Minnesota lawmakers and prosecutors are issuing stark new warnings that the state is now facing an unprecedented wave of fraud across its social service programs, with losses that could reach or even exceed $2 billion.
Republican state Sen. Michael Kreun said Minnesota has known about massive fraud vulnerabilities for years but failed to act decisively.
“Minnesota has an epidemic of fraud, as the rest of the nation is learning,” Kreun said.
“We’ve known here in Minnesota for quite some time that we’ve had a massive fraud problem.
“And it’s turning out that probably Minnesota is the epicenter of fraud in the United States right now.”
The growing alarm follows the federal Feeding Our Future case, one of the largest pandemic-era fraud prosecutions in U.S. history.
It also comes amid fresh scrutiny over ballooning losses in the state’s Housing Stabilization Services (HSS) program.
A Program Expected to Cost $2.6 Million Surged to $120 Million and Collapsed Under Fraud
Kreun called the HSS program a prime example of how fraud spiraled out of control.
Originally forecast to cost just $2.6 million annually, the program exploded to more than $100 million last year and was on track to exceed $120 million this year before being abruptly shut down.
“We’re learning [it is] probably at least $300 million in fraud right now,” Kreun said.
“And the fraud was so pervasive that they basically had to shut that program down.”
An investigation found that many addresses listed on HSS and Feeding Our Future forms were fictitious, leading reporters to vacant lots, nonexistent offices, and legitimate businesses with zero connection to the organizations claiming services.
Prosecutors Warn: Autism Program Likely Hit by Fraud of Similar Scale
Kreun warned that the state’s autism services program may also be engulfed in widespread abuse.
“The autism services program, for example, probably has that level of fraud, maybe even more,” he said.
Federal investigators discovered that one alleged fraudster, Asha Farhan Hassan, siphoned roughly $14 million from the autism-treatment program.
Prosecutors say she billed Medicaid for fake therapy, used unqualified staff, and even paid parents $300 to $1,500 a month to keep their children enrolled.
Hassan allegedly sent hundreds of thousands overseas, including toward real estate purchases in Kenya.
The scope of the fraud reflects the program’s explosive budget growth, from $3 million in 2018 to nearly $400 million in 2023, according to Dr. Mehmet Oz, administrator of the federal Centers for Medicare and Medicaid Services.
Federal authorities say at least 85 entities are currently under investigation.
Prosecutor: “I could do that in five minutes on a computer”
Former federal prosecutor Joe Teirab, who briefly worked on the Feeding Our Future case, said the fraud was shockingly easy to perpetrate.
“Honestly, how easy this fraud was to do,” Teirab said.
“These fraudsters were just saying that they were spending all this money on feeding kids… and they were just making up these PDFs, putting false names into Excel sheets.”
“I could do that in five minutes on a computer if I had absolutely no conscience,” he added.
Teirab said oversight failures inside the Minnesota Department of Education and other state agencies compounded the problem, and that political sensitivities surrounding Minnesota’s Somali community contributed to officials looking the other way.
“There were huge incentives to just turn the other way,” Teirab said.
“There’s a sense of, ‘If we say something, are they going to call us racist?’
“And that’s exactly what happened.”
Whistleblowers Say Staff Were Ignored, Reassigned, Silenced
A widely shared DHS whistleblower account claimed that employees who raised red flags were sidelined, reassigned, or ignored, mirroring what federal investigators now say.
Townhall columnist Dustin Grage cited political pressure after the Department of Education briefly halted payments to Feeding Our Future.
“Omar Fateh… as well as Jamal Osman, a city councilman in Minneapolis, they actually ended up lobbying to the governor and saying, ‘Hey, this is racist if you are to do this,’” Grage said.
After a lawsuit was filed (and later dismissed), the state resumed payments, and fraud controls weakened further.
Grage also said Minnesota’s Democrat Governor Tim Walz had the authority to subpoena bank records tied to Feeding Our Future, but never used it.
“They have that tool at their disposal, and they refuse to use it for whatever reason,” Grage said.
“Maybe they knew about it.
“Maybe it’s just complete incompetence.”
Feeding Our Future and Beyond: Total Losses Could Surpass $2 Billion
Aimee Bock, founder of Feeding Our Future, and restaurant owner Salim Said were found guilty for their roles in the fraud scheme, which prosecutors say funded luxury homes, cars, and extravagant lifestyles.
Prosecutors said the pair claimed to have served 91 million meals, fraudulently collecting nearly $250 million in federal taxpayer funds that were meant to feed children.
Teirab said Feeding Our Future was only part of the picture.
Another nonprofit, Partners in Nutrition (also known as Partners in Quality Care), has also been identified in the scandal.
When adding alleged fraud from Feeding Our Future, Partners in Quality Care, HSS, and other programs, losses exceed $1 billion, and the total could surpass $2 billion, according to Teirab and former acting U.S. Attorney Joe Thompson.
“So that is what we’re dealing with,” Teirab said.
“It’s a travesty that our hard-earned taxpayer dollars are being wasted away.”
Growing Demands for Accountability
With multiple investigations underway and public frustration rising, Minnesota lawmakers face mounting pressure to explain how such vast fraud went undetected and how they intend to prevent the same failures from happening again.
Reform proposals, audits, and new oversight measures are expected in the coming legislative session, but critics warn that unless systemic issues are addressed, Minnesota could remain, in Kreun’s words, “the epicenter of fraud in the United States.”
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