Prosecutors unveil first indictments in housing program fraud

The U.S. Attorney’s Office in Minnesota has indicted eight individuals for their alleged role in defrauding the state’s Housing Stabilization Services (HSS) program. In a press briefing, Acting U.S. Attorney Joe Thompson said most of the $100 million HSS program was fraud.

In August, the Minnesota Department of Human Services (DHS) shut down HSS, a housing assistance program funded by Medicaid but operated by DHS. State leaders said HSS was shut down due to widespread fraud within the program.

Today, Thompson confirmed HSS is “riddled with fraud” as he announced eight individuals have been indicted for allegedly defrauding the program. Thompson told the press, “I think of the eight, I don’t know for sure, but I think six of the eight are of East African descent.”

The individuals charged are Moktar Hassan Aden, Mustafa Dayib Ali, Khalid Ahmed Dayib, Abdifitah Mohamud Mohamed, Christopher Adesoji Falade, Emmanuel Oluwademilade Falade, Asad Ahmed Adow, and Anwar Ahmed Adow.

The U.S. Attorney said HSS was started in 2020 and initially cost roughly $2.6 million per year before program costs “exploded” to more than $100 million annually. Thompson later said most of the program was comprised of fraud, “as far as I could tell.”

In short, the program allowed businesses to bill Medicaid in exchange for providing services that were supposed to help “people with disabilities, including mental illness and substance use disorder, and seniors find and keep housing.”

According to Thompson, there were “hundreds of companies enrolled in the program who began claiming to provide housing stabilization services to thousands of clients throughout the State of Minnesota. Many of these companies operated out of dilapidated storefronts or rundown office buildings that were full of other fraudulent healthcare companies.”

The eight individuals charged on Thursday represent just the first wave of indictments that are expected to come from the ongoing investigation into the HSS program. According to the U.S. Attorney, the charged defendants billed Medicaid for HSS services that were not provided. In total, the eight individual allegedly defrauded HSS of roughly $10 million.

“Minnesota is drowning in fraud,” said Thompson. “Many of the owners of [HSS] companies had one or more other companies through which they billed other Medicaid programs such as the EIDBI autism program, the Adult Rehabilitative Mental Health Services program, the Integrated Community Support program, the Community Access for Disability Inclusion program, PCA services, and other Medicaid-waivered services.”

“The level of fraud in these programs is staggering. Unfortunately, our system of trust but verify no longer works. These programs have been abused over and over to the point where the fraud has overtaken the legitimate services,” added Thompson.

During his press conference, the U.S. Attorney said more must be done on the front end to stop fraud from occurring.

He also noted that indictments are likely to be handed down in an ongoing investigation into fraud in a state autism services program. Discussing the types of Medicaid fraud he is seeing, Thompson said “these aren’t just overbilling … these are often just purely fictitious companies, solely created to defraud the system.”

In a press release responding to the indictments, DHS said it plans to fully redesign HSS with the help of the state legislature and others to ensure program integrity. DHS also said it stopped payments to companies associated with the indicted parties in May and July.

“The charges announced today are the result of ongoing collaboration between [DHS] and our law enforcement partners to root out fraud in state programs and hold criminals accountable,” said DHS Temporary Commissioner Shireen Gandhi.

“Let today’s actions serve as a warning to anyone who steals from Minnesota taxpayers: you will be prosecuted to the fullest extent possible by our law enforcement partners,” added the commissioner.

Luke Sprinkel

Luke Sprinkel previously worked as a Legislative Assistant at the Minnesota House of Representatives. He grew up as a Missionary Kid (MK) living in England, Thailand, Tanzania, and the Middle East. Luke graduated from Regent University in 2018.