May the 4th Be With You—Want to Fight Fraud? ‘This is the Way…’

Happy early Star Wars Day!

A not so long time ago (April), in a galaxy nearby (ours), the Jedi Council (GAO) issued a first-of-its-kind estimate of fraud across federal programs and operations. We estimate that the federal government could lose between $233 billion and $521 billion annually to fraud.

That’s no Jedi mind trick. Each year, losses from fraud could be as large as the spending for the sith—we mean, sixth—largest federal agency. Striking back against this growing menace is important. Fraud hurts the integrity of federal programs and erodes the public’s trust in government. It also wastes taxpayer dollars that could be used to address critical needs.

To highlight this darkness in our galaxy, today’s WatchBlog post looks at our first-ever estimate and what can be done to fight fraud…in a Star Wars theme. May the 4th be with you. 

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That’s no moon…

No area of the federal government is immune to fraud. Fraud schemes are wide-ranging and occur when something of value is obtained through willful misrepresentation—for example, receiving a benefit or assistance from the federal government by lying to meet eligibility requirements. Our report provides examples of fraud perpetrated against the federal government, such as:

• In 2023, a medical physician was found guilty of conspiracy to commit health care and wire fraud after billing for unnecessary, expensive testing on addiction treatment facility patients. The physician was sentenced to 10 years in prison and ordered to pay back $127.4 million.
• In 2022, a former state employee was charged with mail fraud after using others’ identities to submit unemployment insurance applications. This individual was sentenced to over 5 years in prison and ordered to repay $4.3 million.

Fraud schemes like these are just the tip of the lightsaber. Other fraud estimates combined total at least $400 billion:

• We estimated pandemic unemployment fraud to be between $100 billion and $135 billion.
• The Small Business Administration Office of Inspector General (OIG) estimated fraud in two pandemic programs to be about $200 billion.
• A representative from the Health and Human Services OIG noted that the estimated $100 billion in annual Medicaid and Medicare fraud cited by the National Health Care Anti-Fraud Association is likely conservative.

How did we estimate fraud? We used the force…of collected data from three key sources:

• Investigative data, such as the number of cases prosecuted and the dollar value of closed cases
• Semiannual report information from agencies’ OIGs, which audit programs and investigate fraud
• Confirmed fraud data reported to the Office of Management and Budget (OMB)

We organized these data into three categories—known fraud, detected potential fraud, and undetected potential fraud (a phantom menace, if you will). We then used a well-established simulation model to develop the estimated range with a high level of confidence. The model considers different assumptions, scenarios, and uncertainty in data. The difference between known fraud and potential fraud and different risks in different time frames account for the range of our estimate—$233 billion to $521 billion.

Learn more about our fraud estimate by listening to our podcast with GAO fraud fighting Jedi Masters Rebecca Shea and Jared Smith.

Given the scope of this problem, it will take more than a small band of rebels to win the fight against fraud. A galaxy-wide approach is required to address it.

Our report recommends ways to improve current efforts to understand where and how fraud happens and what can be done about it. We recommended that OMB work with agencies and the OIGs to develop guidance to improve fraud-related data. This would improve what we know about fraud and make it easier to understand and combat this issue on a larger scale.

We also think the Department of the Treasury should work with OMB to expand government-wide estimates for fraud, starting with higher-risk programs. Treasury’s data-matching and analytics resources are the droids we’re looking for to help support agencies in their fight against fraud.

Don’t give in to the dark side (fraud)

Lando Calrissian once said, “I got a bad feeling about this.” If you too have a bad feeling about something going on, we have the tools to help use your force against fraud.

Report fraud anonymously: If you suspect fraud, waste, abuse, or mismanagement of federal funds or in federal programs, you can report it to our FraudNet.

Learn more about fraud schemes: If you want to learn more about how fraud affects federal programs and operations, our interactive Antifraud Resource can help. This resource lets you look up common fraud schemes by agency, fraud type, or program.

Preventing fraud: “Do. Or do not. There is no try.” We’ve looked at how federal agencies can proactively include anti-fraud steps into programs to prevent fraud. These steps include assessing fraud risks. Our Fraud Risk Management Framework highlights five key areas that if addressed would jump to lightspeed federal efforts to combat fraud.

Learn more about our work on fraud by visiting GAO.gov.

• GAO’s fact-based, nonpartisan information helps Congress and federal agencies improve government. The WatchBlog lets us contextualize GAO’s work a little more for the public. Check out more of our posts at GAO.gov/blog.