Inside job: For Uncle Sam, the fraud is coming from government employees

Leticia Mariscal seemed to have hit on a nearly foolproof scam.

She worked for the social services department of Madera County in California, where she handled food stamp cases.

For three years, starting in 2022, she would scour the county’s databases looking for people who were elderly or dead, and would approve a benefit claim for them — and siphon the money to her own account. She found noncitizens to be particularly enticing targets, calling to pointedly ask about immigration records, figuring she would scare them into forgoing benefits and she could then grab them for herself.

In Nevada’s Clark County, an employee with the public guardian’s office would also peruse records looking for dead residents whose estates were being administered by the county, prosecutors charged. She got into their accounts and funneled their money to herself.

Congress and President Trump have complained about massive fraud by immigrants, street gangs, international organized crime syndicates and everyday Americans.

But in many cases, the fraud is actually coming from inside the house.

From pandemic assistance to food stamps to Social Security checks to tax refunds, government employees are bilking taxpayers — and those legitimately seeking services — out of their money.

That includes federal workers, such as those at the IRS or Social Security, who exploit their inside access. But it also includes the state and local workers who end up doling out hundreds of billions of dollars Uncle Sam sends the states to provide for housing, food, medical and cash assistance.

“With $1.4 billion of taxpayer dollars lost to fraud each day, we need accountability at all levels,” said Sen. Joni Ernst, an Iowa Republican who has made a cottage industry of embarrassing bureaucrats caught with a hand in the cookie jar. “Any bureaucrat busted for treating government benefits like a self-service buffet should be served their next taxpayer-funded meal behind bars.”

She’s part of a group of lawmakers pushing for legislation to make payments more deliberate, changing the current pay-and-chase model where governments shovel money out the door and only later try to figure out if it went to the right place.

Rep. James Comer, chair of the House Oversight Committee, is leading that push in the House.

“Every single member of Congress should find this rampant fraud unacceptable,” he told The Washington Times. “Any federal employee who engages in fraud should be fired and prosecuted to the fullest extent of the law.”

The National Insider Threat Special Interest Group, at the request of Ms. Ernst, produced a report last year looking at fraud by government employees. It called the amount of losses “staggering” and concluded that it had become an “acceptable norm.”

“This mentality would not be acceptable in a profit-driven corporation,” the report said.

The group cataloged more than 320 insider threat incidents in the federal government alone from 2020 to 2024, singling out the Defense Department, Veterans Affairs and the U.S. Postal Service as particularly troubling.

NITSIG said agencies take care to protect their networks and data against technical threats, but the problem is not just a technology issue.

“How would you like it if your personal bank account had money taken out of your account on a regular basis, to fund the malicious objectives of bank employees? There is really no difference,” the report said.

Even small targets can add up.

Lisa Figge, a National Park Service employee, was caught on video in 2023 counting out the money she’d collected from guided tours and campsites at Ozark National Scenic Riverways — and pocketing $1,200 of it.

When authorities started investigating, they found she’d been doing it for years. She admitted to stealing nearly $250,000.

She earned five years’ probation and an order to pay back the money.

A logistics worker at a Veterans Affairs clinic in Ohio used his position to order nearly $200,000 worth of iPads, iPhones and other electronics, keeping some for himself and selling others for cash.

At the State Department, Levita Almuete Ferrer, a budget analyst, used her access to a government QuickBooks account to cut checks directly to herself or her friends. She would then fabricate the records to make it look like it was an official expenditure.

She wrote 63 checks in all, stealing $657,347.50.

Ferrer told the judge she stole the money to fuel a gambling addiction she developed because of stress related to the coronavirus pandemic.

A housing authority employee in Palatka, Florida, was pulling a similar scheme, creating his own company, then directing 48 payments to it over the course of two years. He managed to walk away with $155,706.

In New York City, Olabanji Otufale — a convicted fraudster — was nevertheless working as a fraud investigator for the city’s Department of Homeless Services. He used his access to databases to steal identities of homeless people who’d applied for shelter beds or food assistance, then had a confederate, Marc Lazarre, apply for unemployment benefits in their names.

They weren’t very successful​ because the homeless often beat them to the punch.

At one point, Lazarre complained that the homeless had already applied for unemployment in their own names, effectively blocking the fraudsters’ claims.

‘Told you these bums b on it,” he texted Otufale.

The pair ended up netting just $182 — and each got more than two years behind bars.

It’s not just having access. Government employees often bring inside knowledge that helps fuel the scams.

IRS employee Rodney Quinn Rupe tried to steal more than $2 million in tax credits from oil giant ExxonMobil. He shifted the credits to apply to an account he created for a company he controlled and belatedly applied them to a past tax year, figuring the IRS would then cut him a refund check.

It did. But Rupe had trouble trying to deposit the check and was ultimately arrested before he could.

His lawyer said he blamed ExxonMobil for the 2016 death of his daughter in a car accident, which he claimed happened on land Rupe associated with the oil firm. Trying to steal the money was his attempt to punish the company.

Still, the lawyer said that since he didn’t actually get any of the money, giving him jail time would be “grossly unjust.” The judge disagreed, slapping him with a year in prison.