Almost half of it was fraud, and all Tim Walz did is sit and watch. A senior federal prosecutor is warning that fraudulent activity within Minnesota’s Medicaid system may exceed $9 billion, describing what he called a uniquely severe and systemic breakdown that has turned the state into a national outlier for abuse.
First Assistant U.S. Attorney Joe Thompson said Thursday that 14 Medicaid programs identified as high-risk have received roughly $18 billion in payments since 2018, with a substantial share potentially fraudulent.
“I don’t make these generalizations in a hasty way,” Thompson said. “When I say significant amount, I’m talking on the order of half or more. But we’ll see. When I look at the claims data and the providers, I see more red flags than I see legitimate providers.”
Thompson said the scale of alleged misconduct in Minnesota eclipses patterns seen elsewhere and directly threatens aid intended for vulnerable residents, according to CBS News. Unlike conventional Medicaid fraud cases involving inflated or duplicate billing, Thompson described operations that appeared to exist solely to siphon public funds, with proceeds used for luxury travel, high-end vehicles, and lavish personal spending.
“The magnitude cannot be overstated,” Thompson said. “What we see in Minnesota is not a handful of bad actors committing crimes. It’s staggering, industrial-scale fraud.”
State officials responded by calling the estimates alarming while emphasizing enforcement efforts. Minnesota Department of Human Services Inspector General James Clark said the scope outlined by federal prosecutors was “shocking.”
“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,” Clark said. “We have been moving more aggressively than ever to suspend payments where we see evidence of fraud and refer criminals to law enforcement for prosecution. 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.”
At a Minneapolis press conference, Thompson announced charges against five additional defendants connected to a Medicaid-funded housing stability program. According to prosecutors, two of the defendants diverted approximately $750,000 intended for housing assistance, instead spending the money on international travel to destinations including London, Istanbul, and Dubai.
Another defendant allegedly submitted $1.4 million in fraudulent claims, converted the proceeds into cryptocurrency, and left the country after receiving a federal subpoena.
The cases, Thompson said, illustrate what he described as “fraud tourism,” citing defendants with no meaningful connection to Minnesota who registered as providers solely to exploit the system. Court filings accuse two Philadelphia residents, Anthony Waddell Jefferson and Lester Brown, of draining millions from programs meant to serve individuals with disabilities or addiction recovery needs.
Under the leadership of Tim Walz, Thompson said, “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. This is a deeply unsettling reality that all Minnesotans should understand.”
The revelations arrive amid heightened political scrutiny of Minnesota’s Medicaid administration. President Trump has recently characterized the state as a hub for improper financial activity, while Gov. Tim Walz has rejected inflammatory rhetoric and pointed to an upcoming independent review intended to clarify the full scope of the problem. Federal records indicate that more than 90 percent of defendants charged so far in major related cases are of Somali background, a statistic state leaders say must be handled with care as investigations continue.
480 Department of Human Services employees publicly accused Governor Tim Walz of enabling the fraud on behalf of the Somalian population that supports Democrats. The whistleblowers charged that Walz “is 100% responsible for massive fraud in Minnesota,” recounting years of ignored warnings, internal suppression, and what they describe as a climate of intimidation designed to keep billions in losses out of public view. According to the employees, they approached the governor early, hoping to partner with his administration to stop the fraud, but instead encountered “monitoring, threats, repression,” and a sustained campaign to discredit their reports. Rather than strengthen oversight, they wrote, the Walz administration and allied legislators “attacked whistleblowers,” while an indifferent media stood by.
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