$264 of Stuffed Flounder and Fancy Hotels: The Rising Fury Over Government Spending

‘I feel cheated.’ Purchasing-card use by public officials, including waste and alleged fraud, is stoking taxpayer backlash in cities and towns across the U.S.

By Scott Calvert of The WSJ. Excerpts:

"Municipalities routinely grant p-cards to elected officials and other employees as a way to streamline business-related purchases. What’s being targeted now is purported misuse and lax oversight. Watchdogs’ findings range from claims of wasteful spending to alleged fraud. Some local officials have pushed back, though many say they have beefed up rules for p-cards."

"In Richmond, Va., a city audit last year identified $5 million in questionable transactions out of about $21 million over roughly two years. Among them: $1,423 on a catered lunch for a training session attended by 14 employees; $738 on “drinks, desserts, popsicles, and supplies” for an appreciation event attended by 11, and a $480 business suit for an employee to wear to court." 

Who Is Benefiting From the 340B Program?

States should stop bolstering a broken program, and Congress must close the loopholes that continue to harm patients

WSJ editorial. 

"Your editorial (“The Great 340B Healthcare Grift,” May 8) is exactly right. 340B drug discounts are fattening the coffers of large hospitals and pharmacies at the expense of patients—and it’s a scandal. The judge correctly called it a “coordinated collusion” that’s exploiting “Congress’s inattention to a federal program.”

A growing wealth of data show that profits are soaring for so-called charity-care hospitals, and that 340B hospitals with the highest share of cancer patients pursue aggressive medical-debt collection tactics against those the program was created to support. Yet state lawmakers continue to propose and pass reforms at the behest of hospitals to protect this unintended windfall.

Anyone who lives in a city with a significant hospital presence has likely noticed the steady expansion of hospital names and buildings—often concentrated in affluent communities rather than areas with large numbers of uninsured or low-income patients. States should stop bolstering a broken program, and Congress must bring transparency to 340B to close the loopholes that continue to harm patients.

Sally Greenberg

CEO, National Consumers League" 

The California Grift Goes On

Eighty percent of improper Medicaid payments nationwide reflect failures of eligibility, not bad-actor providers

Letter to The WSJ. 

"The California fraud story is even worse than your editorial points out (“The Great California Medicaid Grift,” May 16). The story’s central theme is that state leaders don’t care about fraud.

According to my organization’s freedom of information requests, California’s Department of Health Care Services referred only 127 Medicaid providers for fraud investigation between January and March. Yet CBS News found 89 hospice providers at a single address, 75 of which have racked up a combined 400 violations since 2021. The federal government has also suspended 800 hospice providers in the state this year. Is California even looking for fraud?

The real fraud story is that 80% of improper Medicaid payments nationwide reflect failures of eligibility, not bad-actor providers. California contributes to this crisis by letting people self-attest to key aspects of their eligibility, which is to say, it tolerates lying. The Trump administration should get California to start caring about fraud—to say nothing of every other state.

Hayden Dublois

Foundation for Government Accountability" 

Woman at center of sprawling Minnesota fraud gets nearly 42-year prison sentence

By TIM SULLIVAN of AP. 

"A judge on Thursday handed down an extraordinary prison sentence — nearly 42 years — to the former leader of a Minnesota nonprofit who was convicted in a staggering $250 million fraud case that helped ignite an immigration crackdown by the Trump administration.

Aimee Bock ran Feeding Our Future, which had claimed it helped provide millions of meals to needy children during the pandemic. The U.S. Justice Department, however, said she was atop the “single largest COVID-19 fraud scheme in the country.”

“I understand I failed. I failed the public, my family, everyone,” Bock, 45, said in federal court.

After the hearing, authorities announced charges against 15 more people accused of fraud in receiving federal payments for a variety of social services administered through Minnesota’s state government. The FBI said one man jumped from a fourth-floor balcony to avoid arrest.

“We will claw back every dollar you have stolen from the American people,” Assistant Attorney General Colin McDonald said, noting that the government sent more prosecutors and agents to Minnesota this year.

President Donald Trump used the fraud cases against Bock and many others to initially justify a massive surge of federal agents to the Minneapolis-St. Paul area last winter to target immigrants, leading to repeated confrontations between residents and those officers and the deaths of Renee Good and Alex Pretti.

Fake lists, lavish spending

COVID-19 brought changes to a federal program that typically fed children through schools. Restaurants could participate, and food distribution was extended to sites outside schools.

