Feds charge 8 in 'massive fraud' tied to Minnesota housing stabilization program
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Federal authorities said Thursday they’ve charged eight people for their roles in what prosecutors describe as a “massive fraud” scheme tied to Minnesota’s federally funded housing stabilization program.
The program, which used federal Medicaid money, was intended to help people with disabilities find and maintain housing. Instead, those charged acquired the names of eligible people from facilities like treatment centers and used that information to submit inflated and false reimbursement claims, the Minnesota U.S. Attorney’s Office said.
At a news conference announcing the charges Thursday, Acting U.S. Attorney Joseph H. Thompson said some of the owners of housing stabilization services companies also had other companies billing other Medicaid-related programs.
“The level of fraud in these programs is staggering. Unfortunately, our system of trust-but-verify no longer works. These programs have been abused over and over to the point where the fraud has overtaken the legitimate services,” Thompson said.
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Four of the defendants allegedly operated a fraudulent service provider called Brilliant Minds. Between 2022 and 2025, they allegedly submitted claims totaling $2.3 million for assisting clients with housing. Prosecutors say few of those services were actually offered.
Charges allege each of the four defendants in the Brilliant Minds alleged scheme — Moktar Hassan Aden, 30, Mustafa Dayib Ali, 29, Khalid Ahmed Dayib, 26, and Abdifitah Mohamud Mohamed, 27 — pocketed between about $300,000 and $400,000.
The announcement came two days after the head of the DHS office overseeing the program was terminated. That was a day before a state House committee held a hearing on the alleged fraud at DHS.
DHS is in the process of closing down the housing stabilization services program due to the level of fraud. Department leaders said at Wednesday’s House hearing that they had stopped payments to 115 providers who they believed were submitting fraudulent bills.
DHS Temporary Commissioner Shireen Gandhi said the program was providing important, needed services — part of the reason that the department set low barriers to entry for new providers and beneficiaries. But she said those low barriers left it susceptible to fraud, as Thompson, the U.S. attorney, said in a statement.
Beyond the four people tied to Brilliant Minds, federal prosecutors charged Christopher Adesoji Falade, 62, and his son Emmanuel Oluwademilade Falade, 32, alleging a similar scheme involving their company Faladcare Inc., and fraudulent claims of totaling more than $2.2 million
Separately charged were Asad Ahmed Adow, 26, the owner of Leo Human Services LLC based in Brooklyn Park, and Anwar Ahmed Adow, 25, owner of Liberty Plus LLC of Roseville.
In its statement, the Minnesota U.S. Attorney’s Office alleged Anwar Adow “directed his employees at Liberty Plus to bill as much as they could” while making it clear he would not scrutinize the billable hours they submitted. According to the charges, Liberty Plus received more than $1.2 million in Medicaid funds.
In statements following the charges, Minnesota Attorney General Keith Ellison and the Minnesota Department of Human Services said their investigators worked with federal prosecutors to root out the alleged fraud.
DHS said it stopped payments to Brilliant Minds, Leo Human Services and Liberty Plus in May, and to Faladcare in July.
The eight charges unveiled Thursday arose from an investigation by state and federal officials. Thompson called it a “first round” of charges.
According to the Minnesota U.S. Attorney’s Office, DHS had initially predicted the housing stabilization program would cost about $2.6 million annually but paid out more than $21 million in claims in 2021, $42 million in 2022, $74 million in 2023, $104 million in 2024 and $61 million in the first six months of this year.
Thompson said most of the spending turned out to be fraudulent.
“Despite the hundreds of millions of dollars in payments that have gone out from the state of Minnesota to housing stabilization services companies, many of these, most of these individuals, did not receive the stable housing they so desperately needed,” Thompson said. “The money was just simply stolen.”
Fraud in state-administered programs has been an ongoing issue since the initial Feeding Our Future indictments, which came almost exactly three years ago. Critics of DFL Gov. Tim Walz have ripped his administration for not doing enough to oversee program spending and root out fraud.
Walz released an executive order this week directing state agencies to take more action to prevent fraud, which DHS says will allow it to stop payments more quickly when fraud is suspected. Walz also said he’s forming a statewide council including agency inspectors general and fraud experts at the Minnesota Bureau of Criminal Apprehension.
Noting the recent prosecutions of people tied to the Feeding Our Future nutrition aid scandal in Minnesota that involved more than $250 million in federal aid during COVID-19, Thompson, the federal prosecutor, said Thursday that the state was “drowning in fraud” and that more needed to be done up front to build protections into future programs.
“We cannot prosecute our way out of this problem,” he said.
