Two Philadelphia men who branded themselves as housing saviors in Minneapolis have now admitted in federal court that they were really running a multimillion-dollar hustle on Minnesota’s Housing Stabilization Services program.
On Monday in U.S. District Court in Minneapolis, Anthony Waddell Jefferson, 37, and Lester Brown, 53, pleaded guilty to a single count of wire fraud. Prosecutors say the pair siphoned roughly $3.5 million by enrolling about 230 beneficiaries, then submitting inflated claims for services that were not actually provided. Both men entered plea agreements and will be formally sentenced at a later date.
According to FOX 9, Jefferson and Brown marketed themselves as “The Housing Guys,” rented downtown Minneapolis office space for their businesses Chozen Runner LLC and Retsel Real Estate LLC, and recruited clients from shelters and Section 8 housing. Prosecutors say they then used inflated billing practices to collect Medicaid reimbursements. The plea agreements recommend prison ranges of roughly 5 to 6½ years for Jefferson and 3½ to 4½ years for Brown. A judge allowed both men to remain free pending sentencing.
Federal filing lays out scope
Federal court filings and a press release from the U.S. Attorney’s Office outline how Jefferson and Brown allegedly submitted about $3.5 million in Housing Stabilization Services claims for services they said were provided to roughly 230 people. The Justice Department’s release also highlights how fast HSS spending ballooned, from about $27.7 million in Medicaid funding in 2021 to more than $105 million in 2024, a surge prosecutors say created openings for out-of-state operators to cash in, according to the U.S. Attorney’s Office.
How prosecutors say the scheme worked
Prosecutors say the HSS benefit’s loose documentation rules made it an easy mark. Court filings state that “the Program had low barriers to entry and minimal records requirements,” which allegedly let Jefferson and Brown build a paperwork trail that looked legitimate on the surface.
Investigators say Jefferson hired relatives and associates, created phony client notes, and at times even invented staff names to sign off on documents that insurers or payors later requested. Much of the billing, according to the filings, was prepared or authorized from Philadelphia even after clients were enrolled in Minnesota.
AI and the paperwork
During the plea proceedings, Jefferson admitted he used the generative tool ChatGPT to draft fake reports and beneficiary notes when insurance companies demanded documentation. Brown’s defense also acknowledged using the tool to generate paperwork, according to FOX 9.
Prosecutors say those machine-generated records were folded into a broader pattern of fabricated paperwork that supported inflated reimbursement claims. The admissions highlight investigators’ concern that cheap, off-the-shelf AI tools can be abused to mass-produce convincing but bogus records.
Program fallout and next steps
Minnesota officials have already paused the HSS program and scaled back its benefits in response to the widening fraud probe. Federal filings and local reporting have helped spur lawmakers and regulators to expand audits and tighten enrollment rules for providers tapping Medicaid-funded supports.
The wave of cases tied to HSS and related programs has drawn national attention and prompted state and federal officials to promise more aggressive enforcement and recovery efforts. For additional context on the broader investigation, see coverage in the Star Tribune.
What happens next
The plea agreements set out recommended sentencing ranges, but a judge will ultimately decide the punishment for each defendant at separate hearings. Formal sentencing dates have not yet appeared in public court filings reviewed by reporters.
Federal prosecutors say these cases are part of an ongoing, broader crackdown, and investigators have indicated that more indictments and enforcement actions could follow as they continue to sift through provider enrollment and billing data. Victim-impact statements and restitution questions will be addressed at sentencing, according to the filings.
