A staggering $9 billion may have been stolen in Minnesota’s sprawling social-services scam orchestrated mainly by members of its Somali community — a figure nearly equivalent to the entire economy of Somalia.
The enormous new estimate is a nearly nine-fold increase from the swiped $1 billion previously suspected, according to federal prosecutors.
It also accounts for roughly half of the $18 billion in total federal funds provided to the Minnesota-run services since 2018, the feds said — as Democratic Gov. Tim Walz continues to take heat for his handling of the debacle.
By comparison to the $9 billion figure, Somalia’s entire GDP was under $12 billion last year, according to the World Bank.
“The magnitude cannot be overstated,” First Assistant US Attorney Joe Thompson said Thursday of the tentacles of the fraud. “What we see in Minnesota is not a handful of bad actors committing crimes. It’s staggering, industrial-scale fraud.
“Every day, we look under a rock and find a new $50 million fraud scheme.”
The scheme saw dozens of people — the vast majority from Minnesota’s Somali community — setting up businesses and non-profits that claimed to provide services such as housing, food or healthcare assistance and then billing the federally funded state programs for the non-existent services.
The fraud was so enormous that it went beyond the over-billing tactics typically seen in similar fraud cases and instead saw people setting up entire operations — sometimes coming from out of state — to get in on the goldrush of fraud opportunity, Thompson explained.
Charges for six more people allegedly involved in the scheme were announced Thursday, bringing the total number of defendants up to 92.
Among the latest defendants were two people who engaged in what Thompson called “fraud tourism” by allegedly travelling from Philadelphia to set up a bogus housing aid program after spotting an opportunity to make “easy money” off Minnesota’s programs. --->READ MORE HERE
The programs under investigation have billed $18B since 2018.
A top prosecutor suggested on Thursday that the total amount of fraud in Minnesota could be $9 billion or more.
According to First Assistant U.S. Attorney Joe Thompson, 14 Medicaid services under audit and deemed “high risk” for fraud have cost the state $18 billion since 2018.
Thompson said a substantial amount of money billed across those programs is fraudulent, but the exact amount is still under investigation.
“I don’t make these generalizations in a hasty way,” he 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.”
Minnesota Department of Human Services Inspector General James Clark released a statement, saying speculation of the amount of fraud occurring is “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.”
Thompson said the scale of fraud in Minnesota outpaces that of other states and puts services at risk for people who really need them.
While prosecutors typically see fraud manifest as providers overbilling, Thompson said during a news conference in Minneapolis that companies have been created to provide zero services while pocketing federal funds for international travel, luxury vehicles and lavish lifestyles.
“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.”
The investigators’ new findings may bolster President Trump in his claims that Minnesota is a “hub of fraudulent money laundering activity” under Gov. Tim Walz, who was the Democrats’ vice presidential nominee in last year’s presidential election.
Trump has capitalized on the fraud cases to target the Somali diaspora in Minnesota, calling them “garbage” and saying he doesn’t want immigrants from the East African country in the U.S.
More than 90% of the people charged in the major fraud cases announced before today were of Somali descent, according to the U.S. Attorney’s Office for Minnesota. --->READ MORE HERE
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