Avarice, or greed, is one of the seven deadly sins. According to St. Timothy, “The love of money is the root of all evils.”

Greed is part of the human condition. It has always been with us. Yet in our progressive, post-Christian, materialistic, and debased culture, it seems like we are seeing more and more instances of egregious criminality based on greed.  

For example, Minnesota’s Somali community has recently faced scrutiny over major fraud cases, particularly the multimillion-dollar “Feeding Our Future” scandal. It involved Covid pandemic food aid and other forms of government assistance, including Medicaid fraud, child care, housing, and autism programs. Estimates of the fraud vary from between $9 and $18 billion. FBI Director Kash Patel opined that preliminary findings suggest that this is just “the tip of the iceberg.”

To put things in perspective, the GDP for the country of Somalia is approximately $13 billion. 

Taxpayer funds meant for the hungry, homeless, and sick were used by one defendant, 24-year-old Abdimajid Mohamed Nur, to buy luxury cars, jewelry, and a honeymoon trip to a Maldives beach resort. At Nur’s sentencing, U.S. District Judge Nancy E. Brasel admonished him, saying, “Where others saw a crisis and rushed to help, you saw money and rushed to steal.” In other words, greed. At Nur’s sentencing, U.S. District Judge Nancy E. Brasel admonished him, saying, “Where others saw a crisis and rushed to help, you saw money and rushed to steal.” In other words, greed.Tweet This

Unfortunately, this is not an isolated case. Similar fraudulent practices have been reported in Maine, Washington, New York, Oregon, California, Massachusetts, Ohio, Illinois, and other (mostly blue) states. The fraud has been particularly egregious since the enactment of the Affordable Care Act followed by Covid-era federal subsidies that expanded Medicaid coverage. 

For example, according to reporting by Alex Berenson, about one half of New York City is on Medicaid. Fraud of all sorts is widespread. New York state now pays approximately $120 billion a year toward Medicaid alone, or $6,000 a resident, far more than any other state.        

The Government Accountability Office (GAO) recently released a report revealing billions of dollars of systemic Obamacare fraud, including fake enrollments, payments to dead people, marketplace scams, stolen Social Security numbers, and incorrect income estimates to receive Obamacare subsidies at taxpayers’ expense.

A Department of Housing and Urban Development (HUD) report found more than $5 billion in taxpayer funds went to “questionable” rental assistance recipients during Fiscal Year 2024—the final year of the Biden administration. The fraudulent monies were sent to approximately 30,000 “deceased tenants” and “thousands” of potential noncitizens. HUD officials criticized the Biden administration for a directive “to push funding out the door with minimal oversight.”

Obscured by the reporting is that too many progressives feel fraud against government services by recent legal (and illegal) immigrants and others isn’t really that bad. They think it should be considered as a type of secular tithe. It helps mitigate liberal white guilt. In this inverted thinking, the flow of stolen money is a type of reparation. Calls for accountability are returned with charges of xenophobia and racism. Above all, progressives work against transparency and shining light on waste, fraud, and abuse. Too many benefit from the status quo. Remember their criticisms of DOGE?

There is another quiet crisis lurking behind the Somali fraud crisis. It is something that policy makers and law enforcement do not like to talk about: our failure investigating government service fraud in general and following the resulting dirty money and value trails.    

To put things in perspective, a generation ago, there was consensus that proceeds from drug trafficking generate the largest category of dirty money in the United States. It is impossible to put a precise dollar total on America’s narcotics habit, but most experts agree that it is over $100 billion annually.    

However, the U.S. Department of the Treasury’s 2024 National Money Laundering Risk Assessment states that fraud against government programs is now the largest and most significant crime generating illicit proceeds. The GAO calculates the federal government loses between $233 billion and $521 billion annually to fraud and federal improper payments.  

In other words, in 2024, approximately 7 percent of our $7 trillion federal budget resulted in fraudulent outlays. Much of this includes Medicare, Medicaid, SNAP/EBT, and Affordable Health Care Act fraud. The actual amount is much higher because the above is based on a small number of programs that report these numbers. Additional fraud is also generated at the state and local levels.  

For example, California’s Economic Development Department, which oversees Unemployment Compensation, paid out approximately $30 billion in fraudulent unemployment claims, including more than $1 billion to inmates in California prisons—including some on death row. 

Some experts think the public sector experiences fraud at a rate of about 20 percent compared with about 3 percent in the private sector.

