Fraud Tourists Plead Guilty to Minneapolis Medicaid Fraud

 

Defendants Used AI to Fabricate Records and Marketed Themselves as “The Housing Guys” at Homeless Shelters

Two Pennsylvania men pleaded guilty 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. “These 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. This 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.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of eight strike forces operating in federal districts across the country, has charged more than 6,200 defendants who collectively have billed federal health care programs and private insurers more than $45 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.

DHS Urgently Calls on Gavin Newsom and Sanctuary California to Not Release 33,179 Criminal Illegal Aliens from Jails Back into California Communities

 

These sanctuary politicians not only endanger our communities but also increasingly put our officers' lives at risk as they are forced to arrest criminal illegal aliens at large and face coordinated attacks of violence against them

The U.S. Department of Homeland Security (DHS) once again calls on Governor Newsom to honor U.S. Immigration and Customs Enforcement (ICE) arrest detainers, requests for state and local jurisdictions to turn criminal illegal aliens in their custody over to ICE.

ICE has 33,179 active detainers for criminal illegal aliens in California’s local, state, and federal prisons. Across the state of California, 4,561 criminal illegal aliens have had detainers not honored and been RELEASED from jails into California communities since January 20, 2025. The crimes of these aliens include 31 homicides, 661 assaults, 574 burglaries, 184 robberies, 1,489 dangerous drugs offenses, 379 weapons offenses, and 234 sexual predatory offenses.

When local politicians do not honor detainers, they put the safety of our officers and the public at risk.

For example, on February 2, 2026, ICE law enforcement conducted a targeted enforcement operation at the Ventura County Jail in Ventura, California to arrest a criminal illegal alien arrested by local authorities for possession of a controlled substance, possession of unlawful paraphernalia, possession of burglary tools, and trespassing.

Jorge Lopez Santos

ICE lodged an arrest detainer to safely arrest this criminal illegal alien inside the jail. Unfortunately, Gavin Newsom and his sanctuary politicians REFUSED to honor the ICE detainer forcing our officers to make the arrest in the lobby of the jail following his release.  

As law enforcement tried to transfer the illegal alien from the lobby to their custody, 15 agitators gathered outside the jail, surrounded the officers and attempted to prevent the arrest of this criminal. The agitators refused to follow law enforcement commands. During the confrontation, a female agitator physically assaulted one of our officers—a felony and federal crime. Our officers followed their training and used the minimum amount of force necessary to arrest this criminal and protect themselves.

This was not the first detainer on this criminal illegal alien that California politicians REFUSED to honor. In March 2025, he was arrested by Oxnard Police Department for drug possession charges. They declined the detainer and released him from their jail back into California communities.

“We are calling on Governor Newsom and his administration to commit to honoring the ICE arrest detainers of the more than 33,000 criminal illegal aliens in California's custody. It is common sense and vital for public safety,” said Assistant Secretary Tricia McLaughlin. “Criminal illegal aliens should not be released from jails back onto our streets to terrorize more innocent Americans. If we work together, we can make America safe again. 7 of the 10 safest cities in the U.S. cooperate with ICE law enforcement.”

On November 20, 2021, U.S. Customs and Border Protection Officers admitted Lopez Santos into the United States as a nonimmigrant nonagricultural worker (H2-B) with authorization to remain in the U.S. until August 25, 2022. Lopez Santos failed to depart the country.

DHS Secretary Kristi Noem’s message is clear: you will not stop or slow us down. ICE and our federal law enforcement partners will continue to enforce the law.

The public can report doxing and harassment against ICE officers by calling 866-DHS-2-ICE (866-347-2423) or by completing ICE’s online tip form.

Antonio Delgado ends his campaign for Governor

 

Lt. Gov. Antonio Delgado announced he’s ending his quixotic campaign for governor.

 

“After much consideration, I’ve concluded that there simply is no viable path forward,” he wrote in a statement posted on X on Tuesday. “And though my campaign has come to an end, I fully intend to do all I can in our effort to build a more humane, affordable, and equitable state that serves all New Yorkers.”

 

The decision came a mere week after Delgado announced his running mate, one-time Buffalo mayoral candidate and democratic socialist India Walton. Until just days ago, Delgado had said he intended to petition his way onto the ballot after he did not earn enough support to gain access automatically at the state Democratic nominating convention on Friday.

A small number of progressive organizations and politicians – including New York Communities for Change, Citizen Action of New York, state Sen. Jabari Brisport and Assembly Member Emily Gallagher  – endorsed Delgado’s campaign. Last week, Brisport even suggested to City & State that Mamdani “(got) it wrong” when he decided to back Hochul over Delgado. But then the lieutenant governor did not earn the support of the progressive Working Families Party on Saturday, which may have served as the final nail on Delgado’s coffin. 

