Top federal prosecutor says Minnesota's fraud total could surpass $1 billion
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Minnesota's acting U.S. Attorney Joe Thompson says his office has prosecuted a half billion dollars in fraud in state programs in recent years — and the total tally could double by the time it's done.
The latest: FBI agents searched several properties last week in connection with what they called "massive" fraud involving Minnesota's Housing Stabilization Services program.
- The program, which started in 2020 and provided Medicaid dollars for housing for seniors and people with disabilities, paid out over $100 million in claims last year, over 38 times the initial cost estimates.
The big picture: The latest investigation comes on top of the $250 million-plus Feeding Our Future scheme, which has already resulted in 48 guilty pleas or convictions.
- A separate Medicaid-funded program meant to serve people with autism continues to face scrutiny amid fraud concerns and a 2024 FBI raid.
What they're saying: "It's an extraordinary problem, the fraud that's pervasive in this state," Thompson told KSTP in an interview this week.
- Prosecutors have called the new housing stabilization program, one of the first of its kind nationwide, "uniquely vulnerable to fraud."
The other side: DFL Gov. Tim Walz defended his administration's handling of the issue in an interview with Axios this week, saying the prosecutions are "counterintuitively a good thing" because it means state and federal investigators are catching — and stopping — fraud.
- "We want to help people, but we need to be skeptical. And if there's any thought whatsoever [that] these people are doing this, we need to refer them over [to law enforcement]," he said.
Zoom in: Walz noted that a recent change in law allowed the state Department of Human Services to freeze payments amid fraud concerns in the housing stabilization program.
- An FBI search warrant confirms that DHS stopped payments to at least two providers in May, shortly after the law passed.
- But by that point, the providers had already received millions in reimbursements for what investigators say were false claims, per a federal search warrant.
Friction point: Once the money's out the door, it's difficult to claw back. The government has recovered just $60 million in the Feeding our Future case, per KSTP.
What we're watching: DHS told the Star Tribune it's opened about 40 investigations into providers connected to a single building in the housing aid case "and stopped payments everywhere we have seen evidence of fraud."
- "You will see more people going to jail," Walz said of the broader fraud crackdown.
In the meantime, state Rep. Kristin Robbins (R–Maple Grove), chair of the Fraud Prevention and State Agency Oversight Committee, announced Wednesday that she formally requested a federal audit of DHS.