The Trump administration has made fraud a buzzword in Washington and directed the Department of Government Efficiency, or DOGE, to eradicate it from the federal government.
However, Linda Miller, who spent a decade at the Government Accountability Office and wrote the rulebook on preventing fraud in federal programs, believes that the government’s fraud problem is far more complex and costly than most people realize.
Fraud is a crime, and Miller believes the cost to taxpayers is approaching $1 trillion per year. She claims that the main perpetrators are sophisticated criminals, often from other countries, who drain public assistance programs intended for Americans in need, rather than individuals who lie about their eligibility for programs such as unemployment insurance.
“What we’re really talking about is nation-state actors,” says Miller. “We’re discussing organized crime rings. We’re talking about using massive amounts of stolen American identities to monetize criminal activity.”
The threat from transnational fraud rings
The problem exploded during the COVID-19 pandemic, when the government injected trillions of dollars into the economy to assist struggling Americans. Applications for relief programs moved online, making it easier for people to get help, but with few safeguards, scammers, hackers, and organized crime rings took advantage.
Miller, who was appointed to an independent watchdog committee in 2020 to monitor how COVID relief funds were spent, said she saw the theft coming.
“It was like they threw money in the air and just let people run around and grab it,” Miller told me.
There is no official estimate of how much pandemic relief money was lost to fraud, but Miller believes it was more than $1 trillion, or one in every five dollars, making it the largest fraud loss in US history.
The most egregious aspect, according to Miller, was that much of the money stolen during the pandemic went to foreign adversarial nation states such as China and Russia.
Frequently, the fraud rings impersonate Americans using stolen personal information.
Last year, the FBI cracked one of the largest digital fraud cases in US history, with cyber criminals from all over the world using stolen identities to steal $6 billion in pandemic unemployment funds.
According to Bryan Vorndran, head of the FBI’s cyber division, the government is a prime target for this type of fraud due to the vast amount of money it controls.
He claims that almost every American’s personally identifiable information — name, date of birth, previous addresses, and Social Security number — is available for purchase on the darknet.
Some criminals work for foreign governments. Vorndran referred to the fraud rings as “digital gangs of the 21st century,” operating with the knowledge that their governments will not interfere with their activities, even if they are illegal.
China, for example, employs a group known as APT41 (Advanced Persistent Threat), according to the FBI. According to cybersecurity firm Mandiant, in 2021, APT41 conducted a highly sophisticated and unusual hack of at least six state governments, though researchers noted that at least 18 states were potentially vulnerable to the attack. According to Vorndran, APT41 used this access to commit financial crimes for personal gain, including defrauding unemployment insurance programs in multiple states.
“They used stolen personally identifiable information.” and essentially created fraudulent unemployment claims, after which the proceeds were laundered through shell companies and sent back to these individuals in China,” Vorndran said.
The FBI’s best estimate is that $60 million was taken over a two-year period. Vorndran reported that very little had been recovered.
Multiple law enforcement and national security officials told 60 Minutes that China is a popular destination for stolen taxpayer dollars, but the schemes are so intricate and difficult to unravel that the true losses are unknown.
Foreign fraudsters targeting the US government can be caught, according to Vorndran. However, there is a perception that some criminals are untouchable, and that the US government is outnumbered.
“In the United States government, we’re all outnumbered,” Vorndran stated.
The real Americans behind stolen identities
Transnational cybercriminal rings continue to target government programs using tools such as AI deepfakes, synthetic identities, and stolen identity networks linked to fake emails and phones, according to documents and data provided by anti-fraud companies such as ID.me, Sentilink, and Socure.
“It’s whack-a-mole,” Miller explained. “These guys are paying close attention. They can see where better controls are being put in place. And then they’ll go to places where the controls have yet to be improved.”
Miller said that fraudsters frequently target disaster funding. They look at zip codes where disasters occur and then begin purchasing stolen identities so that they can apply for disaster loans and grants.
Rich and Deann Wilken, survivors of the January wildfires in Los Angeles, are among those suspected of identity fraud. They documented the destruction of their nearly five-decade-old home and applied for FEMA disaster assistance.
The Wilkens never heard back, so they contacted a FEMA representative at a disaster center and discovered that the personal information they used to set up their FEMA account had been changed.
“By that time, too, we had already had some of our other friends whose accounts were the same way,” Deann Wilken told me. “And we just go, ‘Oh not us too.'”
The Wilkens were informed that their account had been locked due to suspected identity fraud. They’ve waited months for FEMA to resolve their case, and it’s unclear whether they’ll ever receive any money.
It’s not just one program: anywhere there’s money, there’s fraud — in unemployment, food stamps, disability, and tax refunds — leaving Americans unable to obtain what they’re owed.
Is DOGE looking for fraud in the right places?
When President Trump returned to the White House in January, he established DOGE to identify and address waste, fraud, and abuse within the federal government.
Miller welcomed the formation of DOGE, but she is concerned that it conflates fraud with wasteful spending.
“You may not agree with what USAID does, you may not want to be investing American dollars in, you know, foreign fertilizer, for example, you may think that’s the wrong thing to be spending money on, but that’s not fraud,” she told the crowd.
Last year, the GAO issued a report estimating that the federal government loses up to $521 billion per year to fraud. Miller and other fraud experts believe the figure is higher. Miller estimates the figure at $550-$750 billion per year.
Miller believes there are numerous opportunities for DOGE to save significant money if they focus on true fraud, which she defines as willful deception that can be proven in court.
“This is Mom and Apple Pie stuff. We all agree that bad actors should not be stealing from American taxpayers.”
DOGE claims to have saved taxpayers more than $150 billion so far, sometimes citing inaccurate examples of cost cuts that are later reversed.
A White House spokesman told 60 Minutes that DOGE has been working to improve data sharing between agencies, and that departments are collaborating to identify fraud and prevent criminals from exploiting taxpayers, stating that “fraudsters will be held accountable.”
Miller stated that she sees “some hints” that DOGE is addressing the appropriate issues.
“But right now, I think the jury is still out on whether or not we’re gonna get that kind of progress,” she told the audience.