Two men from Philadelphia, Anthony Waddell Jefferson, 37, and Lester Brown, 53, have pleaded guilty to defrauding Minnesota’s Housing Stabilization Services (HSS) program. HSS is a Medicaid-funded initiative designed to help vulnerable people find and maintain stable housing.
The program supports individuals facing homelessness, disabilities, mental illness, substance use disorders, and other serious challenges. These services are intended to help people live safely and independently during difficult periods of their lives.
Although HSS is operated by the state, it is funded by federal tax dollars. Any misuse of the program directly affects taxpayers and reduces available support for those who rely on housing assistance.
HSS Recruited at Shelters and Billed for Services Not Provided
According to court documents, Jefferson and Brown had no meaningful connection to Minnesota. Between February 2022 and June 2025, they repeatedly traveled from Pennsylvania to Minneapolis for the purpose of exploiting the HSS program.
The defendants set up businesses in Minneapolis and enrolled them as approved HSS service providers. On paper, these businesses claimed to offer housing-related support services. In practice, investigators found that these services were not provided.
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Jefferson and Brown marketed themselves as “The Housing Guys” and recruited Medicaid beneficiaries at homeless shelters and Section 8 housing facilities. Individuals were signed up for HSS under the belief that they would receive legitimate assistance.
After enrollment, the defendants submitted claims to Medicaid for services that never occurred. Approximately 230 Medicaid beneficiaries were falsely listed as receiving support. Over more than three years, the fraudulent billing totaled about $3.5 million. The funds were intended to help people struggling with housing instability but were instead taken through false claims.
Artificial Intelligence Used to Fabricate Records
When insurance companies questioned the billing and requested proof, Jefferson and Brown attempted to hide the fraud. Rather than providing legitimate documentation, they created false records.
Court filings show the defendants fabricated emails that appeared to document discussions about client care. They also used artificial intelligence tools, including ChatGPT, to generate fake client notes and service documentation. These AI-generated records were submitted to insurers as supporting evidence.
Authorities stated that this case represents the first criminal charges in Minnesota involving the use of artificial intelligence to commit health care fraud. The documents appeared detailed and professional, which initially made detection more difficult.
Despite these efforts, investigators identified inconsistencies in billing data and financial records. Officials noted that while artificial intelligence can create false paperwork, it cannot hide missing services or incorrect numbers.
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The defendants’ repeated travel from Philadelphia to Minneapolis also raised red flags. Their limited presence in Minnesota made it impossible for them to provide the volume of services they claimed, leading authorities to describe them as fraud tourists.
Federal Investigation and Guilty Pleas
The investigation involved multiple federal agencies, including the Federal Bureau of Investigation, IRS Criminal Investigation, Health and Human Services Office of Inspector General, Immigration and Customs Enforcement Homeland Security Investigations, and the U.S. Postal Inspection Service.
Federal officials emphasized that fraud against Medicaid programs harms public trust and diverts resources from people who depend on government assistance. Attorney General Pamela Bondi stated that such crimes will be aggressively prosecuted. Deputy Attorney General Todd Blanche said Minnesota will not be a safe place for large-scale fraud schemes.
FBI Director Kash Patel warned that the use of artificial intelligence to commit fraud is dangerous and will not be tolerated. Officials from the Justice Department, HHS, IRS, and Postal Inspection Service echoed this message.
Jefferson and Brown each pleaded guilty to one count of wire fraud, which carries a maximum penalty of 20 years in prison. A federal judge will determine sentencing after reviewing federal guidelines and statutory factors.
The case is being prosecuted by Assistant Chief Shankar Ramamurthy of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Rebecca Kline and Matthew Murphy for the District of Minnesota.