Federal Prosecutor Alleges 'Industrial-Scale Fraud' in Minnesota, Billions in Federal Funds Potentially Stolen

Staggering Scale of Alleged Fraud Uncovered

MINNEAPOLIS, United States – A federal prosecutor has announced that a significant portion, potentially half or more, of the $18 billion in federal funds distributed to 14 Minnesota-run programs since 2018 may have been lost to fraud. First Assistant U.S. Attorney Joe Thompson described the situation as 'staggering, industrial-scale fraud,' emphasizing that the magnitude of the schemes 'cannot be overstated.'

Thompson stated during a news conference in Minneapolis that the scale of fraud in Minnesota surpasses that observed in other states, jeopardizing essential services for vulnerable populations. Unlike typical overbilling, the alleged fraud involves the creation of companies that provided zero services, instead diverting federal funds for personal enrichment, including international travel, luxury vehicles, and lavish lifestyles.

Programs Targeted and New Charges

The investigation, which grew out of the $300 million 'Feeding Our Future' scandal, has expanded to encompass various Medicaid-funded programs. Among the programs identified as high-risk for abuse are:

• Housing Stability Services Program, intended to help individuals find and maintain stable housing.
• The Early Intensive Developmental and Behavioral Intervention benefit, an autism program.
• Integrated Community Supports, designed to assist adults with disabilities in living independently.

Federal authorities recently announced new charges, including five defendants linked to housing services fraud. Two Philadelphia residents were notably accused of 'fraud tourism,' traveling to Minnesota to exploit the Housing Stability Services Program and allegedly submitting $3.5 million in fraudulent claims. One defendant reportedly fled the country after receiving a federal grand jury subpoena. Another individual faces charges for allegedly submitting $6 million in fraudulent claims through an autism program.

State Response and Political Implications

In response to the escalating concerns, Minnesota Governor Tim Walz initiated a third-party audit of the 14 high-risk Medicaid programs in October, simultaneously pausing payments for 90 days. Governor Walz stated, 'We will not tolerate fraud, and we will continue to work with federal partners to ensure fraud is stopped and fraudsters are caught.' He also appointed a director of program integrity to focus on preventing future fraud statewide. James Clark, Inspector General for the Minnesota Department of Human Services, expressed shock at the speculated amount of fraud and urged federal authorities to share evidence to halt payments to fraudulent entities.

The ongoing investigations and revelations have also entered the political arena. The findings may support claims made by former President Donald Trump, who has characterized Minnesota as a 'hub of fraudulent money laundering activity' under Governor Walz's administration. Trump has also drawn attention to the Somali diaspora in Minnesota, as a majority of defendants in some of the fraud schemes are reportedly Somali Americans.