The Trump administration has made fraud a buzzword in Washington and tasked the Department of Government Efficiency, or DOGE, with eliminating it from the federal government.
But the government's fraud problem is much more complex and costly than most realize, according to Linda Miller, who spent a decade at the Government Accountability Office and wrote the rulebook on preventing fraud in federal programs.
Fraud is a crime, and Miller believes the cost to taxpayers is coming close to $1 trillion each year. She said the biggest perpetrators aren't individuals lying about their eligibility for programs like unemployment insurance – they are sophisticated criminals, often overseas, who are draining public assistance programs intended for Americans in need.
"What we're really talking about is nation-state actors," Miller said. "We're talking about organized crime rings. We're talking about using vast amounts of stolen Americans' identities to monetize them for criminal activity."
The threat from transnational fraud ringsThe problem exploded during the COVID-19 pandemic, when the government rushed trillions of dollars into the economy to help struggling Americans. Applications for relief programs moved online, making it easier for people to access aid but with few safeguards, scammers, hackers and organized crime rings also cashed in.
Miller, who in 2020 was appointed to an independent watchdog committee that tracked how COVID relief money was 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 said.
Linda Miller
60 Minutes
There is no official tally of how much pandemic relief money was lost to fraud, but Miller estimates it's more than $1 trillion – or one in five dollars – making it the largest fraud loss in U.S. history.
For Miller, the most egregious part was that a lot of the money stolen in the pandemic went to foreign adversarial nation states, including China and Russia.
Often, the fraud rings are impersonating Americans using their stolen personal data.
Last year, the FBI cracked one of the largest digital fraud cases in U.S. history, which involved cyber criminals from around the world using stolen identities to pocket $6 billion in pandemic unemployment funds.
According to Bryan Vorndran, head of the FBI's cyber division, the government is a target for this type of fraud because of the massive amount of money it holds.
He said practically every Americans' personally identifiable information — name, date of birth, former addresses, Social Security number — is available on the darknet for purchase.
In some cases, the criminals are on the payroll of foreign governments. Vorndran called the fraud rings "digital gangs of the 21st century," operating with knowledge that their governments won't interrupt their activity, even if it's illegal.
China, for instance, employs a group the FBI calls APT41 — APT for Advanced Persistent Threat. In 2021, APT41 carried out a highly sophisticated and unusual hack of at least six state governments, according to cybersecurity group Mandiant, although researchers noted at least 18 states were potentially vulnerable to the attack. According to Vorndran, APT41 used this access to commit financial crime for personal gain by defrauding unemployment insurance programs across multiple states.
Bryan Vorndran, head of the FBI's cyber division
60 Minutes
"They used stolen personally identifiable information…and essentially created fraudulent unemployment claims, then those proceeds were laundered through shell companies, and that money was sent back to these individuals in China," Vorndran said.
The FBI's best estimate is that $60 million was taken over about two years. Very little has been recovered, Vorndran said.
Multiple law enforcement and national security officials told 60 Minutes that China is a top destination for stolen taxpayer dollars but that the schemes are so complex and difficult to unravel that the true losses are unknown.
Fraudsters targeting the U.S. government from foreign countries can be caught, Vorndran said. But there is a perception that some of the criminals are untouchable and that the U.S. government is outnumbered.
"In the U.S. government, we're all outnumbered," Vorndran said.
The real Americans behind stolen identitiesToday, transnational cybercriminal rings continue to target government programs with tools such as AI deepfakes, synthetic identities and networks of stolen identities tied to fake emails and phones, according to documents and data provided by anti-fraud companies, including ID.me, Sentilink and Socure.
"It's whack-a-mole," Miller said. "And these guys are paying close attention. They're seeing where better controls are being put in place. And then, they're going to where the controls still haven't been improved."
The fraudsters often target disaster funding, Miller said. They look at zip codes where a disaster happens, then start buying up stolen identities so they can apply for disaster loans and disaster grants.
Rich and Deann Wilken, who survived the Los Angeles wildfires in January, are among those who are victims of suspected identity fraud. They documented the destruction to their home of nearly five decades and applied for disaster assistance from the Federal Emergency Management Agency.
The Wilkens never heard back, so they followed up with a FEMA representative at a disaster center and learned the personal information they'd used to set up their FEMA account had been changed.
Rich and Deann Wilken
60 Minutes
"By that time, too, we had already had some of our other friends whose accounts were the same way," Deann Wilken said. "And we just go, 'Oh not us too.'"
The Wilkens were told their account was locked due to suspected identity fraud. They've spent months waiting for FEMA to resolve their case and it's unclear whether they will ever get any money.
It's not just one program: where there's money, there's fraud — in unemployment, food stamps, disability, tax refunds — leaving Americans struggling to access what they're owed.
Is DOGE looking for fraud in the right places?When President Trump returned to the White House in January, he launched DOGE to identify and deal with waste, fraud and abuse in the federal government.
Miller welcomed the formation of DOGE but she worries that it's conflating 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 said.
Last year, the GAO released a report estimating that the federal government loses as much as $521 billion a year to fraud. But Miller and other fraud experts believe the number is higher. Miller puts the number between $550-$750 billion a year.
Miller said there are a lot of opportunities for DOGE to save significant money, if they focus on real fraud – which she defines as willful deception that can be proved in a court of law.
"This is mom and apple pie stuff. We all agree that bad actors should not be stealing American taxpayer dollars."
DOGE claims it has saved taxpayers more than $150 billion so far, sometimes citing examples of cost cuts that are inaccurate and later walked back.
A White House spokesman told 60 Minutes that DOGE has been working on improving data sharing between agencies and that departments are collaborating to identify fraud and prevent criminals from exploiting taxpayers, saying, "fraudsters will be held accountable."
Miller said she sees "some hints" that DOGE is addressing the right issues.
"But right now, I think the jury is still out on whether or not we're gonna get that kind of progress," she said.
Cecilia Vega