Legislative News and Views - Rep. Andrew Myers (R)

Minnesota Fraud Monitor: A Year in Review

Friday, July 17, 2026

Minnesota Fraud Monitor: A Year in Review

Welcome back to the final edition of the Minnesota Fraud Monitor from my legislative office. We’re taking a broad look back at the fraud-related developments Minnesota has seen over the past 12 months. If you would rather jump to more current fraud news from June through mid-July 2026, you’ll be forgiven for skipping to the end.

Key Developments at a Glance

- Housing Stabilization Services: Payments grew from a projected $2.6 million annually to $104 million in 2024 and another $61 million in the first half of 2025 before the program was terminated amid widespread fraud.

- Medicaid Fraud Estimate: Former First Assistant U.S. Attorney Joe Thompson estimated that half or more of the $18 billion spent through 14 high-risk Medicaid programs since 2018 may have been fraudulent.

- Coordinated Enforcement: Federal and state agents executed 22 search warrants across Minnesota on April 28, 2026.

- New Oversight Institution: The Legislature created an independent statewide Office of Inspector General with subpoena power, scheduled to be fully operational by September 1, 2027.

- Provider Revalidation: DHS reviewed 5,583 high-risk Medicaid providers; most issues involved incomplete administrative information rather than active fraud findings.

- Federal Pressure: Oversight intensified, including a U.S. House Oversight Committee final report and threats to defer up to $2 billion in Medicaid funding.

- Ongoing Prosecutions: Criminal cases continued across Feeding Our Future, EIDBI autism services, Housing Stabilization Services, and interconnected multi-program networks.

Minnesota’s fraud landscape has evolved from the child care fraud scandals of the late 2010s and the large-scale COVID-era abuses—most prominently Feeding Our Future, whose prosecutions remain ongoing—into a broader reckoning over Medicaid program integrity, grant oversight, and questions about how Minnesota reached this point and how the state can right the ship. This edition focuses on the developments that most changed Minnesota’s fraud-control landscape.

The Crisis Expands

July 2025: Housing Stabilization Services

Minnesota launched Housing Stabilization Services in July 2020 to help eligible seniors and people with disabilities, mental-health conditions, or substance-use disorders find and maintain housing. The program was originally projected to cost approximately $2.6 million annually, but payments reached $104 million in 2024 and another $61 million during the first six months of 2025 alone.

After federal agents executed search warrants at HSS-related locations on July 16, DHS began suspending payments to specific providers. By late July, dozens of providers were already subject to holds. On July 31, DHS imposed additional immediate payment withholds, reporting that 77 providers were under suspension based on credible allegations of fraud. Other HSS providers remained eligible to serve participants during the program’s wind-down. HSS formally ended October 31. (1, 2, 3)

September–October 2025: Expansion of Criminal Cases and Executive Action

On September 17, Gov. Walz issued Executive Order 25-10, directing state agencies to expand proactive fraud detection, provider and grantee oversight, data sharing, prepayment review, interagency coordination, and public reporting of program-integrity actions. (4)

That same day, Cain Pence, a former participant in the Integrated Community Supports program, testified before the House Fraud Committee about his experience with a provider he alleged had failed to deliver services while potentially billing Medicaid for his care. Pence said DHS did not meaningfully respond until KSTP reported his allegations, after which the agency contacted him. (5)

On September 24, federal prosecutors announced the first major criminal case involving Minnesota’s EIDBI autism benefit (Early Intensive Developmental and Behavioral Intervention). Asha Farhan Hassan was charged with using Smart Therapy Center to obtain approximately $14 million in Medicaid reimbursements. Hassan had also been charged in connection with approximately $465,000 received through Feeding Our Future. (6)

Gov. Walz announced a broader Medicaid prepayment-review initiative on October 29. The order applied to 14 high-risk services, with Optum selected to analyze fee-for-service claims before payment and flag claims requiring additional DHS review. (7)

November–December 2025: Payment Review and National Spotlight

DHS began disenrolling inactive Medicaid providers in October and announced licensing pauses for new home- and community-based service providers and adult day settings in December. (8)

On December 18, Former First Assistant U.S. Attorney Joe Thompson first publicly stated that $18 billion in federal funds had supported Minnesota’s 14 high-risk Medicaid programs since 2018 and estimated that half or more—at least $9 billion—may have been stolen, describing the activity as “staggering, industrial-scale fraud.” (9)

The Optum review became operational for the warrant cycle ending December 25. (10)

