Federal Indicts Two Philadelphia Men in Minnesota “Fraud Tourism” scheme Exploiting Medicaid,Housing and Autism Programs

Overview of the Indictment

• Defendants:

1. John D. Reynolds, 38, Philadelphia, PA
2. Mark T. Glover, 42, Philadelphia, PA

• Charges:
• One count of conspiracy to commit health care fraud (18 U.S.C. § 1349)
• Five counts of false statements to the Department of Health and Human Services (18 U.S.C. § 1001)
• Two counts of fraudulent claims against the U.S. Treasury (31 U.S.C. § 3729)

• Jurisdiction: United States District Court for the District of Minnesota

• Arrest Date: 2025‑11‑12 (simultaneous federal operation in Minneapolis‑St. Paul metro area)

• Alleged Losses: $12.8 million in combined Medicaid, housing assistance, and autism services funds

What Is “Fraud Tourism”?

Fraud tourism describes the practice of traveling across state lines to exploit weaker oversight, higher reimbursement rates, or programme loopholes in another jurisdiction. In this case, the defendants:

1. Established shell service entities in Minnesota while residing in Philadelphia.
2. Submitted fraudulent Medicaid claims for nonexistent or over‑billed services.
3. Leveraged Minnesota’s housing Choice Voucher (Section 8) program to obtain rental subsidies for fictitious tenants.
4. Manipulated Autism Spectrum Disorder (ASD) therapy grants by falsifying treatment plans and provider credentials.

How Medicaid Was Exploited

Housing Assistance Abuse

• Section 8 Voucher Fraud: The men applied for and received $4.3 million in rental assistance for 87 “eligible households.”
• Tactics Used:
1. Fake lease agreements with nonexistent landlords.
2. duplicate voucher submissions after moving families to “new” rental units that never existed.
3. Over‑statement of rent amounts to inflate subsidy payouts.

• Impact: over 20 families were listed as beneficiaries, but none actually occupied the rented properties.

Autism Services Fraud

• Targeted Programs: Minnesota’s Autism Services Grant and the Early Intervention Program.
• Key Fraud Elements:
1. Fabricated provider credentials (e.g., “licensed speech‑language pathologist”) to qualify for higher reimbursement tiers.
2. Submitted bogus progress notes showing therapy sessions that never occurred.
3. Misrepresented child eligibility by altering diagnostic codes from mild to severe autism, unlocking higher per‑hour rates.

• Resulting Losses: Approximately $3.5 million in grant disbursements.

Federal Investigation Timeline

1. June 2025 – Initial Tip: A whistleblower from a Minnesota Medicaid provider flagged irregular claim patterns.
2. July‑August 2025 – Joint Task Force Formation: U.S. Attorney’s Office (Minnesota), FBI, HHS Office of Inspector General (OIG), and the Minnesota Attorney General’s Office launched a coordinated investigation.
3. september 2025 – Subpoenas Issued: Financial records, electronic claim logs, and housing voucher files subpoenaed from the defendants’ Philadelphia bank accounts and Minnesota service entities.
4. October 2025 – Search Warrants Executed: Dual raids in Philadelphia (home and office) and Minneapolis (registered corporate address).
5. November 2025 – Arrests & Indictment: Defendants taken into federal custody; the indictment unsealed publicly on 2025‑11‑12.

Potential Penalties

• Maximum Sentences: Up to 20 years imprisonment per count, plus up to $1 million fine per count.
• Mandatory Restitution: Defendants ordered to repay $12.8 million (subject to asset recovery).
• Asset Forfeiture: All property, bank accounts, and vehicles traced to the fraudulent scheme may be seized.

Implications for Service Providers

• Compliance Audits: Organizations must conduct annual internal audits of Medicaid and housing assistance billing practices.
• Vendor Vetting: Verify provider licenses, NPI numbers, and physical addresses before contracting.
• Data Analytics: Deploy real‑time claim monitoring tools to detect anomalies such as:
• Unusual claim frequency from a single provider.
• Discrepancies between patient demographics and service locations.

Practical Tips to Prevent Similar Fraud

1. Implement Dual‑Verification for New vendors
• Cross‑check provider credentials with state licensing boards.
• Confirm physical office via site visits or satellite imagery.

2. Use Predictive Analytics
• Set thresholds for average claim value per service category.
• Flag outliers for manual review before reimbursement.

3. Educate Front‑Line Staff
• Conduct quarterly training on fraud indicators (e.g., duplicate billing, unusually high service rates).

4. Establish a Secure Whistleblower Hotline
• Provide anonymity and legal protections to encourage internal reporting.

5. Coordinate with State Agencies
• Share suspicious activity reports (SARs) with the Minnesota Department of Human Services and Pennsylvania Department of human Services.

Related Legal Resources

• U.S. Department of Justice – Health Care Fraud Enforcement: https://www.justice.gov/criminal‑health‑care‑fraud
• Centers for Medicare & Medicaid Services (CMS) – Fraud Prevention: https://www.cms.gov/Medicare‑fraud‑Prevention
• Minnesota Attorney General – Consumer Protection: https://www.ag.state.mn.us/consumer‑protection

Case Study: Prior Minnesota Fraud Tourism Conviction (2022)

• Defendants: Two Ohio residents indicted for a similar Medicaid‑housing scheme.
• Outcome: Convicted on ten counts; sentenced to a combined 15 years imprisonment and ordered to repay $9.4 million.
• Lesson Learned: Early detection through inter‑state data sharing dramatically reduced the fraud’s lifespan.

key Takeaways for Readers

• Fraud tourism leverages jurisdictional gaps-monitoring cross‑state transactions is essential.
• Medicaid, housing vouchers, and autism grants are high‑value targets; rigorous verification can curb abuse.
• Federal indictments such as this send a clear deterrent signal: white‑collar fraud carries severe criminal and financial consequences.

Prepared by James Carter, senior content strategist, Archyde.com