Criminals trade ‘hit lists’ of easiest states to defraud in nationwide aid scam

TLDR:

• Criminals trade “state hit lists” ranking which states have the weakest fraud protections, with Minnesota on those lists for years
• Fraudsters strategically target sympathetic programs like child care and housing because they know officials are reluctant to scrutinize aid for vulnerable populations
• State administrators often ignore the fraud because it’s federal money, not state dollars — one official told a fraud expert he didn’t care because money “goes back into the local economy”
• The same criminals who ran COVID-19 unemployment scams simply pivoted to child care, Medicaid and housing programs using identical tactics

Criminals are exploiting lax oversight in state aid programs nationwide by trading “hit lists” that rank which states are easiest to defraud, according to fraud prevention experts warning of a crisis affecting every state.

“The level of fraudulent activity is varied by program, as well as some states,” said Haywood Talcove, CEO of LexisNexis Risk Solutions Government, which advises more than 9,000 government agencies.

Mr. Talcove said fraudsters rank states by weakest ID checks, fastest payouts and lowest audit risk. Minnesota has been on those lists for years, while California, New York and Massachusetts have “massive leakage compared to the national averages.”

The scandal intensified after Minnesota’s fraud topped an estimated $9 billion, prompting Gov. Tim Walz to quit his reelection campaign this week.

Experts say state officials often ignore the fraud because it’s mostly federal dollars at stake. Mr. Talcove recalled one state official saying, “Even if there is fraud, I don’t really care, because the money goes back into the local economy.”

“No, it doesn’t. It’s actually going overseas,” Mr. Talcove responded.

He said criminals strategically target sympathetic programs through what he calls “suicidal empathy” — exploiting child care, health care and housing programs because officials hesitate to scrutinize aid for vulnerable populations.

President Trump vowed a nationwide crackdown, saying the fraud is “a giant scam.”

Read more:

• Fraud experts warn that criminals are exploiting aid agencies in every state