Independent content creator Nick Shirley published a widely viewed video raising questions about Minnesota child care centers that had received millions of dollars through the Child Care Assistance Program. The video received national political attention, prompted federal officials to visit locations identified in the report, led to Shirley’s testimony before the U.S. House Judiciary Committee on January 21, and significantly amplified the national spotlight on Minnesota to start 2026. (11, 12)

Federal Intervention and State Response

January–March 2026: Audits and Federal Intervention

Behavioral Health Administration Audit

The Office of the Legislative Auditor reported on January 6 that DHS’s Behavioral Health Administration lacked adequate internal controls, failed to comply with most grant-management requirements tested, and created or backdated documents after the audit began. In one case, a DHS grant manager approved a $672,647.78 payment for a single month of work without detailed invoices or participant data, left DHS days later, and subsequently provided consulting services to the grantee. (13, 14)

Congressional Hearings and Federal Scrutiny

The U.S. House Committee on Oversight and Government Reform held its first Minnesota fraud hearing on January 7, with Minnesota Reps. Kristin Robbins, Walter Hudson, and Marion Rarick testifying. CMS issued a formal notice on January 14 finding that Minnesota’s Medicaid program was not in substantial compliance with federal program-integrity requirements. Rep. Robbins returned to D.C. on February 4 to testify before the U.S. Senate Judiciary Subcommittee on Crime and Counterterrorism. Federal officials deferred approximately $259 million in Medicaid reimbursements on February 25, and Gov. Walz and Attorney General Keith Ellison testified before House Oversight on March 4. (15–19)

Whistleblowers and Retaliation Claims

Testimony from DHS employee Faye Bernstein and former investigator Jay Swanson, along with earlier allegations from Scott Stillman, focused attention on ignored internal warnings, retaliation claims, and DHS’s criminal-investigation unit, which disbanded in 2019. Swanson and Bernstein later testified before the U.S. Senate Committee on Small Business and Entrepreneurship on May 20. (20–22)

OLA Review of Autism-Service Kickbacks

OLA reported on March 17 that DHS had authority to act against kickbacks in the EIDBI program before the Legislature expanded that authority in 2025 but had not used its available tools effectively. OLA also identified a rule error dating to 1995 that could limit provider suspensions. CMS approved Minnesota’s revised corrective action plan later that month. (23, 24)

April–May 2026: Search Warrants, Major Cases, and Legislative Action

Federal and state authorities executed 22 search warrants across Minnesota on April 28 as part of investigations into publicly funded social-service programs. The operation involved the FBI, Homeland Security Investigations, the Minnesota Attorney General’s Medicaid Fraud Control Unit, and the Bureau of Criminal Apprehension. (25)

The Minnesota House Fraud Prevention and State Agency Oversight Committee approved its final report on May 13 after holding 25 meetings. The 84-page report included 18 recommendations. (26)

Aimee Bock was sentenced to 500 months in federal prison on May 21 for leading the Feeding Our Future fraud scheme. That same day, federal prosecutors announced charges against 15 defendants in cases involving more than $90 million in alleged intended losses. (27, 28)

Fraud Legislation Passed in 2026

The Legislature created an independent statewide Office of Inspector General with subpoena power and authority to coordinate investigations across state agencies. The office is scheduled to be fully operational by September 1, 2027. (29)

Other recent laws removed the 60-day cap on payment holds, expanded cross-agency information sharing, authorized additional Medicaid provider screening and enrollment moratoriums, established electronic-attendance and limited camera requirements, and created additional prepayment-review procedures. The Legislature also expanded the Attorney General’s Medicaid Fraud Control Unit. (30–33)

Where Things Stand

June–July 15: Federal Oversight and Revalidation

The U.S. House Oversight Committee released its final majority-staff report on June 8. The report concluded that senior Minnesota officials knew about systemic fraud, possessed authority to stop payments or exclude suspect providers, and repeatedly failed to act. On June 9, Vice President JD Vance asked the Department of Justice to investigate Gov. Walz, Attorney General Ellison, and other Minnesota officials. DOJ had not publicly announced the opening of an investigation by July 15. (34, 35)

Facing a May 31 federal deadline and the potential loss of up to $2 billion in Medicaid funding, DHS conducted a five-month revalidation of 5,583 providers operating in 13 high-risk service categories. The department approved 2,061 providers, sent disenrollment notices to 3,411, and removed another 111 that no longer provided a high-risk service. Most disenrollments involved incomplete or inaccurate administrative information rather than fraud; 59 providers were referred to the DHS Office of Inspector General. Nearly 2,700 providers appealed, and thousands had their billing privileges restored during the appeals process. (36, 38)