Delgado faced a nearly insurmountable polling deficit, with the latest Siena University poll showing Democrats statewide supported Hochul over Delgado by more than 50 points, 64%-11%. 

DEA Issues Immediate Suspension Order to Kentucky Pharmaceutical Distributor Over Controlled Substances Act Violations

 

Earlier today, the U.S. Drug Enforcement Administration issued an Immediate Suspension Order (ISO) to Richie Pharmacal, a pharmaceutical distributor in Glasgow, Kentucky.  An ISO is an emergency administrative action that immediately suspends a DEA registrant's authority to handle controlled substances, due to imminent danger to public health or safety.

The heightened measure comes after DEA diversion investigators exposed several compliance discrepancies and violations of the Controlled Substances Act at the business’ Glasgow distribution facility in recent years.

“Richie Pharmacal’s actions in this case contributed to the diversion of medications often linked with abuse, threatened the safety of our community, and endangered American lives,” said Jim Scott, special agent in charge of DEA’s Louisville Field Division.  “All DEA registrants, especially distributers like Richie Pharmacal, have an obligation to follow all the requirements laid out in the Controlled Substances Act, especially with respect to inventory control, proper record keeping, and suspicious customer orders.”

As a result of today’s action by the DEA, Richie Pharmacal, can no longer handle controlled substances of any kind while the ISO remains in effect.  DEA registrants have 30 days to request a hearing to contest a suspension. However, the suspension will remain in effect until all administrative proceedings are finalized.

COMMISSIONER TISCH ANNOUNCES NEW STRATEGIES TO KEEP NEW YORKERS SAFE, IMPROVE OFFICER TRAINING, AND MODERNIZE POLICING

Divides Bronx into Two Patrol Boroughs to Expand Capacity and Enhance Resources

Launches Most Significant Training Overhaul for Police Officers in Decades

Modernizes 311 Dispatch System to Address New Yorkers’ Quality of Life Concerns and Ensure Accountability

Names the Police Academy and New Co-Chief Chaplains 

Police Commissioner Jessica S. Tisch today delivered her 2026 State of the NYPD address, highlighting the department's new strategies to keep New York City safe, invest in accountability and training, and modernize policing. Today’s announcement comes as the NYPD delivered the safest year ever for gun violence in 2025, with the fewest shooting incidents and shooting victims in recorded history. Last year also saw major crime declines in all five boroughs, as well as the lowest index crime in the subways since 2009, excluding the pandemic years.

“Together, we have cleared away the rubble of crisis, and we say with renewed certainty that the state of the NYPD is strong,” said Commissioner Tisch. “A year ago, I set clear expectations for the NYPD. New Yorkers deserved a police department that was stable in its leadership, disciplined in its operations, serious about its standards, and focused relentlessly on public safety. I made promises to our cops, and to all the people we serve. And 2025 was about keeping those promises — and exceeding those expectations. In 2026, that doesn’t change. Our crime-fighting posture remains the same, the standards we hold ourselves to remain the same, and the commitment to support the noble men and women of the NYPD remains absolute.”

Commissioner Tisch announced the following initiatives in her 2026 State of the NYPD address:

Divides the Bronx into Two Patrol Boroughs

For the first time ever, the Bronx will be divided into two patrol borough commands — Bronx North and Bronx South — starting in the spring. This change will bring nearly 200 additional police officers to the borough, strengthen the NYPD’s ability to respond to the different needs across neighborhoods, and add additional specialized units into the borough, including homicide squad detectives, evidence collection teams, narcotics teams, Neighborhood Safety Teams, and auto crime units.

Currently, the Bronx is organized under a single patrol borough command — one leadership structure overseeing every precinct — while Manhattan, Brooklyn, and Queens have each long since moved to two patrol borough commands to handle the volume of work there. The Bronx has experienced more crime per capita than any other borough while operating under a structure that has not kept pace with the demands placed on it. In 2025, the Bronx accounted for more than one-third of all shooting incidents and shooting victims citywide, roughly three times Queens and Manhattan. The borough recorded more major crimes than Manhattan and Queens, and nearly the same as Brooklyn. Bronx residents also generated nearly 1 million calls for service last year — more than Queens and nearly equal to Manhattan.

