Two Pennsylvania men pleaded guilty yesterday to repeatedly traveling from Philadelphia to Minneapolis to defraud Minnesota’s Housing Stabilization Services (HSS) program of approximately $3.5 million and concealing the scheme by using artificial intelligence to create fake records when questioned by insurance companies.
This case is part of a collaboration between the U.S. Attorney’s Office for the District of Minnesota and the Criminal Division’s Fraud Section to combat prolific fraud on government programs in Minnesota. It also represents the first charges involving the use of artificial intelligence to further a fraud scheme targeting health care programs in Minnesota.
“Criminal fraud not only robs taxpayers – it shatters trust in our institutions. Under President Trump’s leadership, yesterday’s convictions are just the beginning,” said Attorney General Pamela Bondi. “Our prosecutors will work tirelessly to unravel criminal fraud schemes and charge their perpetrators in Minnesota and across the country.”
“Minnesota will no longer be a haven for fraud under our watch,” said Deputy Attorney General Todd Blanche. “The Justice Department has been investigating billions in taxpayer fraud across the country and has already successfully convicted 66 individuals and counting in Minnesota. The collaboration between the Criminal Division and the U.S. Attorney’s Office is a prime example of how we restore justice and public trust, while holding criminal fraudsters accountable.”
“Defrauding those who rely on government programs takes away critical resources, and the use of artificial intelligence to carry out these crimes is dangerous and will not be tolerated,” said FBI Director Kash Patel. “Yesterday’s convictions demonstrate the FBI’s dedication to investigating and holding accountable criminals that target and take advantage of vulnerable members of our communities.”
“These defendants had no connection to Minnesota or its communities. They traveled across the country for one purpose: to prey upon and steal millions in taxpayer dollars meant for people struggling with homelessness, addiction and disabilities,” said Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division. “Although programs like HSS are run by the states, they are funded with federal tax dollars. The Criminal Division will not stand by while fraudsters put all Americans’ tax dollars at risk.”
“The defendants brazenly siphoned millions from a program created to provide vulnerable individuals with stable housing – a deliberate betrayal of public trust that will not be tolerated,” said Inspector General T. March Bell of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “This scheme diverted critical resources from those who need them most and eroded confidence in programs intended to support people with disabilities and mental health challenges. HHS-OIG remains steadfast in its commitment to protect taxpayer-funded programs and will continue working with our law enforcement partners to hold perpetrators fully accountable.”
“Anthony Jefferson and Lester Brown tried to hide fraud behind artificial intelligence, but technology doesn’t replace math – or accountability;” said IRS Criminal Investigation Chief Guy Ficco. “Our special agents followed the money, broke down the data, and exposed a scheme that siphoned public assistance dollars from a program meant to support vulnerable Minnesotans. When people steal from safety net programs, they don’t just take money – they weaken public trust. IRS-CI will continue to identify, unravel, and stop fraud, no matter how sophisticated the tools behind it.”
“Criminals who target the most vulnerable members of our communities will become the target of the U.S. Postal Inspection Service,” said Chief Postal Inspector Gary Barksdale of the U.S. Postal Inspection Service. “We pursue them without pause, making sure they are held accountable and feel the full weight of justice. Yesterday’s sentencing emphasizes our unwavering commitment to those we serve and protect.”
According to court documents, Anthony Waddell Jefferson, 37, and Lester Brown, 53, both of Philadelphia, set up businesses in Minneapolis and enrolled as HSS program providers, purportedly to help people with disabilities – including seniors and people with mental illnesses and substance use disorders – find and maintain housing.
Rather than provide those services, Jefferson and Brown – who marketed themselves as “The Housing Guys” – repeatedly traveled from Philadelphia to Minneapolis to recruit Medicaid beneficiaries at homeless shelters and Section 8 housing facilities. The defendants signed those individuals up for HSS and then billed the program for services that were not provided. When asked to provide supporting documentation for their claims, Jefferson and Brown fabricated e-mails discussing their purported “clients” and used ChatGPT to create fake client notes. In total, from February 2022 through June 2025, Jefferson and Brown stole approximately $3.5 million from HSS for services they fraudulently claimed to have provided to approximately 230 Medicaid beneficiaries.
Jefferson and Brown each pleaded guilty to one count of wire fraud, which carries a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI, IRS-CI, HHS-OIG, Immigrations and Customs Enforcement Homeland Security Investigations, and the U.S. Postal Inspection Service are investigating the case.
Assistant Chief Shankar Ramamurthy of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys for the District of Minnesota Rebecca Kline and Matthew Murphy are prosecuting the case.