Severe thunderstorm and tornado warnings issued for Twin Cities metro area

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support

FBI agents on Wednesday raided five Twin Cities businesses and two homes as part of an investigation into Medicaid housing assistance fraud. 

In 2020, Minnesota became the first state to use Medicaid dollars to help people with disabilities find and keep housing. Legislators initially expected the Housing Stabilization Services program to cost the Medical Assistance program, Minnesota’s version of Medicaid, $2.6 million annually. But investigators note that in its first year, it paid out $21 million, and by 2024, that figure reached $104 million.

In a newly unsealed search warrant, FBI Special Agent Kurt Beulke writes that there's been an "explosion in fly-by-night providers" that have exploited the program amid a housing and addiction crisis while providing no services. Details of the investigation are outlined in the warrant; federal prosecutors have not filed criminal charges in the case. 

Twenty-two purported providers have business addresses at the Griggs-Midway Building on University Ave. in St. Paul. They collectively billed taxpayers $8 million over 17 months and used fake documentation to back their claims, the FBI alleges. 

One of the other businesses, Brooklyn Park-based Leo Human Services, allegedly collected $32,000 on behalf of a man named in the search warrant as Derric F.

While Derric F. is a real person, Special Agent Beulke says the documentation that Leo Human Services used to back claims for him is fictional. Leo allegedly claimed to have provided 47 hours of housing search services for Derric plus another 45 hours of “indirect” services.

But in an interview with investigators, Derric said that Leo only reached out to him occasionally. Some of the housing options that it offered had monthly rent of more than $1,200, which was far more than he could afford. 

“As of June 2025, Derric F. remained homeless,” Beulke writes. 

The agent outlines a similar pattern of alleged fraud in which Leo purloined the biographies of several other people living on society’s margins and used their information to defraud taxpayers. 

Leo Human Services allegedly received $12,000 for a woman named Rachel L., who was referred to the company by a social worker after a 30-day drug treatment program. 

“Rachel L. told agents that she could not recall ever meeting with anyone from Leo Human Services, and she did not receive any services from the company,” Beulke writes.

The agent adds that a second company, Brilliant Minds, also exploited Rachel L.’s personal information for Medicaid housing services that it never provided to her. 

MPR News attempted to call Brilliant Minds, but the business’ telephone number appears to have been disconnected. Messages were also left with Leo Human Services as well as the other companies named in the warrant: Roseville-based Liberty Plus, Pristine Health, which is based in St. Paul, and Faladcare, Inc., which has offices in Little Canada and Woodbury. 

FBI agents on Wednesday also executed search warrants at the homes of the owners of Leo Human Services, Liberty Plus, and Pristine Health. MPR News is not naming them because they have not been criminally charged. One of the homes raided is shared by two brothers, one of whom owns Leo and the other Liberty. 

In a statement, the Minnesota Department of Human Services says that prior to the raids, it had stopped payments to three of the providers, and the agency briefed law enforcement "when credible signs of fraud were seen."

The agency adds that it has open investigations into all five of the providers, and “uses all of the tools at its disposal to detect and prevent Medicaid fraud.”

“Minnesota has a fraud problem—and not a small one,” Acting U.S. Attorney Joe Thompson said in a statement. “For too long, organized fraud schemes like this have flourished in plain sight, draining public resources dry. Today’s warrants are another step in a much bigger reckoning. This state needs to confront the scale of its fraud problem—because ignoring it is no longer an option.”

Correction (July 17, 2025): A previous version of this article incorrectly identified which business owners’ homes were part of the FBI search. The story has been updated.

Crime, Law and Justice

Shows

All Things Considered

NewsPartners

Homepage

Matt Sepic

Author

FBI agents raided five Twin Cities businesses and two homes Wednesday as part of an investigation into Medicaid housing assistance fraud. Twenty-two purported providers collectively billed taxpayers $8 million over 17 months and used fake documentation to back their claims, the FBI alleges.

FBI raids 5 Twin Cities businesses in Medicaid fraud probe

Go Deeper.

Like this?