Overhaul of In-Service Training

To better prepare police officers for situations they might encounter and continue to be responsive to community needs, the NYPD is launching the most significant overhaul of in-service training in decades. Officers will participate in a recurring, focused, weeklong in-service training program that will continue throughout their careers. The training will cover a wide range of topics, including tactics, de-escalation, constitutional policing, legal standards, and situational awareness.

Modernizing the NYPD’s 311 System

The NYPD is rolling out a new digital dispatch system for 311 jobs assigned to the NYPD’s Q-Teams to ensure responses are handled with the same level of structure and accountability as 911 jobs. Officers will be able to better track, respond to, and close out 311 jobs, protecting quality of life for all New Yorkers.

Digitizing NYPD Precinct Command Logs

Since the department’s founding in 1845, precinct operations have been recorded by hand, in a paper logbook, including staffing, roll call, inspections, equipment, overtime, property, and compliance checks. The department will transition to digital precinct command logs, providing leadership a clear, real-time picture of what is happening across their precinct.

Introducing DAS 2.0 for Real-Time Policing

The Domain Awareness System (DAS) is a platform that was created in 2014 to give officers real-time information to support patrol responses and investigations in one central location. DAS 2.0 brings real-time awareness directly into the field. An officer driving on the FDR can be alerted that a stolen car just passed a license plate reader up ahead. A supervisor at a scene can see live drone video and know exactly where that drone is in relation to the incident.

Preparing for Drone Mitigation Authority

The NYPD has the capability to detect drones but lacks the authority to take them down. The department expects to receive authority from the White House this year and continues to prepare by investing millions of dollars in mitigation equipment and completing all necessary training. The preparation ensures that the NYPD will be positioned to commence drone mitigation operations as soon as legally allowed, which is essential as we look ahead to events that will soon take place in New York City, such as the World Cup, the 250th birthday of the United State of America, and the 25th anniversary of 9/11.

Appointing Cardinal Timothy Dolan and Reverend A.R. Bernard as NYPD Co-Chief Chaplains

Cardinal Timothy Dolan and Reverend A.R. Bernard will serve as the two co-chief chaplains of the NYPD, overseeing the Chaplains Unit and their work providing spiritual assistance and moral guidance to all members of the department and their families. Cardinal Dolan led the Archdiocese of New York for almost two decades, guiding one of the largest faith communities in the country and serving as a steady civic and moral leader for New Yorkers across all five boroughs. Rev. A.R. Bernard founded the Christian Cultural Center, one of the largest and most well-known congregations in New York City. He has spent decades serving families across the five boroughs, building a ministry known for outreach, counseling, and deep engagement with the community. Cardinal Dolan and Rev. Bernard will be installed at a ceremony on Feb. 24, 2026.

Naming the Police Academy in Honor of Detective Steven D. McDonald

Detective Steven D. McDonald was shot and paralyzed in the line of duty on July 12, 1986. Despite his life changing in unimaginable ways, Detective McDonald became a role model for all officers, living a life of courage and defined by dignity and forgiveness. Detective McDonald tragically passed away on Jan. 10, 2017. In honor of his memory and in recognition of his profound impact on the department, the Police Academy will be named after Detective Steven McDonald, ensuring every officer who walks through the academy doors is able to look towards him as a role model. There will be an official naming ceremony on July 16, 2026 — 42 years to the day Detective McDonald entered the Police Academy.

Speaker Julie Menin, LGBTQIA+ Caucus Co-Chairs Condemn Removal of Pride Flag from the Stonewall National Monument

 

In a letter to National Parks Service, Council leaders urge Trump Administration to immediately return Pride flag where it belongs 

Today, New York City Council Speaker Julie Menin, along with the Co-Chairs of the Council’s LGBTQIA+ Caucus, Council Members Chi Ossé and Justin Sanchez, denounced the removal of the Pride flag at the Stonewall National Monument in New York City. In a letter to the Trump Administration, Council leaders urged the National Parks Service to immediately return the Pride flag to the monument and requested a prompt response outlining the rationale behind this decision, along with steps the federal agency will take to ensure that the Stonewall National Monument continues to reflect the truth of its history and the community it represents.

This event follows an alarming trend of the erasure of LGBTQIA+ history, including the decision to rename the USNS Harvey Milk and the removal of key facts from the Stonewall National Monument website. 

The full letter can be found here. 

An excerpt from the letter states: 

“Stonewall is a sacred ground in the history of civil rights in our country. The events that took place there catalyzed a global movement for dignity, equality, and freedom — guiding principles upon which our nation was founded. The Pride flag has long flown as a symbol of that struggle and of the resilience of a community that continues to fight for its basic rights. 

