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12.22.2025






Minnesota Fraud Monitor

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Thank you for taking the time to read the Minnesota Fraud Monitor. This newsletter is designed to provide clear, factual updates on fraud cases, oversight activity, and accountability efforts across Minnesota. Each edition highlights key developments, emerging patterns, and ongoing investigations so Minnesotans can better understand how taxpayer dollars are being protected and where serious concerns remain.

This edition reviews major federal prosecutions, national attention on Minnesota’s oversight systems, court decisions, and committee activity that shaped the fraud landscape throughout the month. Given recent late-breaking developments, readers will also find a brief editor’s note addressing new federal disclosures that occurred after our report was compiled. 

This past month brought an unusual wave of scrutiny to Minnesota’s oversight systems from high-profile federal prosecutions, controversial court decisions, and even pointed “Minnesota nice” online exchanges between the state's chief executive and the president, all culminating in new federal investigations announced just as the month concluded. Against that backdrop, Minnesota’s fraud cases, whistleblower accounts, and agency oversight practices drew sustained national attention.

As defense attorney Ryan Pacyga, who has represented multiple defendants in the Feeding Our Future cases, put it, many convicted fraudsters he represented believed state agencies were “tolerating, if not tacitly allowing, the fraud.” Summing up the environment, he said: “No one was doing anything about the red flags. It was like someone was stealing money from the cookie jar and they kept refilling it.”

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*December 18th Federal Update*

Although this edition of the Minnesota Fraud Monitor focuses on developments from the past month, readers should be aware of a significant federal update that occurred just last week. 

On December 18th, federal prosecutors held a press conference in which First Assistant U.S. Attorney Joe Thompson outlined preliminary findings from ongoing investigations into Minnesota’s state-administered, federally funded Medicaid and human services programs. During that briefing, Thompson stated that federal investigators estimate as much as half of the approximately $18 billion paid out since 2018 across 14 high-risk Medicaid programs may be fraudulent, placing potential losses at more than "$9 billion."

 

"You can see for yourself at the following link:""USAO Press Conference [ [link removed] ] (aprox.35min)"

 

Thompson described the situation as “staggering, industrial-scale fraud,” emphasizing that the scope reflects systemic vulnerabilities rather than isolated misconduct. He also noted that investigations remain active, with additional enforcement actions and recoveries anticipated.

Because these disclosures occurred after the November reporting period, this edition does not attempt a full analysis of the findings. A more detailed breakdown of the press conference, supporting data, and policy implications will be included in the next edition of the Minnesota Fraud Monitor Update.

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*National Spotlight and Federal Engagement*

Minnesota’s fraud landscape moved rapidly this month from a preeminent statewide issue to a national conversation. A surge of federal remarks in early November framed Minnesota’s welfare and benefit programs as evidence of deeper system failures nationwide. Those comments triggered a wave of national attention, including coverage from TIME, Fox News, and the Washington Post, examining how repeated oversight failures allowed large-scale fraud to proliferate for years. This national focus intensified at the end of the month and reached a new threshold shortly thereafter when the U.S. House Committee on Oversight and Accountability launched a formal investigation into “massive fraud in Minnesota’s social services system”. The committee requested documents from state leaders and outlined specific concerns regarding ignored internal warnings, alleged retaliation against agency employees, and longstanding vulnerabilities in program administration. The move placed Minnesota at the center of federal oversight conversations heading into 2026. (1) [ [link removed] ]

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*Major Case Developments and Sentencings*

Federal prosecutions continued steadily. Two additional Feeding Our Future defendants — the 77th and 78th individuals charged — were indicted for fraudulent claims, shell entities, and misuse of federal nutrition reimbursements. (2) [ [link removed] ](3) [ [link removed] ] The month also brought one of the case’s most significant sentences: a 24-year-old defendant received a decade in prison and nearly $50 million in restitution for submitting claims for millions of nonexistent meals. (4) [ [link removed] ]

Other major federal fraud cases underscored the breadth of activity across sectors in Minnesota:


* A Minneapolis business consultant was sentenced to seven years for orchestrating a $6 million COVID-era loan and grant fraud scheme. (5) [ [link removed] ]
* A Clay County man was convicted after falsifying military discharge papers and medals in order to improperly obtain roughly $140,000 in VA benefits. (6) [ [link removed] ]
* In Clear Lake, three former city employees were charged with embezzling about $200,000 from a small-town budget. (7) [ [link removed] ]
* One of the most notable developments occurred when a Hennepin County Judge overturned the guilty verdict against a defendant in November 2025, several months after a jury had convicted him of six counts related to a $7.2 million Medicaid fraud scheme. The Attorney General's office is contesting the judge's ruling, thus keeping the case alive in a higher court. The decision drew immediate pushback from those concerned about judicial consistency in enforcing accountability for high-dollar public-fund fraud. (8) [ [link removed] ]