Investigators said Bock’s nonprofit was at the center of a crime network that included a web of partner organizations, phony distribution sites, kickbacks and fake lists of children. Feeding Our Future recruited people to create sites throughout Minnesota, and claims for reimbursement quickly followed, according to the government. 

“Aimee was a god,” a witness testified at trial.

Bock had long proclaimed her innocence but was convicted of conspiracy, fraud and bribery. Investigators said she and co-conspirators enriched themselves with international travel, real estate, luxury vehicles and other lavish spending.

“This was a vortex of fraud and you were at the epicenter,” U.S. District Judge Nancy Brasel told Bock.

A co-defendant was sentenced last August to 28 years in prison. Abdiaziz Farah claimed to be serving meals to thousands of children per day, investigators said, but the sites turned out to be parking lots or empty commercial space.

Bock’s lawyer, Kenneth Udoibok, had argued for no more than three years in prison, saying she had provided key information to investigators. He said Bock, a former teacher, had been unfairly portrayed as the mastermind and insisted that two co-defendants were responsible for running the scams.

State auditors found that the Minnesota Department of Education received numerous complaints about Feeding Our Future, but often told the group to police itself. In January, Democratic Gov. Tim Walz said he would not run for reelection after being pounded by Trump about theft in programs that rely on federal cash.

Trump, who has long derided Somalis, last year blasted Minnesota as “a hub of fraudulent money laundering activity.”

“Somali gangs are terrorizing the people of that great State, and BILLIONS of Dollars are missing. Send them back to where they came from,” Trump wrote on social media.

Bock is white, and the U.S. Attorney’s Office says the overwhelming majority of defendants in the cases are of Somali descent. Most are U.S. citizens.

At least 65 people have been convicted in a series of overlapping food fraud cases. Investigations began during the Biden administration.

“This case has changed our state forever,” Joe Thompson, formerly the lead prosecutor in the case, said outside the courtroom. “Aimee Bock did everything she could to earn this long sentence.”

Fraud cases grow

In a fresh batch of criminal cases filed this week in Minnesota, the government said alleged fraud involved $90 million across seven state-managed Medicaid programs.

The defendants include Fahima Mahamud, who was CEO of Future Leaders Early Learning Center, a childcare center in Minneapolis. Over three years, Mahamud’s organization was reimbursed approximately $4.6 million for services on behalf of people who didn’t make a required copayment, prosecutors allege.

A message seeking comment from her lawyer was not immediately returned Thursday. Mahamud earlier this year pleaded not guilty to fraud related to meals.

Two other people were charged with conspiring to get $975,000 in Medicaid subsidies for housing services that were not provided.

Two additional people were accused of receiving $21.1 million by billing Medicaid for autism therapy that was either unnecessary or not provided. Investigators said the two paid families as much as $1,500 per child per month to add their names to the program and get reimbursement. 

Minnesota’s Department of Human Services said it helped build the cases. Inspector General James Clark said payments to more than 600 providers have been halted since 2025 because of fraud allegations."

How a Scientific Cartel Protects Fraudsters and Rakes in Billions of Taxpayer Dollars

Corrupt scientists rarely face accountability. The real victims are everyone else. 

From Reason. Excerpts:

"Sylvain Lesné, a neuroscientist at the University of Minnesota, published a paper in Nature in 2006 claiming to identify a specific amyloid beta protein assembly as the direct cause of memory impairment in Alzheimer's. This reinvigorated the amyloid hypothesis at a moment when skepticism about it was ramping up. The National Institutes of Health (NIH) devoted $1.6 billion to projects that mention amyloids in 2022 alone, nearly half of all federal Alzheimer's funding that year. Lesné was a star.

But there were rumblings. Numerous amyloid drugs made it to trials with billions invested by pharmaceutical companies. They failed repeatedly. A question arose in the pharmaceutical community: How can this be right? How can the trials keep failing if the underlying research is correct? 

In 2022, the Vanderbilt neuroscientist Matthew Schrag uncovered evidence that images in Lesné's paper had been manipulated. Science magazine found more than 20 suspect papers by Lesné, with over 70 instances of possible image tampering. Nature retracted the paper in June 2024. Every author except Lesné signed the retraction. Lesné himself resigned from his tenured position at the University of Minnesota on March 1, 2025, three years after his fraud was exposed.

