By Vincent McKnight, Shaun Rosenthal, and Erica Roberts
The government is losing hundreds of billions of dollars each year to fraud because it is not spending enough money and devoting sufficient resources to combat it. According to the government’s own estimates and reported recoveries, well over 90% of fraud dollars are not being recovered. The Government Accountability Office (GAO) released a report in April 2024 that calculated the annual losses from fraud ranged from $233 billion to $521 billion. The GAO report, titled “Fraud Against the Government,” was based upon an exhaustive review of data from 2018 through 2022. In this same period, the Department of Justice recovered approximately $2.9 billion (2018), $3.0 billion (2019), $2.2 billion (2020), $5.7 billion (2021), and $2.2 billion (2022).
The efforts to recover fraud are falling short.
OIG Only Investigates ‘Worst of Worst’
Surprisingly, in the months since the release of the GAO report, no one on Capitol Hill or in the press has examined this issue or asked why so many fraud dollars go unrecovered. The silence has been deafening.
The GAO report suggested that government agencies need to be more proactive in identifying fraud and noted that “agencies reported challenges related to the availability of resources such as staff, access to data-analysis tools and techniques, and access to data to look for fraud.”
Moreover, the report concluded that “not all potential fraud is investigated or prosecuted…[because]…OIG can only investigate the ‘worst of the worst,’” referring to the Office of Inspector General. The OIG is the oversight division of a federal agency that investigates allegations of fraud, waste, abuse, and/or misconduct involving federal programs and operations. OIG investigations address criminal, civil, and administrative violations of laws and regulations.
The GAO Report did not attempt to explain the root cause of the government’s anemic response to recover these staggering losses.
Fraud Can’t Be Fought Effectively on a Budget
Based on an analysis by the Anti-Fraud Coalition in its “Fraud by the Numbers” series, one could estimate that DOJ annually spends roughly $75 to $100 million fighting fraud. The Criminal Division estimates that it will allocate $27.7 million to fight fraud. The Civil Division has a budget of $400 million, and it is estimated that 88% of its caseload was defensive, meaning defending the government from claims against it. Therefore only 12%, or $48 million, is available for affirmative cases, including the investigation and prosecution of fraud.
In today’s world of expensive litigations, one cannot expect the DOJ to effectively fight fraud on such a small budget.
Studies have shown that for every dollar spent fighting fraud, the government gets at least $20 back. With that return on investment, shouldn’t the government double the DOJ’s fraud budget?
The government is lacking the appropriate resources to be able to fully address fraud in today’s climate, which is what makes private enforcement necessary for the public good. Qui tam provisions are an important mechanism for discovering, investigating, and rectifying fraud and misconduct related to our tax dollars.
If you have information about fraud against the government and believe you have a whistleblower claim, please feel free to fill out our online intake form to contact a whistleblower attorney at our firm today.