the money they got, the two used $1 million for personal uses like the purchase of vehicles including an Aston Martin, three Porsches and three Teslas, as well as jewelry and five Rolex watches, according to charging documents.

Unlike many of the defendants charged in recent fraud cases, Healey had a long-established business, something his lawyer noted when asked about the case.

“Mr. Healey has for decades provided genuine and meaningful assistance to vulnerable Minnesotans,” attorney Thomas Calhoun‑Lopez said in a statement. “He denies the allegations in the indictment and will vigorously defend against these baseless allegations to clear his good name.”

‘She had a legitimate operation’

Another local case doesn’t fit the mold, either, at least by her attorney’s account.

In a case charged in May, Sharmaine Meadows, 45, of Lake Elmo, was accused of overbilling for nearly $4.3 million through housing stabilization for her nonprofit Cradle of Love LLC, which Meadows described on its website as a “non-medical home care agency.”

She received $3.7 million, according to prosecutors, who allege she directed employees to bill for hours of service regardless of whether services were provided, up to the maximum level of hours allowed under the housing stabilization program. She submitted claims for clients who were hospitalized and couldn’t have claimed services, according to the charges.

Meadows started her business in 2019 and applied for Housing Stabilization Services funding soon after the state created the program in 2020. Federal officials posted videos of agents walking out of her business with boxes of documents while serving a search warrant at her office on St. Paul’s East Side earlier this year.

Her attorney, Peter Wold, argued her business had an actual presence that helped hundreds of people and couldn’t be put in the same category as other providers accused of fraud.

“They got the wrong person,” he said. “She had a legitimate operation. She had a payroll of probably 30 employees at the height of this, that were carrying on this work, and they were trained. They did it the best they could under the … regulations of this housing program.”

National attention

High-profile fraud cases involving hundreds of millions of federal dollars stolen from state agencies have drawn national attention to Minnesota over the last year.

Minnesota fraud has been described as “industrial scale” by Thompson, the former assistant U.S. attorney, who speculated total losses in Medicaid programs alone could top $9 billion since 2018. It’s a figure Gov. Tim Walz and state officials have disputed.

So far, prosecutors have proven hundreds of millions of dollars in fraud.

Significant fraud in Medicaid programs, particularly 13 considered “high risk,” continues to trouble the Department of Human Services, which is currently working on “corrective action” after Trump administration threats to cut off billions in funding. There were originally 14 high-risk programs before the agency terminated Housing Stabilization Services last year.

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