Old Infrastructure Underpins Trump Administration’s New War on Fraud

The Trump administration has made cracking down on fraud — particularly waste and improper payments in federal benefits programs — a key domestic policy initiative.

Administration officials have swiftly and aggressively leveraged the pathways already available to them: On suspicion of fraud, payments to hundreds of hospice and home health care providers in Los Angeles have been suspended and the federal government has attempted to freeze millions of dollars in funding to California and Minnesota.

But the administration also said it would change the way the federal government identifies and targets fraud, vowing to work more closely with states to identify misconduct in the programs that states administer, making changes to how the Justice Department investigates and prosecutes benefit fraud, and improving communication between federal agencies.

“I often find in the fraud task force that there sometimes are barriers that we need to break down, agencies that need to coordinate,” said Vice President JD Vance, who leads the White House Task Force to Eliminate Fraud and often describes it as a “whole of government” effort.

While the administration quickly claimed early wins attributed to the task force, the more permanent systems with potential to have an impact after Trump leaves office are still taking shape.

Significant changes were announced at the DOJ, where the administration created an entirely new division — the department’s first in 20 years — to target fraud.

The National Fraud Enforcement Division, formally established in April, was granted operational control of preexisting DOJ units, most notably the Health Care Fraud Unit. The unit had been part of the DOJ’s Criminal Division in the Fraud Section, which litigates cases of financial fraud against the federal government.

In a memo announcing the division’s creation, acting Attorney General Todd Blanche promised an unprecedented “comprehensive and coordinated approach to investigating and prosecuting fraud against taxpayer dollars and taxpayer-funded programs.”

While it’s unclear what shape that coordinated approach will take, former DOJ employees said that units within the Fraud Section were successful and productive

“The Health Care Fraud Unit each year in the last five years has brought bigger numbers each year than the previous year,” said Glenn Leon, a partner at Jenner & Block who until January led the Fraud Section in the DOJ’s criminal division.

“So yes — the fact that this new division is taking those resources, it’s kind of a transfer of those accomplishments from one part of the DOJ to another part of the DOJ,” he said.

Because the division is so new, Leon added, many of the accomplishments the department is praising were being investigated “prior to this new division being created.”

Final recommendations will be made to Blanche after Aug. 5, a deadline set in the memo, about how the division should be structured.

The memo outlines plans for development goals, such as every U.S. attorney’s office having a prosecutor detailed to the new division and a substantial increase in prosecutorial resources. In a statement to NOTUS, a DOJ spokesperson said the department is embedding dedicated fraud prosecutors in U.S. attorney’s offices and equipping investigators and prosecutors with state-of-the-art data analytics tools.

“We’re building a first-of-its-kind division to deter fraud against the United States,” the spokesperson said, adding that the initiatives outlined in Blanche’s memo are “well ahead of schedule.”

Scott Armstrong, another alum of the DOJ’s Fraud Section and a white-collar criminal defense attorney at Armstrong & Bradylyons, said he’s observed a change in the types of cases being pursued.

“There’s definitely a market change in the kinds of cases that are being investigated and charged,” he said, pointing to the prioritization of fraud cases centered on procurement, government programs and health care over complex fraud cases.

The Trump administration has also repeatedly signaled its desire to “work with states.”

“If you allow hundreds of millions, billions, even more money to go out the door, not to health care services for low-income families, but to fraudsters, you eventually are going to destroy the Medicaid program,” Vance said at a May 14 press conference. “So this is why we say red state, blue state, this does not need to be a political or a partisan issue. We want to work with you to eliminate fraud and make these programs last longer for the people who truly need them.”

But beyond leveraging the control the federal government has over the flow of money — threatening to withhold funds for failure to comply with the administration’s efforts — it’s unclear what this looks like in practice for most states.

Officials from Democratic- and Republican-led states told NOTUS that strong collaboration with the federal government continues, but did not note any changes in recent months.

A spokesperson for the South Carolina attorney general’s office said its unit dedicated to investigating Medicaid fraud against vulnerable adults has long partnered with federal agencies.

“These partnerships — including those with the U.S. Attorney’s Office, Health and Human Services Office of Inspector General, the Federal Bureau of Investigation, and others — have resulted in a substantial number of arrests within the Vulnerable Adults and Medicaid Provider Fraud unit’s jurisdiction,” Robert Kittle, the communications director, said in an email. “Although Medicaid fraud has received increased national attention recently, these federal relationships have remained strong and unchanged in South Carolina.”

Despite the politicization of alleged fraud in Minnesota on the national stage, a spokesperson for Attorney General Keith Ellison’s office said collaboration on benefits fraud continues as normal.

“Throughout three separate federal administrations, [Minnesota’s] Medicaid Fraud Control Unit has regularly investigated expansive Medicaid fraud schemes in partnership with the Department of Health and Human Services’ Office of Inspector General and the Federal Bureau of Investigations,” the spokesperson said in a statement. “Any rhetoric coming from outside Minnesota is not affecting the day-to-day work of, and collaboration between, the dedicated MFCU investigators and federal law enforcement agents tasked with building these complex Medicaid Fraud cases.”

Colbey Stosberg, a spokesperson with the Missouri attorney general’s office, pointed to this year’s National Medicaid Fraud Takedown with the Justice Department.

“Missouri had the second-most cases filed out of any state,” he said. “We partner daily with the Office of Inspector General on investigations, information sharing, and other efforts to combat fraud.”

According to a press release from the Justice Department, this year’s fraud takedown resulted in 455 defendants facing charges for over $6.5 billion in alleged fraud. The takedowns are an annual collaboration between HHS and the DOJ that dates back years.

The DOJ spokesperson said state-federal collaboration had increased under this administration, but didn’t offer specifics.