“In the year of the United States of America’s 250th anniversary, American monuments like Stonewall matter more than ever. This is a moment to honor, celebrate, and uplift American culture and history. This decision sends a deeply troubling message, one that shows the world that we are willing to sanitize and erase our history and the very values that make America great.” 

Attorney General James Recovers Over $4.7 Million From NYC Truck Rental Companies and Their Accountant for Massive Tax Evasion Scheme

 

New York Attorney General Letitia James today recovered more than $4.7 million from the owners of two New York City truck rental companies, Able Rentals, Inc. (Able) and Abarn Equipment Corp. (Abarn), and their accountant, Howard Zapken, for their roles in a decade-long sales tax evasion scheme. An investigation by the Office of the Attorney General (OAG) found that the owners of the truck rental businesses, Myron and Martin Schulman, pocketed sales taxes that they collected from customers on more than $15 million in revenue from 2014 through 2024 by vastly underreporting their taxable sales to the state. Zapken, as founder of the accounting firm Zapken & Loeb (Z&L), helped the two businesses and their owners operate the scheme, which allowed them to avoid paying over $1.3 million in sales tax. As a result of OAG’s investigation, the Schulmans will pay more than $3.9 million and Zapken has paid more than $825,000.

“Businesses that cheat on their taxes are depriving our state of the funding that provides health care, education, and other critical services to New Yorkers,” said Attorney General James. “Abarn and Able violated both the law and the trust of their customers who expected the taxes they paid to benefit the public. This case sends a clear message to businesses and their accountants: my office will not tolerate tax evasion schemes, and we will hold you fully accountable.”

The investigation revealed that the Schulmans massively understated the amount of taxable sales they reported for years, allowing them to avoid paying most of the sales taxes they owed. They did not use the actual sales records of their companies to calculate taxable sales. Instead, they instructed Z&L to use only cash deposits made to certain bank accounts to calculate sales tax due. These deposits represented a fraction of actual sales because they excluded all credit card transactions, which made up the vast majority of the businesses’ New York transactions.

These sales tax calculation methods allowed Able and Abarn to pocket most of the taxes they owed to the state. For example, in 2018, Able and Abarn reported taxable receipts of $250,099, while their point-of-sale system recorded that total payments received that year were actually $1,888,388. Myron Schulman then instructed Zapken to lower taxable receipts even further by disregarding portions of the cash deposits as supposed estimates of nontaxable transactions. When the resulting calculation of sales tax due was still too high, Myron Schulman told Z&L to lower the taxable amounts further. Zapken knew this conduct was fraudulent and warned his clients that the amounts used to calculate sales taxes were too low. Yet he participated anyway, filing false and fraudulent sales tax returns for the companies for years.

As a result of their scheme, Able and Abarn failed to report taxable sales of $15,008,715.98 over a ten-year period. Under the settlements with OAG, the Schulmans will pay back $3,972,419. The whistleblower who brought this conduct to OAG’s attention will receive $794,483.80 of the settlement funds. In addition, a licensed accountant approved by OAG must certify that Able and Abarn’s sales tax returns reflect the actual transactions recorded by the businesses for the next five years. Under Zapken’s settlement with OAG, he has repaid $826,660.61 and agreed not to sign, prepare, or file New York state tax returns for anyone other than his immediate family for the next five years.

BRONX MAN SENTENCED TO 9 YEARS IN PRISON FOR SHOOTING IN AFTERHOURS CLUB

 

Defendant Wounded Two Men After Dispute

Bronx District Attorney Darcel D. Clark today announced that a man has been sentenced to nine years in prison for assault and weapon charges for firing a shot in a crowded afterhours club that wounded two men. 

District Attorney Clark said, “After a dispute, the defendant fired a semi-automatic pistol inside an afterhours club full of people. Two men were wounded. The defendant has been held accountable for his intentional and reckless actions.” 

District Attorney Clark said the defendant, Manuel Nunez, 31, of the Bronx was sentenced on February 9, 2026, by Bronx Supreme Court Justice Timothy Lewis to nine years in prison and five years post release supervision. He was found guilty by a jury of Attempted Assault in the First Degree, third-degree Assault and second-degree Criminal Possession of a Weapon on December 12, 2025.

According to the facts at trial, on August 20, 2023, at approximately 6:48 a.m., inside of 80 West 169 St., the defendant engaged in a dispute with a man, then shot him at close range while his back was turned. The bullet entered the victim’s rear end and exited his right thigh and then grazed the left knee of a security guard working inside the illicit establishment.

District Attorney Clark thanked NYPD Detectives Edgar Pino and Corey Simpson of the 44 Detective Squad for their work on the investigation.