Law enforcement spent years looking into a Twin Cities sex trafficking ring, which le d to criminal charges against five people this month, including a former Anoka County assistant prosecutor.

Meanwhile, the suspects under investigation quietly built a small social services empire. They opened assisted living homes, an autism services business, a housing support organization and a mental health company.

And they billed Medicaid about $4.8 million for the services.

Lawmakers and advocates say the situation illuminates continued issues with oversight of state social service programs at a time when many of those programs are facing intense scrutiny for widespread fraud.

It also raises concerns about collaboration between law enforcement and state regulators.

Officials at the state Bureau of Criminal Apprehension (BCA) said they started looking into the case in 2021 and did not find information suggesting a possible fraud component until November 2025. The BCA said it “promptly notified the appropriate partner agencies and invited them into the investigation in December 2025.”

During those years, several people charged this month in connection with the sex trafficking ring enrolled with the state to provide health care services.

Fingerprint-based background studies are required for people enrolling in some health care programs and can identify criminal convictions and some other disqualifying information, according to the Minnesota Department of Human Services (DHS). But they don’t identify whether someone is under investigation.

The state stopped Medicaid payments to several people and businesses associated with the scheme in February, the DHS said in a statement.

But as recently as April, human services staff signed off on the continued certification of a mental health business in which Frank Reeves — the man at the center of the alleged sex trafficking ring — had a 50% ownership interest.

“We need to make it harder to get in, and then provide more support and accountability to those organizations that are doing those services well. And that’s just not been the Minnesota way the last few years,” said Marcus Schmit, who leads the Minnesota chapter of the National Alliance on Mental Illness.

Sex house turned assisted living

Homefelt Assisted Living’s website describes an idyllic day at their homes: early morning coffee, eggs made to order, perhaps some “cards, a favorite hymn on the radio, the garden beds, a grandkid stopping by on her lunch break.”

It’s a stark contrast from how the property had allegedly been used before.

The home on University Avenue in Minneapolis was previously used to offer commercial sex services, a criminal complaint states. It’s unclear whether the property was ever used simultaneously for assisted living and prostitution.

Former Anoka County prosecutor Andrea Sampson owns Homefelt Assisted Living. She has been charged with 26 felonies related to the prostitution ring.

Between May 2023 and February 2026, Homefelt billed Medicaid for more than $1.2 million in home and community-based services at its facilities. Those services are supposed to help seniors and people with disabilities live in their homes or community settings — like small assisted-living properties — rather than larger institutional facilities like nursing homes.

Last week the Minnesota Department of Health shut down and revoked the licenses of Homefelt’s assisted living facilities on University Avenue and Adams Street in Minneapolis, arguing that both had violated state care restrictions in ways that put residents in immediate jeopardy.

Because of an ongoing investigation into the homes, a state health spokesman declined to list the number of residents that had to be relocated as a result of the suspension order.

However, the Adams facility was sheltering three residents earlier this year and the University facility had four residents, state inspection records show.

The Homefelt situation comes amid growing concerns about oversight and care in assisted-living facilities, which have seen rapid growth in recent years.

A recent investigation from MPR News and APM Reports added fuel to oversight concerns.

It examined how Sekou Dukuly, a government official in Liberia, was tied to at least two dozen group homes and was reportedly in charge of daily operations at three houses.

Concerns with assisted living

While many people associate assisted living with senior care, the properties — often single-family homes with a handful of residents — house many Minnesotans with disabilities and, in some cases, individuals with complex mental health and addiction challenges.

The state started licensing assisted living in 2021, and has 2,531 licensed assisted living facilities, nearly 60% of which serve five or fewer residents, said Rajean Moone, who leads the University of Minnesota’s Long Term Care Administration Program.

He said state licensing and regulatory agencies have made significant progress over the past five years adapting to the changing assisted living landscape.

“But the sheer number and diversity of licensed facilities, combined with limited investigative capacity, creates a fundamental oversight challenge,” Moone said in an email.

Families and advocacy groups like Elder Voice Advocates have repeatedly flagged problems with safety and quality of care at many facilities.

Last year, that group asked the Legislative Auditor to review the Health Department’s oversight of assisted living and other long-term care facilities, and raised fraud concerns.

“Bad actors have many avenues to scam the system but the responsibility lies with both the Legislature and the regulators. We also need the Governor’s Offi ce to lead in the protection of elders and people with disabilities who are trying to survive in these places,” Elder Voice Advocates Executive Director Kristine Sundberg said.

The Minnesota House Committee on Fraud Prevention and State Agency Oversight has also looked into assisted-living facilities.

Committee Chair Kristin Robbins, R-Maple Grove, said the Homefelt case reminds her of another situation she found, where a man indicted in the Feeding Our Future fraud scheme continued to own various properties and rent them to his wife and others who ran them as assisted-living facilities.

If the BCA or another entity is investigating someone who is billing the state, Robbins said they should flag regulators and potentially require a site visit.

She also wants the state to create a system where, if someone is charged for fraud in one program, it triggers a review of any other situations where they may be billing the state.

Lawmakers and Gov. Tim Walz’s administration have taken some steps to try to break down silos across state agencies when it comes to fraud, including a new law that took effect Aug. 1. It says state agencies may notify each other of a potential fraudster collecting payments from more than one agency if it does not compromise an active investigation.

And the DHS does keep lists of providers excluded from getting Medicaid payments, people terminated for fraud, theft and abuse. But the databases available on the state’s website Monday did not include the businesses or individuals associated with the alleged sex trafficking ring.

People charged in connection with the sex trafficking ring also created the Helpful Housing LLC to provide Housing Stabilization Services, a Medicaid program that helps people find and keep housing.

The state shuttered the program last year amid widespread fraud concerns and as FBI investigators searched numerous providers.

The company billed Medicaid for more than $266,000 in 2024 and 2025, according to DHS data.

They also created Reva Health LLC, which billed Medicaid nearly $2.9 million for Adult Rehabilitative Mental Health Services between 2024 and 2025, and Reva Health Autism Center LLC, which got more than $428,000 last year for services it claimed to be providing to young people with autism and their families, according to state data.

Both of those services were among the 13 Medicaid programs where state officials added extra layers of scrutiny over the past year. Minnesota has landed in the national spotlight for fraud and faced sharp condemnation from the Trump administration and other Republicans.

When the fraud concerns tied to the alleged sex trafficking ring were brought to DHS, the agency said it was not yet licensing autism service organizations — something it has since added. But DHS officials said they opened a maltreatment investigation into the company to evaluate the safety of those getting services and visited the program this February.

“Investigators observed children and staff onsite and reached out to the parents of children enrolled in the program. No parents or staff reported concerns regarding the care of children receiving services, and no concerns were observed onsite,” the agency said in a statement.

jessie.vanberkel@startribune.com jeremy.olson@startribune.com