Minnesota put a spotlight on the country's fraud crisis.
It's even worse than anyone imagined.
And Josh Hawley exposed one sickening fact about government fraud.
Your Tax Dollars Fund Terrorism While Bureaucrats Protect The System
U.S. Senator Josh Hawley (R-MO) grilled fraud prevention expert Haywood Talcove during a Senate hearing about the trillion-dollar heist happening under Washington's nose.
"Where's this money going?" Hawley demanded.
Talcove didn't sugarcoat it.
"It goes to terrorism, it goes to child trafficking, it goes to drugs, and then it's used to purchase luxury items, cars, purses, homes, that's all funded by people like me that pay taxes."
$115 million stolen every single hour.
Hawley hammered the point: "You're telling me that the electrician who goes to work every day and clocks in and works his butt off and tries to earn just enough to make his rent, maybe have a kid or two, put food on the table, his tax money is being used to buy other people luxury items, cars, yachts, whatever else, and is going to fund terrorism and child trafficking."
"Yes, sir," Talcove confirmed.
They Learned During COVID That Government's The Perfect Mark
The pandemic created a criminal training ground.
Talcove explained how fraudsters cracked the code: "During the pandemic, between the PPP loans and the unemployment insurance, they learned a really valuable lesson. Government never runs out of money, and the probability of getting caught is virtually zero. I have it at one-tenth of 1%."
One-tenth of one percent chance of getting caught.
The GAO estimates the government loses between $233 billion and $521 billion annually to fraud, but experts believe it's closer to a trillion.
During COVID alone, criminals stole between $100 billion and $135 billion from unemployment insurance programs using stolen identities.
California handed out at least $11 billion to fraudulent claims—potentially as high as $29 billion.
New York lost over a billion dollars.
International crime rings used bots and labor farms in China, Brazil, and Mexico to file fake claims by the thousands.
They created fictitious employers, bought stolen identities on the dark web, and paid hospital employees to steal patient data.
One Georgia scheme filed 5,000 fraudulent claims totaling $30 million using patients' stolen information.
Minnesota Shows Where Your Money Goes
Hawley's hearing exposed specific pipelines where stolen funds flow overseas.
In Minnesota under Tim Walz and Keith Ellison, billions vanished through fraudulent daycare centers and health clinics.
That money went to Somalia, to NGO fronts, to transnational criminal organizations.
Minnesota became the test case proving this isn't waste—it's organized theft on an international scale.
California gave billions to pro-Hamas NGOs.
Chinese Communist Party-linked individuals are tapping into these funding streams.
Russia and China learned during COVID that American government programs are unguarded ATMs dispensing cash to anyone with basic identity theft skills.
Talcove testified that criminals exploit "programs that they know elected and appointed officials won't touch and they can steal at scale."
Most benefit recipients "aren't real," Talcove explained.
"They're fake. They're someone's stolen identity that is getting used in all 50 states."
Antiquated Systems Are Features Not Bugs
Hawley pressed Talcove on how criminals pull this off at industrial scale.
These aren't sophisticated hackers breaking military encryption.
They're exploiting the fact that government still operates like it's 1974—because legally, it does.
The Privacy Act of 1974 prevents agencies from using the same identity verification tools banks use every day.
Private sector fraud rate: 3 percent.
Government fraud rate: 20 percent.
When Talcove testified at a House hearing, he told Marjorie Taylor Greene that government never fixes data theft "because it can't be forced to go out of business."
Businesses that lose 20 percent to fraud go bankrupt.
Government prints more money and demands your taxes.
Washington Won't Use The Solution That Already Exists
Hawley asked what needs to happen to stop the bleeding.
Talcove laid it out: "It's really simple. It's used every single day in the commercial sector, front end identity verification. You just don't get to say I am who I say I am. Second recertification of all the recipients. Third, a third party independent audit, and finally, involving federal law enforcement like the Secret Service to investigate it."
Banks verify your identity before opening accounts.
Amazon makes sure you're not stealing someone's identity to buy a TV.
Government runs trillion-dollar programs on the honor system.
The technology to fix this exists right now—Talcove's company and others provide identity verification services that could eliminate most fraud overnight.
Updating the Privacy Act and admitting the current system is designed to fail would solve the problem.
The fraud pipeline funding terrorism remains wide open because career bureaucrats protect their antiquated systems like sacred texts.
Another $115 million disappears every hour to luxury yachts for criminals and terror networks overseas.
Washington pretends there's nothing they can do about it.
Sources:
- LifeZette News Staff, "Senate Hearing Shocker: $1 Trillion Lost Annually, Where's the Outrage From the Swamp?" LifeZette, February 12, 2026.
- Josh Hawley Senate Office, "Hawley Exposes Fraud in State and Federal Programs and Dark Money Funding Web," February 11, 2026.
- U.S. Government Accountability Office, "Fraud Risk Management: 2018-2022 Data Show Federal Government Loses an Estimated $233 Billion to $521 Billion Annually to Fraud."
- CBS News, "Fraud costing U.S. government hundreds of billions a year as crime rings use stolen identities," May 12, 2025.
- ProPublica, "How Unemployment Insurance Fraud Exploded During the Pandemic," October 20, 2021.
- House Committee on Oversight and Accountability, "Hearing Wrap Up: DOGE Subcommittee's First Hearing Uncovers Billions Lost to Fraud and Improper Payments," February 13, 2025.