More news and details trickled out over time. Charles Piller's 2025 book Doctored talks about the Amyloid Mafia, a nickname for a network that had prioritized novelty over replication and marginalized dissenters for decades. Anyone questioning the amyloid gospel was pushed out and watched their funding vanish."

"Lesné resigned, but was still rich. None of his grant money was clawed back. The system that was supposed to catch this—peer review, university compliance, journal editorial boards—failed repeatedly for years.

Lesné was not a lone bad apple. The rot and corruption of academic research are systemic and structural. Daniele Fanelli's 2009 meta-analysis of survey data in PLOS One showed that approximately 2 percent of scientists self-reported fabrication or falsification—and 14 percent reported witnessing it in colleagues. Self-reports mark the floor, not the ceiling.

J.B. Carlisle's 2021 paper, "False individual patient data and zombie randomised controlled trials submitted to Anaesthesia," showed that out of 153 trials with individual patient data available, 44 percent had untrustworthy data and 26 percent were zombie trials animated entirely by false data. In a 2025 PNAS study, researchers estimated that the number of fraudulent publications is doubling every 1.5 years, while legitimate publications double every 15.

At least 400,000 papers published from 2000 through 2022 showed signs of coming from paper mills. Former BMJ editor Richard Smith asked, "Is it time to assume health research is fraudulent until proven otherwise?" A 2015 Lancet comment by Richard Horton put it bluntly: "Much of the scientific literature, perhaps half, may simply be untrue."

"The peer review process helps enable this fraud. The economist Bruce Yandle called it the "Bootleggers and Baptists" phenomenon: A group with strongly held moral beliefs will end up working with people interested in exploiting it financially. Self-righteous gatekeepers say peer review is required for integrity. As a byproduct, the publishing oligopoly extracts billions in profit by charging for access to taxpayer-funded research. Paper mills have become a shadow market worth, by one conservative estimate cited by Nature, hundreds of millions of dollars per year by publishing any slop they get their hands on, knowing that researchers desperate to publish would rather cheat than starve and that sociopaths would happily buy authorship with a credit card."

"The Food and Drug Administration Amendments Act of 2007 legally required public posting of clinical trial results on ClinicalTrials.gov. A 2015 New England Journal of Medicine analysis showed only 13.4 percent compliance in reporting summary results within the required 12-month window. The government has the authority to fine violators up to $10,000 per day; it could have collected $25 billion according to a 2015 STAT investigation. But it collected essentially nothing, because the agency doesn't want to fight the powerful institutions it regulates."    

The U.S. Indicts a Mexican Governor

Charges made in New York mean President Sheinbaum will have to choose a side

By Mary Anastasia O’Grady. Excerpts:

"Mexican civil-society groups have long accused the political class of aiding and abetting cartels. Activists, family members whose loved ones are among the 130,000 gone missing since 2006, and journalists are some of the brave Mexicans who have tried to raise the consciousness of their nation about what they allege is a link between the gangsters who terrorize them and the state. It’s dangerous work."

"For more than a decade, the Cartel, under the rule of the Chapitos Leaders, and, before them El Chapo and El Mayo, has paid cash bribes to public officials at each level of the government, in exchange for protection of the Cartel’s drug trafficking operations. These corrupt government and law enforcement officials, including the defendants, are essential to the Cartel’s drug trafficking operations.”" 

Charges of a Covid Coverup

The Morens indictment reveals an effort to hide facts about the U.S. role

WSJ editorial. Excerpts:

"the facts in the indictment, which say he [David Morens] intentionally sought to obfuscate the NIH role in funding the nonprofit EcoHealth Alliance, which may have contributed to the virus leaking from a Chinese lab."

"The NIH last decade provided some $8 million in grants to EcoHealth, some of which funded the Wuhan Institute of Virology’s gain-of-function virus experiments."

"Between February and March 2020, Dr. Morens and a co-conspirator—whom press reports say is Mr. Daszak—co-authored articles arguing that the virus most likely emerged from the wild."

"On June 17, 2021, the indictment says, he warned Mr. Daszak and “others” that he had received a document production request by five Senators investigating the virus’s origins. Dr. Morens assured his correspondents that he had “retained very few documents on these matters.” Public officials are required by federal law and instructed to retain all such documents." 

