The Feds are threatening to freeze Medicaid funds amid ongoing fraud investigations

Minnesota is facing threats that the Federal Government may pull its funding from Minnesota’s Medifota program until it cleans up its Actid Supports law for allegedly defrauding many of the State’s resources.

Minnesota is coming under increased scrutiny as President Donald Trump has labeled Minnesota a “Hub of money laundering,” due to several important fraud programs targeting state programs, and other federally funded programs that prey on children. More than 80 people are facing charges in the state in connection with these programs.

Chris Edwards, the Kilts Family Chair in Financial Studies at the Libertarian Calling Calling-Tank The Cato Institute, says that Federal-State funding programs are ripe grounds for fraudulent activity.

“Federal Aid-To-State programs are at high risk for fraud and scams because the Feds underpay them,” Edwards said Tuesday via email to Fox News Digital. “States manage and don’t care about pollution because the Feds pay. States will have more incentive to run the right rates if politicians have to measure performance.”

“In contrast, the federal government is running a huge deficit, so politicians don’t care about the mess,” Edwards said. “There’s a two-fold problem with AID-to-State programs: States don’t care about the waste because it’s federal money, and the Feds don’t care that they’re running huge deficits.”

Minnesota Defraff Scheme gets millions in luxury goods, cars: doj

Included in this series of suspected fraud programs is the start of a new program known as the housing stabilization program, which provides Medicaid integration services for stability, mental illness, and substance abuse problems in housing.

The Justice Department has so far charged less than a dozen people with allegedly defrauding Minnesota’s Medicaid service, but more charges are expected.

In addition, the Trump administration and the judiciary have launched charges of “feeding our future Minnesota” for $250 million in fraud that is responsible for the child food program funded by the Department of Agriculture and that Minnesota is passing through during the 19 pandemic. At least 77 people have been billed for the program, which takes advantage of the US Department of Agriculture’s Department of Agriculture to meet certain requirements of the Incentive Program.

Other fraud cases in Minnesota have not gone down, however, and a state judge in Hennepin overturned a verdict in Abdifatah Yusuf’s Medicaid fraud case in November. Minnesota Attorney General Keith Ellison announced in August that Yusuf had been found guilty of seven counts of defrauding health services, which he found fraudulent based on irreparable documents.

Minnesota depends on the federal government for a portion of its funding. By 2023, federal funding for Minnesota’s Medifota Program will be $11 billion – accounting for nearly 58% of all Minnesota federal funding, according to the Energy and Commerce Committee. Ultimately, the federal government covers about 51% of Medifota’s costs.

For each state, the federal government allocates Medicaid costs using the Federal Medical Cost Force Formula, which is calculated by comparing the state’s revenue to the per capita cost. The percentage determined how much the Federal Government restricts the state, with the federal government covering between 50% of Medicaid costs in states such as California and Colorado, up to about 77% in Mississippi, according to the Conmessional Research Service.

Minnesota taxpayer dollars funneled to Al-Shabaab Terrong Group, reported charges

It’s unclear exactly how many dollars are reaching fraudsters in Minnesota. The US Centers for Medicare & Medicaid told Fox News Digital on Tuesday that the audit will examine how federal funds are spent.

“CMS is using all of our resources to investigate and address this egregious fraud program in Minnesota … as part of a comprehensive audit,” CMS spokeswoman Catherine Howden said on Fox News Digital. “Given the complexity of the situation, and the lack of transparency in Minnesota, this review will be complex and lengthy.”

The Minnesota Department of Health and Human Services did not respond to a request for comment from Fox News Digital by deadline.

Edwards said it’s easier than ever for gangs to prey on these fraudulent spies, because benefits and subsidies are now being paid automatically by computer, rather than paper forms.

“The only solution is to deviate from these federally funded programs in the regions and let them pay the money,” said Edwards. “There is no magic money tree in Washington. Social welfare programs should be funded and controlled at the federal level.”

Tim Walz called out by the Washington Post for refusing to take responsibility for the Sinnesota fraud scandal

In September, the Justice Department announced that it had charged eight defendants in the Defrack wire for their roles in the Medical Services scandal. Acting attorney Joseph Thompson said in a statement that the charges marked the “first wave” expected in relation to the case.

“I want to be clear on the scale of the crisis,” Thompson said in a statement in September. “What we’re seeing are programs tied to programs, tow facilities were made for those in need. I’ve spent with my fraud prosecutor and the depth of the fraud in Minnesota takes my breath away.”

In July 2022, Minnesota launched its housing services program, which offers Medicaid coverage for housing strengthening services. But instead, those charged in September received and “misappropriated millions of dollars in program funds that were intended to be reimbursed for services provided to those individuals,” according to the justice department.

Minnesota’s $70 million fraud reveals how Democrats created a system designed to steal

Tim Walz speaks at the 2025 SXWS Onstage Durn Conving Conference at the Austin Convention Center on March 08, 2025 in Austin, Texas. (Tibrina Hobson/Getty Images)

Although the housing system is robust Expected to cost $2.6 million annually, the program pays $42 million in 2022, $72 million in 2023, and $104 million in 2024.

Finally, the organization’s investigation found that many providers of the program questioned the program by obtaining the names of the beneficiaries of the correction of the programs from the cases of bogus returns – they began to stand up the money paid by the tax fraudulently, through the department of justice.

Among those billed in September for the Housing Stabilization Program was Moktar Hassan Aden, 30; Mustafa Danib Ali, 29; Khalid Ahmed Dayb, 26; And Abdifitah Mohamd Mohamed, 27. Together, they are accused of registering the company Aden Minds Services LLC as a Provider of Service Services Program in April 2022 and then demanded that it provide consulting services returned to the program, said the Department of Justice.

In total, the brains that have agreed to apply for refunds amounting to $2.3 million between September 2022 and April. Each defendant is accused A package between $300,000 and $400,000 between April 2023 and May 2025 for a brilliant mind, according to the justice department.

Treasury secretary launches investigation into Minnesota tax dollars allegedly funding Al-Shabaab terrorists

Centers for Medicare & Medicaid Services Mehmet OZ issued a strong warning to Minnesota Gov. Tim Walz on Friday, and threatened to have Minnesota restore the “integrity” of its program.

Specifically, Oz said more than $1 billion was stolen by the Minnesota-based Somalita fraud scheme, and asserted that some of the money “may have gone to the terrorist group (Al-Shabab).”

“Our staff at CMS told me they’ve never seen anything like this in Medicaid — and everyone from Gov. Tim Walz down should be investigated, because they’re asleep at the wheel,” Oz said.

What did you know about Minnesota ‘feeding’ on our ‘fake’ future at the center of Trump’s latest crackdown

Centers for Medicare & Medicage Services (CMS) Administrator Dr. Mehmet OZ on Friday warned the Minnesota Gov. Tim Walz that the state could lose state funds if it does not “restore the integrity” of its system. (@Drozcms via x)

Walz’s office did not immediately respond to a request for comment from Fox News Digital.

Click here to download the FOX News app

Because of this, Oz said that Walz must send weekly updates on anti-fraud measures to the institutions of Medicare and Medicaid Services including the maximum enrollment of six months, confirm or remove the CMS JOIN THE SECURITY PROGRAM in the future in the next 60 days.

“If we are not satisfied with the programs or cooperation of the state, we will stop paying the share of the state for these programs,” said Oz.

FOX News’ Sophia Compton and Breanne Deppisch contributed to this report.