Minnesota Government Fraud May Top $1 Billion, U.S. Attorney Warns

Minnesota’s public assistance programs are being drained by massive fraud schemes, and the total losses could soon climb beyond $1 billion, according to the state’s chief federal prosecutor.

Joe Thompson, the acting U.S. Attorney for the District of Minnesota, revealed this week that his office has prosecuted over $500 million in fraud tied to government-funded programs over the past few years. And that staggering figure, he says, may just be the beginning.

“We’re looking at an epidemic of fraud that is unprecedented,” Thompson told 5 EYEWITNESS NEWS. “It’s clear now that this isn’t limited to a few bad actors. It’s widespread and deeply embedded in several state-run programs.”

Thompson suggested the situation may grow far worse. As current investigations unfold and cases head to court, the total amount of taxpayer money lost to fraud in Minnesota could easily exceed $1 billion, he warned.

One program in particular — the federal Housing Stabilization Services initiative, which provides Medicaid reimbursements for housing assistance — has raised major red flags. The cost of reimbursements under this program has already surpassed $100 million, but according to Thompson, the “vast majority” of that spending is believed to be fraudulent.

“It’s a wake-up call for everyone,” Thompson said. “We need to stop assuming every program is being run properly. When things look suspicious, they need to be investigated.”

Federal prosecutors have already made significant recoveries. In the high-profile Feeding Our Future case, the government has clawed back $60 million. That scam involved alleged fraudulent use of pandemic-era child nutrition funds.

Another case involved Nuway Alliance, a treatment provider that was accused of overbilling Medicaid. Although the organization did not admit to wrongdoing, it agreed to a $18 million settlement with federal authorities.

But Thompson made it clear that much more work lies ahead. Investigations into both autism service providers and the Housing Stabilization Services program are still in progress. Officials anticipate more indictments and settlements as additional evidence is uncovered.

The Biden administration has touted increased funding for public programs, but critics argue that such expansion — without rigorous oversight — creates more opportunities for abuse.

“This level of fraud undermines public trust and takes resources away from the people who actually need them,” Thompson added.

With Minnesota emerging as a national case study in large-scale government fraud, the pressure is now on state and federal officials to tighten oversight — and hold perpetrators accountable.