Police Chiefs Allegedly Faked Robberies in $5,000-a-Pop Visa Fraud Scheme

For nearly a decade, four Louisiana lawmen and a Subway shop owner manufactured phony crime reports to help foreign nationals stay in the U.S., prosecutors say

By Joe Barrett of The WSJ. Excerpts:

"In a case still winding through court, federal officials allege the men spent nearly 10 years manufacturing false crime reports as part of a visa-fraud scheme. The operation netted the officers $5,000 per “victim” and helped hundreds of foreign nationals secure U visas—a status that allows certain crime victims to remain in the U.S., Van Hook said."

"The center of the scheme, authorities said, was Chandrakant “Lala” Patel, the friendly owner of a Subway and other small businesses. Patel, himself a U visa recipient, would allegedly connect with crime “victims” looking to stay in the U.S."

"He would then turn to one of the law-enforcement officials to draw up paperwork for crimes that never happened"

"The officers would generate false reports and swear in writing that the people named were legitimate crime victims"

"For years, it worked, authorities said. Investigators with the U.S. Citizenship and Immigration Services spurred the multiagency probe in July 2024 after uncovering a pattern of inconsistencies in U-visa applications."

"Hundreds reportedly obtained U visas through the scheme, and Louisiana isn’t alone."

"Earlier this month, a federal grand jury in Boston indicted 10 Indian nationals for allegedly staging convenience-store holdups in Massachusetts and elsewhere to secure U visas. A bogus robber and getaway driver would appear to rob the clerk or owner at gunpoint, then flee, authorities said. Minutes later, the clerk would call police and present security-camera footage as evidence."

Also see Five Things to Know About the Visa Fraud Case Shaking Small-Town Lousiana: Prosecutors say the little-known U visa is at the heart of an alleged scheme. 

Tariffs Have Long Been a Corruption Magnet

Transparency is a hallmark of good tax policy; opacity is its enemy

Letter to The WSJ. 

"Paul Rahe’s justifications for tariffs fail under scrutiny (“There’s a Case for Tariffs,” op-ed, April 16).

Mr. Rahe assumes tariffs boost resiliency, but recent history shows the opposite. National security might justify narrow trade restrictions, but tariffs have not insulated Americans from economic disruptions and have frequently made things worse. The baby-formula crisis of 2022 and automakers’ recent struggles to obtain aluminum, each triggered by the sudden closure of a tariff-protected U.S. factory, show that localized supply chains are vulnerable to local shocks—and tariffs block alternatives. Research from the pandemic finds that globalized supply chains performed better and adjusted faster than nationalized ones.

Mr. Rahe also errs on tariffs’ ability to promote manufacturing. Decades of protection failed to create thriving U.S. steel, shipbuilding, textile and footwear industries. More recent duties on solar panels did the same. With around half of imports being manufacturing inputs, tariffs raise American producers’ costs and undermine competitiveness. Combined with uncertainty surrounding executive branch tariffs, this explains why surveys consistently reveal manufacturers opposed to new protectionism.

Mr. Rahe is correct about the intrusiveness of income taxes, but tariffs can’t replace them because import volumes are far too small. Their invisibility, meanwhile, isn’t the benefit Mr. Rahe thinks. Since the 19th century, tariffs have been a breeding ground for rent-seeking and corruption and have persisted after decades of failure, precisely because their costs are hidden and diffuse. Transparency is a hallmark of good tax policy; opacity is its enemy.

Alfredo Carrillo Obregon and Scott Lincicome

Washington

Mr. Carrillo Obregon is a trade policy analyst and Mr. Lincicome is vice president for economics and trade at the Cato Institute" 

Costliest Autism-Therapy Firm—Which Was Barred From Medicaid—Is Closing

A rival provider, which recently settled civil allegations of fraudulent Medicaid billing, to take over operations at Piece by Piece Autism Centers

By Christopher Weaver of The WSJ. Excerpts:

"The nation’s costliest autism therapy provider will shut down by mid-May"

"the state of Indiana said it would bar the firm from billing Medicaid."

