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Two men from Pennsylvania pleaded guilty Monday to “fraud tourism,” i.e., repeatedly traveling to Minneapolis to swindle $3.5 million from the state’s Housing Stabilization Services (HSS) program by using artificial intelligence (AI) to create phony records to hide their scheme.
The U.S. Department of Justice (DOJ) has begun to unravel what it referred to as the “prolific fraud on government programs in Minnesota” through collaboration between the U.S. Attorney’s Office for the District of Minnesota and the DOJ’s Criminal Division’s Fraud Section.
In a press release Tuesday, the DOJ noted the case against Philadelphia-based Anthony Waddell Jefferson, 37, and Lester Brown, 53, “represents the first charges involving the use of artificial intelligence to further a fraud scheme targeting health care programs in Minnesota.”
According to the DOJ, court documents show the two men established businesses in Minneapolis and registered themselves as HSS program providers. The two men claimed to be working to assist people – including seniors and those with mental illness and addictions – to 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 DOJ explained. “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.”
Between February 2022 and 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,” the department asserted.
“Criminal fraud not only robs taxpayers — it shatters trust in our institutions,” said Attorney General Pamela Bondi in a statement. “Our prosecutors will work tirelessly to unravel criminal fraud schemes and charge their perpetrators in Minnesota and across the country.”
The two men each pleaded guilty to one count of wire fraud, which could carry a maximum penalty of 20 years in prison.
According to the Justice Department, 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 against Jefferson and Brown.
FBI Director Kash Patel observed that the crime ended up “[d]efrauding those who rely on government programs” because it took away “critical resources.”
“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,” Patel added.
Deputy Attorney General Todd Blanche also observed that the DOJ “has been investigating billions in taxpayer fraud across the country and has already successfully convicted 66 individuals and counting in Minnesota,” adding that the collaborative effort between the Criminal Division and the U.S. Attorney’s Office serves as a “prime example of how we restore justice and public trust, while holding criminal fraudsters accountable.”
Vice President JD Vance announced in January a new federal task force that would feature an additional DOJ assistant attorney general position to address fraud.
“We have activated a major Interagency task force to make it possible to get to the heart of this fraud,” Vance said, according to Fox News. “We also want to expand this. We know that the fraud isn’t just happening in Minneapolis. It’s also happening in states like Ohio. It’s happening in states like California.”
Weeks later, President Donald Trump nominated Colin McDonald to the new position of Assistant Attorney General (AAG) for National Fraud Enforcement.
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