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*Program Oversight and Agency Patterns*

Beyond individual prosecutions, several stories highlighted patterns within Minnesota’s administrative systems. KARE-11’s continuing coverage of the Housing Stabilization Services (HSS) program revealed multiple guilty pleas connected to a fraud network that exploited billing practices inside the program. Reporting showed the scheme involved close family relationships, fabricated services, and weaknesses in verification; themes of fraud that have become common across numerous DHS-administered programs. (9) [ [link removed] ]

Additionally, statewide debate intensified around provider transparency. Under Minnesota law, DHS has the authority to release the names of Medicaid providers suspected of fraud. Recent reporting showed the agency has declined to do so, citing investigative concerns. That posture has created tension for legislators and counties who rely on timely data to prevent ongoing fraud and protect vulnerable clients. (10) [ [link removed] ]

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*Committee Work and Oversight Activity*

The House Fraud Prevention and State Agency Oversight Committee continued its work. Members and staff met with whistleblowers, and state and county government employees; began drafting legislation to address statute gaps; and held a hearing with DEED in preparation of the January 1st rollout of Paid Family Medical Leave. (11) [ [link removed] ]

Chair Kristin Robbins of Maple Grove emphasized during the November PFML oversight hearing that Minnesota must avoid repeating past fraud failures and that stronger data-sharing, clearer statutory guardrails, and tighter coordination between agencies and the Legislature are essential to preventing fraud before it occurs. 

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*Closing - Stay Informed*

Thank you for taking the time to stay informed on these important issues. Meaningful oversight depends not only on investigations and hearings, but on an engaged public that expects transparency, accountability, and responsible stewardship of taxpayer dollars.

I appreciate your partnership in following these developments and encouraging informed discussion in our communities. As new information continues to emerge, I remain committed to keeping you updated and pressing for reforms that strengthen oversight and protect the resources intended for those who truly need them.

Please continue to reach out with questions or priorities. If you know friends, family, or neighbors who would like to receive future editions of the Minnesota Fraud Monitor, I encourage you to share this update and invite them to sign up using the link below.

Subscribe Here [ [link removed] ]

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*Further Reading*

Minnesota GOP lawmakers request federal fraud investigation. (12) [ [link removed] ] TIME overview of fraud allegations, Minnesota, and national rhetoric. (13) [ [link removed] ] National commentary referencing Minnesota as a prime example of welfare-fraud vulnerability. (14) [ [link removed] ]

*Bibliography*

(1) House Oversight Investigation: [link removed]

(2) DOJ – FOF #77: [link removed]

(3) DOJ – FOF #78: [link removed]

(4) 10-year sentence: [link removed]

(5) COVID-era loan fraud sentence: [link removed]

(6) Stolen-valor conviction: [link removed]

(7) Clear Lake embezzlement: [link removed]

(8) Judge overturns $7.2M verdict: [link removed]

(9) HSS “family affair” guilty plea: [link removed]

(10) Medicaid provider transparency reporting: [link removed] [ [link removed] ]

(11) PFML coverage: [link removed] [ [link removed] ]

(12) Minnesota GOP lawmakers request federal fraud investigation: [link removed] [ [link removed] ]

(13) TIME fraud/TPS explainer: [link removed]

(14) National commentary referencing vulnerability: [link removed]

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Editor's Note Resources: December Coverage

_KARE 11: ‘The fraud is not small’ – U.S. Attorney announces new charges as part of widespread government fraud schemes [ [link removed] ]_

_CBS News: 2 Philly men defrauded Minnesota aid programs after hearing state was “good opportunity,” new charges allege [ [link removed] ]_

_KSTP TV: US Attorney’s Office: ‘Half or more’ of $18B billed through state programs tied to fraud [ [link removed] ]_

_MinnPost: Prosecutor says 14 Minnesota programs are targeted for fraud and the state is swamped with crime [ [link removed] ]_

_Pioneer Press: ‘Industrial-scale’ fraud may have cost MN billions, feds say while announcing new charges [ [link removed] ]_

_Star Tribune: Federal prosecutors charge six more people in ‘staggering’ social services fraud scandal [ [link removed] ]_

_MN Reformer: U.S. Attorney: Fraud likely exceeds $9 billion in Minnesota-run Medicaid services [ [link removed] ]_

 

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Please Contact Me

Please continue to reach out if I can be of any assistance to you. You can reach me by phone at 651-296-5185 or by email at [email protected]. 

Merry Christmas!

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658 Cedar Street
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651.296.5185







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