An investigation Found Medicaid Fraud In Tim Walz Minnesota in a program initially budgeted for $2.5 million has already spent $60 million in 2025
Federal investigators executed search warrants at eight locations in the Twin Cities area, including offices and homes tied to five Housing Stabilization Services (HSS) providers:
Brilliant Minds Services LLC (St. Paul),
Leo Human Services LLC (Brooklyn Park),
Liberty Plus LLC (Roseville),
Pristine Health LLC (St. Paul), and
Faladcare Inc. (Little Canada, Woodbury, Blaine, St. Paul)
The raids are part of an ongoing investigation into a “massive scheme” to defraud the Medicaid-funded program, with allegations that companies billed for services that were never provided exploiting vulnerable people in drug treatment or halfway houses.
The taxpayer funded program is supposed to help people in need find homes, however the service providers allegedly forged signatures, billed people in need of help that didn’t receive services and over billed Medicaid.
The Minnesota Department of Human Services (DHS) has suspended payments to three of the providers.
Acting U.S. Attorney Joseph H. Thompson said that
“Minnesota has a fraud problem — and not a small one. For too long, organized fraud schemes like this have flourished in plain sight, draining public resources dry.”
In the first six months of 2025, the program paid out more than $61 million in claims.
The program was launched in 2020 as the first Medicaid benefit of its kind nationwide, the HSS program was to help elderly people, people with disabilities and homeless people in finding and maintaining stable housing.
Initial annual cost estimates were $2.5-2.6 million. By 2021, spending spiked to $21 million; in 2024, it reached $104 million.
Over 1,700 providers are enrolled, with the program’s vulnerability attributed to easy access and lack of initial licensing requirements, leading to “fly-by-night” operations.
The FBI says it has been “extremely vulnerable to fraud,” similar to prior schemes like Feeding Our Future.
Specific fraud examples include Leo Human Services receiving $2.7 million (2022-2025) for 290 clients, many of whom reported no services; one client was billed $12,000 while homeless.