"The autism-therapy provider, Piece by Piece Autism Centers, received $340,000 in Medicaid payments per patient in 2023, the highest level in the country"

"Once Piece by Piece—which state officials have said abused the taxpayer-funded program for low-income people—closes, its centers will be operated by a rival autism-therapy provider"

"Piece by Piece extracted its high payments in part by boosting list prices to levels that allowed it to collect as much as $640 an hour from the state"

"From 2019 to 2023, Indiana directly paid Piece by Piece $58 million"

"State Medicaid programs’ direct payments for the therapy grew to $2.2 billion in 2023, from $660 million just four years earlier"

"At first, owner Meghann Mitchell, who purchased a $2.5 million Sanibel Island vacation home, a $600,000 riverfront Indiana getaway and other properties as Piece by Piece’s billings soared, was defiant. She wrote to employees that “Piece by Piece has done nothing wrong and intended to fight this decision,”"

"Mitchell also owns, through a limited liability company, real estate used by the centers—meaning she could remain a landlord for her former business."

"Indiana is undertaking a wider overhaul of how it covers autism therapy. For years, Indiana had paid autism-therapy providers 40% of whatever list prices they charged, leading to ultrahigh payments for some providers. The state set a flat rate in 2024."

"Indiana also plans to seek federal approval for a moratorium on new autism-therapy providers this month"

Related posts:

The Boom in Autism Therapy Is Medicaid’s Fastest-Growing Jackpot: Some companies have found lucrative opportunities to capitalize on a growing need, billing long hours and extracting payments as high as $800 an hour (2026)

Autism-Therapy Firm That Was Paid $340,000 per Patient Is Barred From Medicaid: Indiana officials move to terminate Piece by Piece Autism Centers, cite federal pressure for crackdown after a Journal investigation (2026) 

The Medicaid Autism Racket: Behavioral therapy payments are an easy target for fraud (2026)

Autism-Therapy Firm That Was Paid $340,000 per Patient Is Barred From Medicaid

Indiana officials move to terminate Piece by Piece Autism Centers, cite federal pressure for crackdown after a Journal investigation

By Christopher Weaver of The WSJ. Excerpts:

"Indiana is barring one of the nation’s most expensive autism-therapy providers from billing the state’s Medicaid program two weeks after the company’s practices were detailed in a Wall Street Journal article, state officials said.

The autism-therapy provider, Piece by Piece Autism Centers, received the highest per-patient payments in the country in 2023—about $340,000 on average—according to a Journal analysis of Medicaid billing records.

Piece by Piece did so in part by raising its list prices to levels that allowed it to collect as much as $640 an hour from the state for services that could be performed by a high-school graduate. From 2019 to 2023, Indiana directly paid Piece by Piece $58 million for autism-therapy services, the billing records show."

"In letters sent to Piece by Piece this week, the state [Indiana] said it was revoking the company’s provider agreements for all seven of its centers."

The state "would bar the centers from billing Medicaid"

One official said "“There were no guardrails under the prior administration, and they weren’t doing the job of oversight they should have been doing." 

Related post:

The Boom in Autism Therapy Is Medicaid’s Fastest-Growing Jackpot: Some companies have found lucrative opportunities to capitalize on a growing need, billing long hours and extracting payments as high as $800 an hour (2026) 

State records show 89 hospice companies at one Los Angeles office plaza. We went to look for ourselves.

By Laura Geller of CBS News. Excerpts:

"The Merabi Professional Medical Plaza, a three-story, 32,000 square foot stucco and glass office building in Los Angeles, is home to a salon, a law office, a modeling agency, a realty corporation and, also, 89 licensed hospice companies."

"The building is among the most extreme cases of what's known as "clustering" to turn up in a sweeping CBS News investigation — a grouping of large numbers of hospice offices that state auditors consider a major red flag for potential fraud. 

The Van Nuys address for Merabi Plaza appears dozens of times in state records for licensed hospice companies. Inside the building's entry hall, a directory lists numerous  hospice agencies that line the long tiled hallways, although the building's owner claims many are no longer there."

"Auditors said the clustering of so many firms raised concerns because it suggests that "the number of agencies in these areas likely exceeds the number of patients who need services."

Concerns about clustering appear in a 2022 California State Auditor's report, which found that Los Angeles County had experienced a 1,500% increase in hospice companies countywide since 2010. That's six times more hospice providers than the national average, relative to the county's elderly population."

"other warning signs for potential fraud included multiple hospices in one building, geographic clustering, low patient counts, high rates of terminally ill patients later discharged alive, excessive billing and staff shared across multiple companies."

"72 of the 89 registered hospices in Merabi Plaza have at least three of those six potential warning signs."

"regulators visited multiple suites in Merabi Plaza between 2021 and 2025. They found nearly 400 violations at 75 companies"

"Many of the hospice companies in Marabi Plaza have been billing Medicare for years and collecting reimbursements that come from federal tax dollars."