The ongoing revalidation problems have reopened an old wound for providers still recovering from payment freezes and prepayment-review delays. New paperwork, portal, site-visit, and appeal problems have again disrupted payrolls, operations, and care for vulnerable Minnesotans. (37)

DHS announced on July 15 that the moratorium on new providers in 12 high-risk Medicaid categories would continue through January 27, 2027. EIDBI autism providers remain subject to a separate enrollment moratorium through October 31, 2026. (39)

DHS Leadership Changes

Temporary DHS Commissioner and Medicaid Director John Connolly testified before the U.S. House Energy and Commerce Subcommittee on Oversight and Investigations on June 25. Shireen Gandhi—DHS chief compliance officer beginning in 2017, temporary commissioner in 2025, and permanent commissioner beginning in February 2026—was reassigned as deputy commissioner on May 4 and retired effective July 14. (40–43)

Fraud Case Developments: June 1 through July 15

Continuing Feeding Our Future Accountability

Said Abdullahi Ereg surrendered at Minneapolis-St. Paul International Airport on June 10. Abdikerm Abdelahi Eidleh was taken into custody in Somalia on June 25. On July 7, the FBI announced a reward of up to $150,000 for information leading to the arrest or conviction of Fahad Mohamed Nur. (54, 56, 57)

Aimee Bock appealed her conviction and 500-month sentence on June 17. Feeding Our Future defendants Najmo Ahmed and Asha Jama were sentenced to 14 months and six months in federal prison, respectively, on June 15 and 16. Abdirashid Bixi Dool pleaded guilty on July 13 for his role in the scheme. (55, 46, 47, 51)

Additional Charges, Judgments, and Guilty Pleas

On June 11, the Minnesota Attorney General’s Medicaid Fraud Control Unit charged former Mower County care coordinator Jessica Jean Arneson with seven felony theft offenses. On June 12, a state district court entered a nearly $2.5 million civil judgment against Emaldeldin Ibrahim. On June 23, the Attorney General charged seven additional Medicaid providers in cases involving more than $700,000. (44, 45, 48)

Abdifitah Mohamud Mohamed pleaded guilty on July 8 to using Brilliant Minds Services LLC to submit more than $2.3 million in fraudulent HSS claims. Fahima Egeh Mahamud and Jillaine Mertens pleaded guilty in separate child care cases on July 9. (49, 50)

Interconnected Fraud Networks

On July 14, the Minnesota Department of Revenue charged Ali Farah Egal, Fardous Jama Egal, Abdirisak Abdirahman Abdulle, and Samsam Gatah with tax crimes involving more than $1.1 million. Investigators connected the defendants through an interrelated network of real estate, personal care, child care, restaurant, catering, and nutrition businesses—reflecting the cross-program business and property relationships Chair Kristin Robbins had warned about through fraud-network maps presented to the House Fraud Committee. (52, 53)

Work Still Ahead

One year after the HSS payment freezes began, Minnesota has more oversight tools and no shortage of warnings. The test now is whether government can identify fraud early while protecting access to legitimate services for the vulnerable Minnesotans these programs exist to help. New statutes, reports, and task forces matter only if they produce competent administration and measurable results that safeguard both taxpayer dollars and the care vulnerable residents rely on.

A Final Note

This is the final Minnesota Fraud Monitor sent from my legislative office until the 2027 Legislative Session. The investigations and prosecutions will continue well beyond this edition. The record reviewed here is severe, but it does not have to be permanent. Minnesota can right the ship—but only by confronting how we reached this point and refusing to accept the same failures under a new name.

Thank you for reading, sharing these updates, and continuing to demand accountability for the use of public funds.

Sincerely,

Representative Andrew Myers

House District 45A

Co-Chair of the Suburban Solutions Caucus

“Your voice has an impact.”

Serving Excelsior, Greenwood, Long Lake, Minnetonka Beach, Minnetrista, Mound, Orono, Shorewood, Spring Park, St. Bonifacius and Tonka Bay

Sources

Report Fraud!

Minnesota has lost an estimated $9 billion to fraud, money meant to help vulnerable Minnesotans and fund your top priorities. We can’t afford to let it continue. If you’ve seen or experienced fraud in state programs, make a confidential report at MNFraud.com and help us protect taxpayer dollars.

Please Contact Me

Please continue to reach out with thoughts, ideas, and priorities by emailing me directly at rep.andrew.myers@house.mn.gov or calling me at my office at (651) 296-9188 or via my cell at (612) 615-8444. Your voice has an impact and allows me to better address the priorities of you and your neighbors. Thank you and have a great week.

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