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"Massive scheme to defraud" Minnesota's Housing Stabilization Services under investigation, search warrant shows
"Massive scheme to defraud" Minnesota's Housing Stabilization Services under investigation, search warrant shows

CBS News

time4 hours ago

  • CBS News

"Massive scheme to defraud" Minnesota's Housing Stabilization Services under investigation, search warrant shows

Federal agents are investigating a "massive scheme to defraud" Minnesota's Housing Stabilization Service program, according to court documents. A search warrant filed with the U.S. District Court for Minnesota details the fraud investigation concerning the new Minnesota Medical Assistance benefit meant to help find and maintain homes for people with disabilities — including mental illnesses and substance use disorders — as well as the elderly. When the program started in 2020, it was estimated that it would cost taxpayers about $2.5 million a year. But by 2021, it cost $21 million. Last year, it ballooned to $104 million. In the warrant, the FBI says the housing program has "proved to be extremely vulnerable to fraud," and lists eight business locations where the alleged fraud took place. They are located throughout the Twin Cities, including in St. Paul, Roseville, Blaine, Little Canada and Woodbury. "Since Minnesota became the first state to offer Medicaid coverage for Housing Stabilization Services, dozens of new companies have been created and enrolled in the program," the search warrant reads. "These companies, and the individuals that run them have taken advantage of the housing crisis and the drug addiction crisis in Minnesota to prey on individuals who need help getting on their feet as they recover from drug addiction." Federal investigators say the companies and individuals contacted Medicaid-eligible individuals in drug treatment facilities and halfway houses to offer stable housing. After they registered the individuals, these companies would "fraudulently claim" to provide dozens of program hours to the clients when the client in fact received little or no actual services, investigators said. Housing Stabilization Services is run by the state's Department of Human Services. DHS Temporary Commissioner Shireen Gandhi released the following statement on the search warrants, which the commissioner says were executed Wednesday. "The search warrants executed today at several Housing Stabilization Services providers are the result of the critical partnerships between the Minnesota Department of Human Services (DHS), the Minnesota Department of Public Safety Bureau of Criminal Apprehension (BCA), the Office of Attorney General and federal offices and is an important example of our shared commitment to work together to ensure Medicaid program integrity. The DHS Office of Inspector General (OIG) regularly provides investigative data and information about Medicaid provider targets to our law enforcement partners so they can build actionable cases to hold bad actors accountable." Charges have not been announced in connection with the investigation. This is a developing story and will be updated.

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