[there are] ""ghost hospices." Those are paper companies that bill the government for patients, even if they don't actually provide any real care."

The Boom in Autism Therapy Is Medicaid’s Fastest-Growing Jackpot

Some companies have found lucrative opportunities to capitalize on a growing need, billing long hours and extracting payments as high as $800 an hour

By Christopher Weaver, Tom McGinty and Anna Wilde Mathews of The WSJ. Excerpts:

"In 2023, the state [Indiana] paid [Meghann] Mitchell’s company, Piece by Piece Autism Centers, $29 million to provide therapy to just 84 patients" 

"That amount [$340,000 a child] surpassed what Indiana Medicaid typically spends in a year treating a newly diagnosed lung-cancer patient or covering a year of nursing-home care."

"reimbursements as high as $640 an hour for routine therapy that can be administered by workers with little more than a high-school diploma."

"“I don’t think Indiana really had any oversight, or not much,” said Mitchell"

"The number of companies offering such therapy"

"almost doubled between 2019 and 2023. Direct payments from state Medicaid programs to autism therapy providers grew to $2.2 billion in 2023, from $660 million just four years"

"Federal taxpayers financed about 70% of Medicaid spending during that period. Entrepreneurs and investors, including some private-equity firms, have piled into the business."

"The office [inspector general inspector general] has so far found widespread flaws in Maine, Wisconsin, Indiana and Colorado" and "errors in every case, including billing for therapy while patients napped or watched videos"

"Many providers nationwide billed a high number of hours of therapy for nearly every patient"

some "billed an average of 30 or more hours of weekly therapy per child in 2023"

"Evidence-based, broadly accepted guidelines do not exist for autism care" 

one firm "paid bonuses for working more hours of “treatment delivery” services, starting at 30 hours per week"

"Medicaid [in Indiana] spending on autism surged—from $21 million in 2017 to $611 million in 2023"

"No one monitored providers’ billing practices during those years"

one company "company threw Christmas parties with an open bar at local country clubs and a downtown Indianapolis karaoke bar"

one firm "In October 2023 . . . boosted its therapy prices again, raising them to $1,600 an hour" 

Seniors Paid Billions in Extra Premiums Due to Alleged Medicare Overpayments

A congressional committee finds that controversial practices like adding diagnoses in Medicare Advantage triggered higher bills

By Christopher Weaver and Anna Wilde Mathews of The WSJ. Excerpts:

"The average American senior’s Medicare premiums last year were about 10% higher, or more than $200 annually, because of alleged overpayments to private Medicare Advantage plans, congressional investigators found.

Medicare Part B premiums that most seniors pay were partly pushed up by controversial health-insurer practices such as adding diagnoses to trigger higher payments"

"Overpayments to Medicare Advantage insurers increased Part B premiums by $13.4 billion in 2025"

"Medicare Advantage costs the federal government more than traditional Medicare, partly because of insurers’ billing practices. The insurers are paid more to cover enrollees who have more health conditions, and they can boost their reimbursement by recording more diagnoses."

"in 2025 Medicare Advantage cost roughly 20% more than traditional Medicare."

"insurer practices contribute to potential overpayments. For instance, insurers sent nurses to patients’ homes, where they documented diagnoses that trigger more payments."

"Medicare officials nevertheless moved in January to remove some of the tools insurers use to increase their payments, such as certain behind-the-scenes reviews of medical charts that can lead to extra diagnoses." 

The Medicaid Autism Racket

Behavioral therapy payments are an easy target for fraud.

WSJ editorial. Excerpts:

There was "a Minnesota man pleading guilty last week to bilking Medicaid by setting up a sham autism center."

"Medicaid autism treatment has become an open vault for fraud and abuse."

"Behavioral therapy is an especially ripe target for people looking to game Medicaid. Diagnostic standards can be elastic, and states provide little oversight of providers and pay claims without requiring verification of treatment or benefits. While insurers that administer Medicaid benefits have an incentive to police fraud, autism treatment has become a fee-for-service free-for-all."

"Abdinajib Hassan Yussuf set up a fly-by-night autism center [in Minnesota] claiming to provide one-on-one therapy for autistic children . . . and paid kickbacks to parents to enroll them in his center."

"99% of Colorado’s Medicaid payments in 2022 and 2023 for autism treatment were improper or likely improper, totalling $285.2 million."

