At Least $9 Billion in Medicaid Billing May Be Fraudulent in Minnesota, Officials Reveal
Minnesota is facing a staggering Medicaid fraud investigation, with prosecutors suggesting that at least $9 billion in claims could be fraudulent. This figure emerges from an ongoing audit of 14 Medicaid services in the state, which have billed a combined $18 billion since 2018. First Assistant U.S. Attorney Joe Thompson, speaking at a news conference in Minneapolis on December 19, 2025, described the situation as “industrial-scale fraud” that far exceeds typical cases seen elsewhere in the U.S. Thompson emphasized that the observed fraudulent activity was not limited to isolated incidents but involved large-scale operations that have severely compromised the integrity of Minnesota’s Medicaid programs.
“I don’t make these generalizations in a hasty way,” Thompson said, referring to the estimate that a significant portion—possibly half or more—of the $18 billion billed may be fraudulent. “When I look at the claims data and the providers, I see more red flags than I see legitimate providers.”
According to Thompson, the fraud includes schemes where companies have been established to provide no actual services but still receive federal funds. Some of the misappropriated money has been used to finance extravagant lifestyles, including international travel and luxury vehicles.
The investigation has already led to charges against several defendants, including five new individuals linked to the Minnesota Housing Stability Services Program. Two of these defendants are accused of diverting roughly $750,000 intended for housing assistance to fund trips abroad to destinations such as London, Istanbul, and Dubai. Another defendant reportedly submitted $1.4 million in fraudulent claims, using some proceeds to invest in cryptocurrency before fleeing the country after receiving a subpoena.
A troubling trend highlighted by Thompson is the rise of "fraud tourism," where individuals from outside Minnesota register as providers to exploit the state’s Medicaid programs. Two Philadelphia residents, Anthony Waddel Jefferson and Lester Brown, were charged for allegedly siphoning millions from programs designed to assist disabled persons and individuals battling addiction, despite having no real ties to Minnesota communities.
“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 stated. He called the magnitude of the fraud “deeply unsettling” and urged Minnesotans to recognize the seriousness of the problem.
Minnesota Department of Human Services (DHS) Inspector General James Clark responded to the allegations by calling the speculation “shocking” but reaffirming the state’s commitment to combating fraud. Clark stated, “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.” He also noted that DHS has intensified efforts to suspend payments to suspected fraudsters and refers cases to law enforcement.
Clark further indicated that he has been seeking a closer partnership with federal prosecutors to share evidence and coordinate actions swiftly. “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,” he said.
The issue has also become a political flashpoint. President Donald Trump has pointed to the fraud cases as evidence of systemic problems in Minnesota, calling the state a “hub of fraudulent money laundering activity” under Governor Tim Walz’s administration. Trump’s commentary, which included controversial remarks targeting Minnesota’s Somali community, has drawn condemnation from Walz, who called for patience pending a comprehensive audit due in late January 2026. Walz’s office emphasized that aggressive measures are underway to prevent future fraud, though they have yet to comment on the latest developments.
Notably, over 90% of individuals charged in previously announced major cases are of Somali descent, according to federal prosecutors. Walz and other state leaders have pushed back against accusations that unfairly target any community and reaffirmed their commitment to rooting out fraud regardless of background.
The new charges come as prosecutors continue to analyze other Medicaid programs, including one serving children with autism. One female defendant associated with that program recently pleaded guilty to exploiting it financially.
When asked about accountability, Thompson remarked, “The state has not done a good job of mining these programs,” underlining systemic weaknesses that have allowed fraud to flourish.
The growing exposure of vast Medicaid fraud in Minnesota highlights a critical challenge for both state and federal governments to safeguard public funds and ensure that vulnerable populations receive the support intended for them.
For more information or to report suspected Medicaid fraud, contact the Minnesota DHS Inspector General’s office or the U.S. Attorney’s Office for the District of Minnesota.
This article is based on reporting by WCCO and KVLY as of December 19, 2025.