Owner of Now-Closed Adult Family Home Sentenced to Federal Prison for Healthcare Fraud

Brad D. Schimel, First Assistant United States Attorney for the Eastern District of Wisconsin, announced that on October 22, Lori Butts (age 49) was sentenced to 28 months' incarceration for committing a healthcare fraud scheme through which she stole $1,253,920.47 from a Medicaid-funded program designed to provide residential care services for disabled Wisconsin residents.

Butts previously operated Lordan Care Adult Family Homes, a company that provided residential services to Medicaid beneficiaries. The government authorizes these services on a beneficiary-by-beneficiary basis. All residents in the program are placed in a multi-bedroom apartment that has 24-hour supervision by a caregiver. Some residents also receive one-on-one care from a worker, in addition to this caregiver.

Butts admitted that from July 2019 to December 2020, she billed for hours of care work never provided. In particular, she billed for two workers to provide dedicated service, 24 hours per day, to a single resident-but those caregivers were not present. In addition to personally enriching herself at the expense of taxpayers, Butts took resources away from extraordinarily needy and vulnerable individuals who qualified for a high level of care. Butts's adult family homes were severely understaffed and experienced frequent police contact, often when staffing levels were insufficient to address volatile or inappropriate resident conduct.

In announcing the sentence, United States District Judge J.P. Stadtmueller emphasized the "reprehensible" nature of the conduct. He noted that "the taxpayers were bilked" because they paid for tens of thousands of hours of caregiver time that Butts's company simply did not provide. By billing for unworked hours and accepting the agency's money, Butts engaged in conduct that was the "functional equivalent of grand larceny." Judge Stadtmueller also explained that the significant sentence he imposed was necessary to send a message of deterrence to others considering engaging in fraud against government healthcare programs.

In addition to the 28-month prison sentence, Judge Stadtmueller ordered Butts to pay restitution to Medicaid of $1,253,920.47.

"When the defendant stole this money, she took it from every American taxpayer and diverted it from individuals who needed help," said First Assistant U.S. Attorney Schimel. "The U.S. DOJ is laser focused on punishing those who defraud our federal healthcare benefit programs."

"Lori Butts exploited a government program and stole from the American taxpayers by billing for services never provided to disabled Wisconsin adults," said FBI Milwaukee Special Agent in Charge Alan Karr. "The FBI is committed to working with our law enforcement partners to hold accountable individuals who defraud the government for personal gain and enrichment. The message is clear, if you steal from American citizens, justice will find you."

"Lori Butts billed for care she never provided and collected money she never earned," said Robert J. Kuszynski, Acting Special Agent in Charge, IRS Criminal Investigation, Chicago Field Office. "Behind every claim is a promise to care for someone. Butts turned that promise into a payday. Her prison sentence is the price of that choice."

The Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigations unit investigated the case. Assistant United States Attorneys Carter B. Stewart and Zachary J. Corey prosecuted the case.

On April 7, 2026, the Department of Justice announced the creation of the National Fraud Enforcement Division ("Fraud Division"). The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department's work to combat fraud supports President Trump's Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.

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For further information contact:

Public Affairs Officer Steve Caballero

(414) 297-1700

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