"Many autism centers billed Medicaid at more than $50 an hour for autism “treatment” when children were playing games, napping or eating."

"the state failed to do a “postpayment review of payments” to verify compliance with state and federal requirements."

"treatment was often “provided by staff who did not have the appropriate credentials”"

"states have little incentive to police waste and fraud because they get paid more for enrolling more of their citizens in Medicaid." 

Why is the USDA Involved in Housing?!

By Alex Tabarrok.

"In yesterday’s post, The 21st Century ROAD to Housing Act, I wrote that Trump’s Executive Order “cuts off institutional home investors from FHA insurance, VA guarantees and USDA backing…”. The USDA is of course the United States Department of Agriculture. In the comments, Hazel Meade writes:

USDA? Wait, what????
Why is the USDA in any way involved in housing financing?
Are we humanly capable of organizing anything in a rational way?

It’s a good question. The answer is a great illustration of the March of Dimes syndrome. The USDA got involved with housing in the late 1940s with the Farmers Home Administration. The original rationale was to support farmers, farm workers and agricultural communities with housing assistance on the theory that housing was needed for farming and the purpose of the USDA was to improve farming. Not great economic reasoning but I’ll let it pass.

Well U.S. farm productivity roughly tripled between 1948 and the 1990s as family farms became technologically sophisticated big businesses. So was the program ended? Of course not. Over time the program subtly shifted from farmers to “rural communities”–the shift happened over decades although it was officially recognized in 1994 when the Farmers Home Administration was renamed the Rural Housing Service. Today rural essentially means low population density which no longer has any strong connection to agriculture.

So that’s the story of how the US Department of Agriculture came to run a roughly $10 billion annual housing program for non-farmers in non-agricultural communities. And how does it do this? By supporting no-money-down direct lending and a 90 percent guarantee to approved private lenders. Lovely.

It’s a small program in the national totals, but an amusing example of the US government robbing Peter to pay Paul and then forgetting why Paul needed the money in the first place."

Dead people received internet subsidies

See FCC Overhauls $2.9 Billion Lifeline Subsidy Program to Curb Improper Payments: Regulators vote to tighten vetting for phone and internet subsidy after investigation found millions went to dead subscribers by Patience Haggin of The WSJ. Excerpts:

"The Federal Communications Commission voted Wednesday to advance sweeping reforms to its Lifeline program, tightening eligibility requirements and procedures for the nearly $3 billion phone and internet subsidy for low-income households."

"A government review, released by the FCC Office of Inspector General last month, found that over a nearly five-year period about 117,000 deceased individuals across California, Texas and Oregon received Lifeline benefits totaling $5 million. Thousands of these subscribers were already deceased at the time they were purportedly enrolled in the program. Another nearly $5.5 million was claimed for duplicate enrollments, in which more than one monthly benefit was claimed for a single individual, according to the report." 

How a $30 Billion Welfare Program Became a ‘Slush Fund’ for States

Republicans and Democrats alike decry the lack of oversight for America’s famous antipoverty experiment. ‘Fraud by design.’

By Cameron McWhirter, Dan Frosch and Scott Calvert of The WSJ. Excerpts:

"Temporary Assistance for Needy Families, or TANF, has long been plagued by poor financial oversight and questionable spending in states led by both Republicans and Democrats.

"Auditors in numerous states . . . . have uncovered problems with TANF"

"TANF funds flow annually through block grants to states, which have wide latitude to spend them and minimal reporting requirements—a structure critics say hampers oversight."

"States now award most of the money to nonprofits, companies and their own state agencies. An average of about 849,000 families got direct cash aid each month in fiscal 2025, federal data shows, down from about 1.9 million in fiscal 2010."

"states inaccurately reporting large expenditures and disbursing millions of dollars to contractors without tracking how the cash was spent."

"states  . . . have directed hundreds of millions of dollars to programs with tenuous—or no—connections to TANF’s goals."

"college scholarships that benefited middle- or upper-income families, antiabortion centers, a volleyball stadium in Mississippi, and an Ohio job-training nonprofit where leaders and employees were later sentenced to prison after prosecutors said they used TANF money for vacations, real estate and salaries for people who didn’t work there."

"the GAO identified 37 states where recent audits found 162 deficiencies in financial oversight, “56 of which were severe.”"

