Eight charged in $8.4M scheme linked to Minnesota housing program dismantled after $100M losses

Minnesota charges eight in alleged Medicaid housing fraud as state moves to reboot troubled program

Federal prosecutors in Minnesota have charged eight people with orchestrating more than $8 million in alleged wire fraud tied to the state’s Housing Stabilization Services program, a Medicaid benefit intended to keep disabled and elderly residents housed. The indictments, announced Thursday in Minneapolis, mark what prosecutors called the “first wave” in a widening probe into a program that ballooned far beyond its original scope—and is now being dismantled and redesigned amid accusations of systemic abuse.

“The level of fraud in these programs is staggering,” Acting U.S. Attorney Joseph H. Thompson told reporters, describing a benefit he said had become “riddled with fraud.” He added a sober warning that echoed beyond Minnesota: “We cannot prosecute our way out of this problem.”

A safety net stretched thin—and exploited

The Housing Stabilization Services (HSS) program began in 2020 with broad hopes and low barriers. It was meant to help people with disabilities or serious health conditions find and maintain housing—paying providers to coach clients through leases, appointments, and landlord disputes. In the first year, costs were a manageable $21 million. By 2024, they had surged to $104 million, with another $61 million in just the first half of 2025, according to state and federal figures. Investigators now believe a significant share of that outflow was fraudulent.

Minnesota’s Department of Human Services (DHS) has halted payments to 115 providers suspected of improper billing—collectively paid more than $100 million—and is preparing a redesign with tighter controls. In the meantime, beneficiaries can still seek help from providers not under suspension, though gaps in care are likely. As Inspector General James Clark put it, “Too many fraudulent, unqualified bad actors have likely stolen money from our state’s taxpayers, and also cheated Minnesotans who need housing services.”

Who’s charged and what’s alleged

Prosecutors say the eight defendants operated four companies that billed heavily for services that were inflated, improperly documented, or never delivered. The companies and allegations include:

• Brilliant Minds Services LLC (St. Paul): Four men—Moktar Hassan Aden, 30; Mustafa Dayib Ali, 29; Khalid Ahmed Dayib, 26; and Abdifitah Mohamud Mohamed, 27—allegedly ran the provider out of the Griggs-Midway Building. From September 2022 to April 2025, Brilliant Minds submitted about $2.3 million in claims, placing it among the state’s top billers last year. Prosecutors say many claims were for consultations and “transition services” rarely provided. Mohamed allegedly operated a second company, Foundation First Services LLC, which federal authorities say churned out $222,000 in false consultation claims—some billed to Brilliant Minds itself. The indictment alleges the four shared a Platinum American Express card for nearly $500,000 in personal charges, and that each took home $300,000 to $400,000. They face six counts of wire fraud.
• Faladcare Inc. (Little Canada and Woodbury): Prosecutors charged Christopher Adesoji Falade, 62, and his son, Emmanuel Oluwademilade Falade, 32, with submitting more than $2.2 million in inflated claims while claiming to serve about 100 beneficiaries. Court filings include allegedly falsified day sheets and service verification forms sent by email.
• Leo Human Services LLC (Brooklyn Park): Asad Ahmed Adow, 26, allegedly told staff to “bill as much as they could” and to create service notes only to prepare for possible audits—even though such notes weren’t required for payment. Leo billed roughly $2.7 million for about 250 purported clients. Prosecutors say Adow channeled proceeds into real estate in Kenya, a Roseville apartment lease, and a 2024 BMW X4.
• Liberty Plus LLC (Roseville): Prosecutors say Asad’s younger brother, Anwar Ahmed Adow, 25, ran Liberty Plus, which received more than $1.2 million in Medicaid payments while instructing employees to inflate hours. Authorities allege he used proceeds to lease a 2023 Mercedes-Benz CLA and make personal investments. The brothers are accused of pooling funds across their companies.

Overall, the four companies are accused of extracting more than $8.4 million through the housing benefit. Prosecutors say a common tactic was harvesting names of eligible clients from addiction treatment centers and other facilities, then billing for hours that would be difficult to verify. Defense attorneys for at least one defendant say their client denies the allegations and will fight the charges in court.

Political heat and a policy reset

The state’s move to suspend payments and rebuild the program ignited partisan crossfire at the Capitol. Republicans called the response “too little, too late,” with House Speaker Lisa Demuth arguing the Walz administration acted only after millions vanished. Senate Republican Leader Mark Johnson suggested officials “pulled the plug before an audit can expose” broader mismanagement.

Democrats say the shutdown was the responsible choice to stem losses. Gov. Tim Walz endorsed the action, insisting “fraudulent actors will not receive another penny” and pointing to a new statewide Inspector General Coordinating Council to speed suspensions when red flags arise. DHS says the rebuilt program—crafted with federal partners—will feature tougher vetting of providers and clearer documentation requirements.

Built for speed, vulnerable to abuse

How did this happen? The short answer: a design that favored speed over scrutiny. To become a provider, applicants needed to be 18, pass a background check, and watch about five hours of online training videos—no professional licenses required. Billing was light on documentation: just the client’s name, service type, and hours. Those same low barriers that helped the state scale services quickly for people teetering on the edge of homelessness also made the system easy to game.

Thompson, who has warned repeatedly about abuse in pandemic-era and Medicaid-linked programs, says Minnesota’s case fits a larger national story. Watchdogs across the U.S. have flagged tens of billions lost to fraud in programs rolled out quickly and with loose controls—from emergency food aid to unemployment insurance. The Minnesota scandal follows the “Feeding Our Future” case, which exposed more than $250 million in alleged theft of federal pandemic nutrition funds. The policy challenge is familiar: how to deliver urgent help without opening a barn door to grifters.

Community worries, global echoes

Minnesota is home to one of the largest Somali communities in the United States. Several of the defendants are Somali, but prosecutors have made no allegation that fraud was concentrated in any ethnic group. Community advocates have long asked the state to tighten oversight so that legitimate providers are not engulfed in sweeping freezes—and so that people with disabilities and unstable housing don’t lose a lifeline while cases wind through court. That tension—between speed, equity, and integrity—resonates from Minneapolis to London to Nairobi, wherever social safety nets are being stitched and restitched after the pandemic.

What to watch next

The investigation involves the FBI, the Department of Health and Human Services’ Office of Inspector General, and IRS–Criminal Investigation, with assistance from state authorities. Prosecutors emphasized that Thursday’s charges are only a beginning. As more indictments arrive, attention will turn to how quickly DHS can stand up a rebuilt housing support system without leaving vulnerable people stranded—and what kinds of guardrails will prevent the next wave of abuse.

Perhaps the most sobering line of the day came from Thompson: “We cannot prosecute our way out of this problem.” If that’s true, then the fix won’t just be in courtrooms—it will be in the design, in the data, and in the courage to say no when the paperwork looks perfect but something doesn’t add up.

By Ali Musa
Axadle Times international–Monitoring.