The rampant federal fraud that DOGE has done little to stop

International criminal groups are stealing as much as a trillion dollars a year from U.S. government programs but DOGE has done little to address the problem, according to a new report by a private anti-fraud firm.

“It’s the government’s dirty little secret—this has been an ongoing effort by nation states and other criminal organizations for years,” said Jordan Burris, vice president of Socure, an identities management firm, a former White House official. “We’ve been able to confirm that these coordinated attacks are pilfering government programs and doing so at a velocity that is relentless.”

Socure’s new report found that U.S. government programs are being attacked by international criminal groups in China, Russia, Egypt, Poland and several other nations—and that international fraudsters were responsible for up to 12% of all applications for government services and loans. The core problem is a failure to properly identify recipients.

“For far too long, fraud has been seen as the cost of doing business in government. But this is a fallacy,” says the new report, which NBC News obtained in advance of its publication. “As Washington prioritizes efficiency, one of the most significant opportunities to reduce government waste, fraud, and abuse remains under-addressed: strengthening our digital identity verification systems.”

A Trump Administration official speaking on behalf of DOGE told NBC News that DOGE is trying to implement new technology and private sector solutions to stop improper payments. But he said those efforts have been met with criticism, such as a plan to modernize computer code in the Social Security Administration.

“Doge is taking common sense approaches that have been done in the private sector and we get criticized for cutting people’s benefits,” the official said. “We are making basic changes to try to prevent fraud, we’ve made tremendous progress and we are well on our way to uprooting fraud in our government once and for all.”

Hundreds of billions stolen

NBC News reported in 2022 that hundreds of billions of dollars were stolen from pandemic relief programs by foreign criminal groups using false identities. They included expanded unemployment relief and the employer loans and grants associated with the Paycheck Protection Program. 

But anti-fraud experts say the same thing has been happening for years to regular government programs, from Federal Emergency Management Agency hurricane relief to Medicare.

A report by the Government Accountability Office last year pegged annual losses to fraud at between $233 billion and $521 billion annually. Burris and other experts say the true number if likely far higher.

“You can only measure what you can see when it comes to identity fraud,” said Burris, who previously worked in the White House as the chief of staff in the Office of the Federal Chief Information Officer from 2017 to 2021. “Frankly, the government does not have the right visibility. And so if you were to ask me, I would say that number–you can double and/or triple it.”

Another fraud expert, Linda Miller, told CBS’s 60 Minutes she believes the losses reach between $550 and $750 billion a year.

DOGE’s work so far

Burris and other experts credit Elon Musk and the Department of Government Efficiency for bringing attention to the issue of fraud in federal programs. But they say Musk has misunderstood the real vulnerabilities—focusing on foreign aid spending with which he disagrees and making baseless allegations of government employees with unexplained wealth.

Experts say the vast majority of fraud in federal programs involves so-called improper payments — money paid in benefits to people or entities who pose as an eligible recipient using a stolen or fake identity. It’s a problem that banks and private companies such as Amazon and Walmart have largely solved. Experts say it persists in government not because of corrupt bureaucrats but due to incompetence and inertia, experts say.

“Criminals are using the stolen identities of Americans to pilfer federal and state government programs at a record pace,” according to the new report from Socure,. “New AI enabled technologies allow bad actors to use increasingly sophisticated fraud tactics to siphon billions away from programs.”

“Researchers from Socure have tracked fraud rings originating in China, Russia, and around the world,” the report adds. “And these criminals are getting more sophisticated, deploying techniques such as the creation of synthetic identities, faster and in greater volume than ever before.”

DOGE has highlighted examples of improper payments by the federal government, but there has so far been no effort to bring in new technology that might stop them, according to Burris and another anti-fraud expert.

“The problem is that no one has actually acted on it, and with the politicization of fraud, I still see no signs of them actually taking any concrete action to change course,” Burris said.

The Socure report highlighted examples of suspected fraud rings defrauding government programs, without naming the specific programs. The criminals—two international and one domestic–used stolen identities to apply for government benefits, fabricated business names and internet domains, disguised their IP addresses through VPN providers, and submitted suspicious or mismatched phone numbers and emails, the report says.

Failure to act

In most cases, Burris said, federal agencies are not using the kinds of techniques employed by private companies to detect such fraud.

“Today, in many agencies, if someone calls into a call center and says that I’m locked out of my account, many of them will allow them to get access to their account by saying `hey, we’ll let you change your name and your password on here,’” Burris said.

“They’ll probably ask them something to the effect of, ‘hey, can you tell me your name? Can you tell me social security number? Can you perhaps answer this question about a car that you probably had once upon a time?’ The person on the other end of the phone will do so,” based on easily obtainable stolen information.

Banks and other private companies, by contrast, use artificial intelligence and analytical tools to check for anomalous behavior. Examples include someone claiming to be calling from Connecticut who is actually in China or asking to add a bank account that has never been associated with the presumed beneficiary.

“DOGE claims that this is something that’s front and center for them,” Burris said. “I look forward to seeing what they actually do to try to curb some of these issues.”