"“opaque accounting practices”"

"States often use TANF money as a “slush fund” to plug budget shortfalls and finance initiatives that don’t help poor people"

"The most prominent scandal involving TANF funds, at least $77 million, took place several years ago in Mississippi."

"officials have often failed to track where the money goes or whether it is spent properly."

"Louisiana . . . state employees didn’t verify or document the hours worked by some TANF enrollees"

"hadn’t accurately documented TANF distributions to contractors."

"In Connecticut, auditors said the state in 2024 didn’t sufficiently review the financial reports of 131 subcontractors who received $53.6 million in TANF funds"

"states don’t have to spend all their TANF money in a single year, and many have built up large surpluses. In times of fiscal pressure, such as the 2007-09 recession, many states used TANF funds for purposes that had little to do with the program’s original goals"

"Several states have also used TANF money for programs available to people well above the poverty threshold.

Between 2011 and 2024, Michigan faced criticism for pumping more than $750 million in TANF funds into two college scholarship programs that aided many students from middle-income and even affluent families" 

Medicaid Fraud in New York

By Chris Edwards of Cato. 

"Medicaid waste is huge. Officially, the federal-state health program loses 6 percent of benefits to errors and fraud a year, or $37 billion in 2025. But some analysts argue that the waste is much larger because the official figures exclude certain types of improper payments.

Medicaid theft seems straightforward to execute. No brilliant scheme is required, as the Minnesota scandals illustrate. You submit fake paperwork to the state Medicaid agency for services not provided, and the government drops money in your bank account. Scams often last for years before authorities finally investigate.

Recently, seven individuals in Brooklyn were found guilty of stealing $68 million from New York’s Medicaid program. The theft began in October 2017 and continued until July 2024. State administrators were paying a lot of money for a long time to three fake health care businesses before law enforcement finally caught up.

Zakia Khan and Ahsan Ijaz owned and operated two social adult day cares (SADCs)—Happy Family Social Adult Day Care and Family Social Adult Day Care—as well as Responsible Care Staffing, which was a consumer directed personal assistance program (CDPAP). These entities billed New York Medicaid, and the two ringleaders paid people to recruit fake patients with bribes to pretend to receive services from the scam health care companies.

Why did it take seven years to bust this racket? Did state administrators ever inspect the facilities, call customers to check if services were actually delivered, or interview the business owners, Khan and Ijaz? After all, they were getting about $10 million a year of taxpayer money.

New York Post reporters recently visited 13 SADCs in New York City and “found little evidence of any medical support being offered or administered.” Apparently, the program’s rules are loose, government administrators don’t seem to audit much, and facilities appear to offer free lunch and games to able-bodied individuals. More ping pong tables than wheelchairs.

The Post reports that the “number of SADC centers has jumped from 40 in 2013 to almost 400 today, popping up in storefronts, apartments, and basements across the five boroughs.” Meanwhile, in New York, even “Governor Hochul has called CDPAP a racket … citing TikTok ads which reportedly attempt to recruit individuals at $37 an hour to care for their own relatives who may not actually need care.” 

Laxity in rules and enforcement helps explain why New York State spends two and a half times more on Medicaid than Florida, even though the latter has a larger population.

state, and local spending on Medicaid in New York State soared from $55 billion in 2013 to $116 billion by 2025, with federal taxpayers currently picking up 60 percent of the costs. How can we cut Medicaid fraud? Congress should block-grant the program and slash the federal payment share."

Minnesota’s Fraud Problem Isn’t Immigrants

It’s the vast size of the welfare state that corrupts them

WSJ editorial, Excerpts:

"Cash payments. Minnesota offers a “working families” tax credit of up to $3,089 a year, which operates similar to the federal earned income tax credit (maximum of $8,046). Both credits phase out as incomes rise. Minnesotans can also claim a $1,750 refundable tax credit for each child, on top of the $2,200 federal credit. That’s $4,000 per kid.

Low-income Minnesotans can also qualify for a preloaded debit card to pay for incidental expenses. A single unemployed parent with two children can get $1,189 a month in additional cash payments. Minnesotans who work can get more cash, but the work incentive is undermined by the state’s other payments that phase out as paychecks grow."

"With so much money and so many programs, this vast system is an open vault for scammers—especially when politicians are loathe to police fraud because doing so might be called “racist” or “anti-poor.” But it’s also corrupting for beneficiaries who have an incentive to remain on the dole rather than build an independent life."