Federal agents have uncovered a widespread scheme to defraud Minnesota’s Housing Stabilization Services (HSS) program, with search warrants executed across the Twin Cities this week. The Medicaid-funded program, designed to help seniors and people with disabilities find stable housing, has instead become a magnet for fraudulent providers who billed the state for services they never delivered. The fraudsters have allegedly stolen millions of taxpayer dollars in the process.
“Like a broken record, we’ve seen this story over and over in Minnesota during Gov. Tim Walz’s watch,” Sen. Eric Lucero (R. St. Michael), the lead Republican on the Senate Housing Committee, said. “This is just the latest example of a taxpayer-funded program with a massive failure of oversight. Democrats have consistently blocked Republican attempts to include real safeguards in place to protect Minnesota taxpayer dollars. And once again, fraudsters saw the open door and walked right through it. Minnesotans are outraged. While good people who follow the law are struggling to afford housing, scammers are getting rich off bogus claims and fake services. We cannot keep writing blank checks for these programs. We need real accountability and real protections.”
This most recent fraud scheme follows a disturbing pattern in Minnesota, including the $250 million Feeding Our Future scandal that revealed a similar abuse of a well-intended public program.
BACKGROUND INFORMATION
Minnesota launched the Housing Stabilization Services program in 2020 as the first state in the nation to allow Medicaid funding to support housing-related services for people with disabilities, mental illness, or substance use disorders. It was expected to cost about $2.5 million per year. Instead, costs exploded:
- $21 million in 2021
- $42 million in 2022
- $74 million in 2023
- $104 million in 2024
- $61 million in just the first half of 2025
Court documents show dozens of companies rapidly enrolled in the program and billed for housing services that were never provided. Investigators found multiple cases of forged documents, fake service logs, and billing for tens of thousands of dollars per client.
One company, Brilliant Minds Services, claimed over $2 million in reimbursements for 340 clients. Many of those clients later said they never received help of any kind.