Another day, another fraud scandal

We’re just digging into the 105 pages of federal search warrants being executed at nine separate locations in the metro area.

The searches involve at least five (5) corporate entities participating in the state Medicaid program Housing Stabilization Services (HSS) offered through the state Dept. of Human Services.

The U.S. Attorney alleges specific instances of fraud across the five companies totaling $348,100. The Feds calculate that combined, the five companies took in over $7 million in revenue from the HSS program. The Feds document that two of the five companies are owned by a pair of brothers.

The Minnesota Star Tribune reports:

Companies have received millions in Medicaid funds for services they did not provide, according to a search warrant application that says the Housing Stabilization Services program has proven to be “extremely vulnerable to fraud.”

HSS is a relatively new program that’s grown exponentially since it started. From the search warrant, p. 23:

The program has continued to grow into 2025. In the past 4 1/2 years, HSS has paid out over $300 million, working out to more than 25 times the original projections.

From the Acting U.S. Attorney for Minnesota Joe Thompson:

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. Today’s warrants are another step in a much bigger reckoning. This state needs to confront the scale of its fraud problem—because ignoring it is no longer an option.

The federal investigation builds on the work of KARE-11 TV reporter A.J. Lagoe.

Here’s how DHS describes the service:

Housing Stabilization Services is a new Minnesota Medical Assistance benefit to help people with disabilities, including mental illness and substance use disorder, and seniors find and keep housing.

So, it doesn’t provide actual housing. It provides a service consisting of people talking to you, the client, about housing. As the search warrant notes (p. 15, paragraph 39), Minnesota was the first state in the nation to offer this service for Medicaid. Lucky us. The program began in July 2020.

Coincidentally, Search Premises No. 1 in this investigation is the massive multi-tenant office building at 1821 University Ave. in St. Paul, which features prominently in the unrelated Feeding Our Future scandal.

The search warrant reports (p. 26, paragraph 67) that the above building houses 22 separate HSS provider companies. The Feds estimate that more than $8 million for HSS flowed through this building.

With this new data on the HSS fraud we have updated the ScandalTracker.