THE HARD LESSONS OF FRAUD

Fraud is the bread and butter of journalism.  Not a day goes by where there isn’t another news report of fraud.  Corporate fraud, small business fraud, church fraud, and the big one, government fraud.  Of these, government fraud is the most insulting.  It is your tax money.   It gets handed out to “government programs” usually “managed” by non-profits.  We will learn that of all the corrupted forms of government support, the worst is community block grants.  This was an idea created by Congress back in the 1960s.  It was a fundamental part of the War on Poverty.   Yes, I am working up to Minnesota.  Stick with me.

Government fraud can be characterized as stealing money from the stupid and letting evil people steal it.  Being a furious taxpayer has pretty much accomplished nothing over the years.  Sure there is an occasional scandal, but it never addresses the real nature of the problems of fraud. 

In fact, the more we learn about fraud, the more obvious it becomes this is a big part of why so many people are not doing well.  The few steal from the many.  It is not some trashy neo-Marxist novel of oppression.  It is the story of government officials, consultants, non-profit groups working as teams to ensure the diversion of tax money into their own “favorite charities”.  Enough fraud kills economies, jobs, future growth.  If you see no improvement in the conditions of a city, now you know why.  It is not just incompetence.

The federal government and every state government has laws on the book concerning fraud. Yet, we are hearing case after case of fraud on a scale that becomes hard to grasp. Elon Musk and DOGE found massive fraud in every federal agency.  His words.

The fraud in Minnesota has put a burning bright light on the subject. What was thought to be $1 billion has become $8 billion and growing. Soon enough, the questions will come, the hearings will begin and all will ask:  How did we let this happen? What are we going to do about it?

While the take home message is that we have to try much harder to fix this problem, a deeper understanding of these failures is needed in order to bring about real change.  One would have to be that the process of accountability has to become stronger.  The ability to detect fraud has to be more sensitive, rapid and responsive than currently exists.  But what does that look like in the form of legislation?  That remains to be determined.

Some group that calls themselves “American Progress”  wrote a title about DOGE – “The Real Impact of DOGE – Gutting Public Assistance”.  As usual, liberals leave out the key stuff.  The correct title is “Gutting Public Assistance That Doesn’t Reach the People Who Need It.”  The correct title points to the fundamental problem.  Why should anybody have to go through the most bizarre intellectual or administrative contortions to arrive at a place where fraud suddenly becomes obvious?  It is not just re-form, it is re-thinking.  It is reverse engineering the current fraud industry and designing a system that kills fraud.

Fraud and Overcentralized Government

Fraud is a creature of careless governance.  So much of it can be stopped in hindsight.  We have the rules and procedures to prevent it as well as detect it.  There are forensic accountants.  There is a specialty called Certified Fraud Examiner.  The government hires these people.  Yet this fraud continues to happen.

Every Rule Creates a New Way to Steal Your Money

For every rule there is a work around solution.  That is one of the unspoken jobs of a lawyer or CPA.  Any future solution needs to recognize this fundamental failing as well.

Promises to clean up the mess are old news .  Sometimes there is a breakthrough and legislators have their come to Jesus moments.  But before the ink is even dry on new legislative reforms others are working on new scams using the new rules.  There has to be a way to stop this.

What to Do?

The first step is to make much more noise about this.  You have Nick Shirley in Minnesota leading the charge on covering the fraud there.  That the FBI  is acting like they are having a CYA moment is to be expected. Denaturalization of Somali crooks?  Great.  Prison? Great. Deportation? Great, but none of this provides an enduring solution to such a common problem.  The DOGE list of corrupt federal agencies and non-profits has to number in the hundreds if not the thousands.  Next would be some proposal on how this needs to be fixed.  How about sending responsible government officials (read Tim Walz) to jail? That would be a start.  There is a good chance government officials of all kinds were aware and afraid to act or were even a part of it.  Getting true justice will be doubly hard.  George Carlin was right “You ain’t in the club.”

If there is to be even a shred of integrity left in our governmental institutions, we have no choice but to scream like hell, keep screaming, and keep on demanding justice.  It will take years.  We have no choice.