While greed is an intrinsic part of the human condition, at least in the United States it was more manageable in the not-too-distant past. Unfortunately, it seems to be growing exponentially. There are many reasons, but some include the breakdown of the family, the growth of secularism, entitlement, the tremendous growth in government services, and political pressure and the corresponding lack of effective oversight. During the Biden administration, there was a flood of illegal immigrants from countries where fraud and corruption are commonplace. They bring their culture, values, and ways of doing business with them. Corruption, the politicization of law enforcement, influence, and vote buying are now seemingly mainstream. 

The end result is that the surge in fraud affects individuals, communities, and our country as a whole. The rule of law is weakened. Trust in government erodes.  

There is another quiet crisis behind the fraud as well. It is our inability to effectively follow the fraudulent money trails.

Once criminals and criminal organizations start to accumulate large amounts of money, they try to hide it or disguise its origins. In other words, they launder the ill-gotten gains. 

Fraud is a “specified unlawful activity” (SUA) or “predicate offense” to charge money laundering. In addition to drug trafficking and government program fraud, other common SUAs include human trafficking, customs fraud, weapons trafficking, e-commerce fraud, social media scams, corruption, and many others.  

The magnitude of criminal proceeds is staggering—conservatively estimated at approximately $4 trillion a year worldwide. Of course, it depends on what is included in the count. For example, tax evasion is not a predicate for money laundering in the United States, but it is in many countries and jurisdictions. But however we calculate it, the trillions of dirty dollars laundered every year along with the tens of trillions of dollars of nonproductive wealth parked in nontransparent offshores and secrecy havens pose a real threat to the integrity of the world financial system.  

Shadow banking and underground financial systems pose enormous problems. Global regulators report that in 2024 non-bank financial institutions held approximately 257 trillion dollars in assets operating largely beyond traditional banking rules. That sum exceeds the combined annual GDP of every country on earth.

Using our initial example of Somali fraud in Minnesota, without a doubt some of the proceeds of crime were illegally transferred back to unknown recipients in Somalia using hawala, an ancient money and value transfer system that is quite common in East Africa. Hawala gained some recognition in the United States after the September 11 terror attacks. It is a form of trade-based money laundering—in my opinion, the largest, least-known, and under-enforced money laundering methodology in the world. There are accusations that some of the fraudulent Minnesota monies were remitted to Somali warlords and terrorist organizations. Hawala transfers by unregistered and unlicensed money service businesses, and other alternative remittance systems such as the Chinese fei chien (flying money), successfully avoid our traditional anti-money laundering countermeasures such as financial intelligence commonly generated by banks and non-bank financial institutions. 

From a money laundering enforcement standpoint, how are we doing? There are two bottom-line “metrics that matter.” The first is the amount of criminal proceeds that are identified, seized, and forfeited. The next metric is money launderers that are investigated, prosecuted, and convicted.

So, out of the roughly $4 trillion of criminal proceeds that are laundered worldwide every year, how much do we actually recover? The answer is less than one percent. That shocking percentage holds true in most countries around the world, including the United States.  

President Trump, referring to the Minnesota Somali fraud scandals, recently said, “We’re going to get that money back. It’s all coming back.”  

I have worked in the anti-money laundering arena for over thirty years; I can say with absolute certainty that all the money is not coming back. In the Minnesota Somali scandal, we may get back more than the typical one percent, but that is only because the government is sending hundreds of FBI, ICE, and other federal agents and resources into Minnesota. The low-visibility, everyday fraud committed by everyday criminals in every state continues unabated. 

And how many convictions for money laundering are there? The numbers are imprecise and sometimes defendants plead to other charges. However, the reality is that since the magnitude of the problem is so massive, for a money launderer to be caught and convicted, he or she has to be either very stupid or very unlucky.   

In Minnesota, there are a lot of stupid criminals. Their greed got the better of them. Many got caught. Others are unlucky because increased visibility brought attention to their criminal activities. 

Raymond Baker, a noted anti-money laundering expert, has examined the data and addressed the effectiveness of our anti-money laundering efforts and concluded with a concise analysis: “Total failure is just a decimal point away.”

Concurring with the above, Ron Pol, a respected anti-money laundering researcher from New Zealand opines, “Anti-money laundering legislation is the least effective of any anti-crime measure, anywhere.”

I have testified before Congressional committees nine times on anti-money laundering and anti-terror financing. There are many specific steps we can take to better follow the illicit money and value trails. But the most important thing we can do is get back to the basics of enforcement—because the sobering truth behind the Somali fraud crisis is that unless criminals and those that enable them are held accountable, nothing will change.