'Fraud tourists' plead guilty to Minnesota Medicaid scheme
Guilty plea expected in MN fraud tourism scheme
A guilty plea is expected for in the fraud tourism scheme in Minnesota. FOX 9 Investigator Paul Blume has more.
(FOX 9) - Two men from Philadelphia have admitted to their roles in a $3.5 million fraud scheme against Minnesota's Housing Stabilization Program that prosecutors have called a case of "fraud tourism."
MN fraud tourism
What we know:
Anthony Jefferson and Lester Brown, both from Philadelphia, have pleaded guilty to a single count of wire fraud in U.S. District Court, admitting to exploiting the state’s Housing Stability Services (HSS) Program to line their own pockets.
The two men pleaded guilty on Monday as part of a plea deal with federal prosecutors.
The pair admitted to using inflated billing practices to defraud the state of $3.5M.
They told the court they traveled to Minneapolis and rented downtown office space for their companies, Chozen Runner LLC and Retsel Real Estate LLC, while marketing themselves as "The Housing Guys."
They deliberately targeted shelters and Section 8 housing to enroll individuals in the HSS program – a total of 230 beneficiaries.
The backstory:
The HSS program was a taxpayer-funded benefit aimed at helping people including the elderly with disabilities, mental health issues, and substance use disorders find and maintain housing. The program experienced explosive growth in spending over recent years.
According to data provided by the U.S. Attorney’s Office, the program went from $27.7M in Medicaid funding in 2021 to $105.3M in 2024.
Minnesota’s Department of Human Services previously ended the HSS program because of widespread fraud.
At the time they were charged in December, Joe Thompson, then First Assistant U.S. Attorney, stated, "These defendants came here not to enjoy our lakes. Our beautiful summers and warm people. They came here because they knew and understood that Minnesota was a place where taxpayer money could be taken with little risk and few consequences."
Sentences in case
Dig deeper:
Anthony Jefferson is 37 years old.
He told the court he has a master’s degree, and that he registered Chozen Runner LLC in Minnesota in February 2022.
In addition to fraudulent billing, Jefferson admitted he generated fake reports and notes with the assistance of ChatGPT for insurance companies that inquired about the services he was supposed to be providing.
As part of his plea deal to avoid trial, Jefferson agreed to a prison range of between 5 to 6-1/2 years that will ultimately be decided by a judge.
Lester Brown is 53 years old. His defense attorney said he is a Special Education teacher in Philadelphia.
He also said he used ChatGPT to generate fake reports and beneficiary notes for insurance companies as well as inflating his company’s Medicaid billing reimbursement submissions.
His plea deal calls for a prison sentence of between 3.5 to 4.5 years behind bars.
A judge allowed both men to remain free until they are formally sentenced later.
Minnesota DHS reacts
What they're saying:
In a statement to FOX 9, the Minnesota Department of Human Services said:
Today’s guilty pleas are a result of the Minnesota Department of Human Services working with our law enforcement partners to hold criminals accountable for their actions. In summer 2025, the state suspended payments to both providers related to today’s pleas and referred the case to law enforcement. Since then, we have discontinued the Housing Stabilization Services benefit and implemented several new verification checks to prevent fraud in other services.
We remain devoted to strengthening program integrity, improving oversight of services and preventing improper and fraudulent payments before they go out the door. We welcome any tips or information from our partners or the public that helps us take action.