- Minnesota’s Housing Stabilization Services program ballooned from $2.3 million to over $300 million amid widespread fraud involving fictitious companies and over-billing.
- A parallel $300 million child-nutrition scheme saw perpetrators steal federal funds for personal luxuries, with key figures sentenced for fraud and attempted jury bribery.
- Investigators report that significant remittance flows from Somali communities in the U.S., especially Minnesota, are vulnerable to diversion into Somali hawala networks that ultimately benefit Al-Shabaab.
Loosely regulated social benefits services in Minnesota have resulted in massive fraud, according to the Department of Justice.
By 2024, Minnesota’s Housing Stabilization Services program was spending 3,900% more annually than it was anticipating. In what started out as a $2.3 million initiative to help elderly and disabled people find and maintain housing, the Housing Stabilization Services ended up with a more than $300 million price tag, allegedly because of fraud and abuse.
The DOJ report was published just under two months after the state began to terminate the program to “protect the fiscal integrity of Minnesota’s Medicaid program.”
As of Aug. 1, the Office of Inspector General had suspended payment to 77 housing stabilization providers since January, based on credible allegations of fraud, per a letter sent to the acting director of the state’s Medicaid program.
Joe Thompson, then-U.S. attorney for the District of Minnesota, announced criminal indictments against the following on Sept. 18:
- Moktar Hassan Aden
- Mustafa Dayib Ali
- Khalid Ahmed Dayib
- Abdifitah Mohamud Mohamed
- Christopher Adesoji Falade
- Emmanuel Oluwademilade Falade
- Asad Ahmed Adow
- Anwar Ahmed Adow
Of the eight individuals, six belong to Minnesota’s Somali community. Minnesota is home to the largest Somali population in the U.S., making up just over 1% of the state’s residents.
“Most of these cases, unlike a lot of Medicare fraud and Medicaid fraud cases nationally, aren’t just over-billing,” Thompson said at a press conference announcing the indictments, per City Journal. “These are often just purely fictitious companies solely created to defraud the system, and that’s unique in the extent to which we have that here in Minnesota.”
“What we see are schemes stacked upon schemes, draining resources meant for those in need. It feels never ending,” Thompson said. “I have spent my career as a fraud prosecutor and the depth of the fraud in Minnesota takes my breath away.”
In one instance, 25-year-old Anwar Adow started a company called Liberty Plus LLC, and claimed to serve around 200 beneficiaries and received $1.2 million in Medicaid funds. In federal court, Adow admitted he told his employees to bill as much as they could and “significantly overrepresented” the hours of service provided by his company, per the Minnesota Star Tribune.
He also said he spent Liberty Plus funds on a leased 2023 Mercedes Benz, as well as on his friends and his brother, Asad Adow.
$300M child-nutrition fraud saw funds spent on luxuries and bribery
Minnesota’s HSS program is not the only program mired in fraud allegations. In another $300 million scheme, seven people were engaged in a plan to exploit a federal child nutrition program meant to feed children affected by the COVID-19 pandemic, the DOJ says.
Abdimajid Mohamed Nur, 24, was sentenced to 10 years in prison and ordered to pay nearly $48 million in restitution, by the Department of Justice on Monday.
Feeding Our Future claimed to serve 18 million meals to Minnesota children at more than 30 distribution sites, but investigators found that no meals were served at many of the designated locations, which were “nothing more than parking lots or vacant commercial spaces,” the DOJ wrote.
Instead, Nur received nearly $1 million in fraudulent money and used it to buy jewelry in Dubai, a 2021 Dodge Ram pickup, a 2021 Hyundai Santa Fe and a honeymoon trip to the Maldives.
Nur also used the money to pay for an online college degree at Herzing University and paid $12,000 to a site called PayMeToDoYourHomework.com, per the Minnesota Star Tribune. The DOJ added, “Despite having graduated from Shakopee High School in 2019 with only a 1.75 GPA, Herzing University records show that Nur ‘earned’ his bachelor’s degree in less than three years with a 3.42 GPA.”
In July 2024, Nur pleaded guilty for his role in plotting to bribe a juror with a gift bag stuffed with $120,000 in cash. According to the Department of Justice, Nur gave 31-year-old Ladan Mohamed Ali $200,000 in cash to leave at the juror’s home, but she allegedly only delivered $120,000 and kept $80,000 for herself.
Investigators tracked Somalia-sent money to terror groups
A report by the Rift Valley Institute, an African nonprofit organization, found that around 40% of Somalian households receive remittances from abroad, and in 2023, Somalians living abroad sent $1.7 billion back home, per the Somalian news site Hiiraan. For some context, the Somalian government’s budget in 2023 was around $970 million.
Outside of Africa, the United States is home to the largest number of Somalians, followed by the U.K. and Sweden, per Pew Research Center. Within the U.S., Minnesota has the largest Somalian population of all the states.
A retired Seattle Police Department detective, who spent 14 years on a federal Joint Terrorism Task Force, told City Journal that his team found Somalis running a “sophisticated money network, spanning from Seattle to Minneapolis, and were routing significant amounts of cash on commercial flights from the Seattle airport to the hawala networks in Somalia.” They found that in one year, one network sent $20 million abroad.
Another former official for the Minneapolis JTTF, told City Journal that he believes money sent back to Somalia is benefitting the terrorist organization Al-Shabaab.
“For every dollar that is transferred from the Twin Cities back to Somalia, Al-Shabaab is ... taking a cut of it,” he said.