Two Philly men accused of ‘fraud tourism’ in a Minnesota scandal that has drawn criticism from President Donald Trump

Two Philadelphia men are facing federal charges in Minnesota after authorities said the men had learned of the state’s lax controls around a government-funded housing program, then traveled there to learn how to exploit it — the latest development in a long-running fraud scandal that has enveloped Minnesota and drawn the ire of President Donald Trump.

Anthony Waddell Jefferson, 37, and Lester Brown, 53, were accused of fraudulently obtaining more than $3.5 million in government proceeds — funds that should have gone to Minnesota’s Housing Stabilization Services Program, prosecutors said, but were instead diverted to two companies the men oversaw in Philadelphia.

Jefferson and Brown “came [to Minnesota] not to enjoy our lakes, our beautiful summers, or our warm people,” Joseph H. Thompson, Minnesota’s first assistant U.S. attorney, said Thursday. “They came here because they knew and understood that Minnesota was a place where taxpayer money could be taken with little risk and few consequences.”

Jefferson and Brown each face one count of wire fraud and were charged by information, prosecutors said, which typically means a defendant intends to plead guilty.

Court records for their cases were not immediately available, and it was not clear if either man had retained an attorney.

Thompson cast their case as a novel twist in a scandal that he said was “swamping Minnesota” and had likely bilked taxpayers out of hundreds of millions of dollars intended for daycares, hunger programs, autism support, and other endeavors.

The state had become such a magnet for fraudsters, Thompson said, that Jefferson and Brown had effectively performed “fraud tourism,” visiting the state purely to learn how to take advantage of its reputation for having programs that were ripe for abuse.

The broader issues over the state’s lax disbursements have burst into national view in recent months as Trump and other Republicans have taken interest in the situation. Trump on social media called Minnesota a “hub of fraudulent money laundering activity” and, because many of those charged have ties to Minneapolis’ Somali community, said “Somali gangs are terrorizing the people of that great state.”

Republicans have also blamed Minnesota Gov. Tim Walz — the 2024 Democratic vice presidential nominee — for allowing the situation to unfold on his watch. And right-wing groups have questioned whether some funds were being disbursed to terrorist groups in Somalia or elsewhere in Africa.

Thompson said Thursday that he did not believe that was being done at a large scale, but that the exploitation of the programs was troubling and a phenomenon that had become uniquely common in Minnesota.

Fraud scandals targeting government programs date back at least a decade in that state. But they received renewed attention in 2022, when the FBI raided the offices of Feeding Our Future, a food relief nonprofit that had rapidly expanded through pandemic relief efforts.

Investigators later pointed to about $250 million in federal funding the group had received as part of the Department of Human Services’ Child Nutrition Program, some of which had allegedly been funneled into fraudulent claims for the Medicaid-backed meals program.

Prosecutors did not have evidence to show exactly how much they said had been misspent, but said last month 78 people had been charged in connection with the scheme, which they called one of the largest pandemic-related frauds in the country.

The Feeding Our Future investigation is just one of several schemes that have been fueling discourse over Minnesota’s government disbursements. The discussion has taken a dark turn in recent weeks, as Trump used the situation to insult Walz with a slur for people with intellectual disabilities, and to lash out at Somali immigrants, saying, “I don’t want them in our country.” During a speech in Pennsylvania this month, he called Somalia “about the worst country in the world.”

As for the Philadelphia defendants, prosecutors said the men created two companies — Chozen Runner LLC and Retsel Real Estate LLC — in order to submit “fake and inflated bills” for housing services that were never provided. The program they ripped off was intended to create housing for people with disabilities or substance abuse issues, prosecutors said.

Jefferson and Brown “repeatedly flew together from Philadelphia to Minneapolis,” purportedly to recruit beneficiaries for their LLCs from Section 8 housing or shelters, prosecutors said. But Jefferson and his employees created fake paperwork, sometimes listing bogus employees, to dupe insurance companies into reimbursing them.

In all, prosecutors said, they submitted $3.5 million worth of claims for services they said they provided to 230 people.

Thompson said the men and their companies had virtually no connections to Minnesota other than viewing the state housing funds as “easy money.”

Jefferson, a Brewerytown resident according to voter registration data, describes himself in social media profiles and an online biography as a serial entrepreneur — selling a line of perfumes, working as a gospel musician, while also serving as the CEO of “The Housing Guys,” a group that says it provides housing stabilization services. In a photo posted to social media last summer, Jefferson was pictured being presented with an honorary citation from City Council President Kenyatta Johnson.

Contacted Thursday by an Inquirer reporter, Jefferson hung up.

He was pursued earlier this year in Philadelphia courts over a $103,000 federal tax lien.

Brown formed Retsel — “Lester” spelled backward — in 2021, according to Pennsylvania corporate documents, using a mailing address in the West Oak Lane neighborhood.

Attempts to reach Brown for comment Thursday were unsuccessful.