Criminals are using identities stolen from the dark web to set up businesses that look legitimate on paper, then billing government programs for healthcare and other services that were never delivered, according to Haywood Talcove, CEO of LexisNexis Risk Solutions Government.
Talcove told Fox News Digital that fraudsters create LLCs using information that receives little scrutiny, pair them with stolen identities, and submit fraudulent claims covering everything from wheelchairs and diabetes treatments to childcare and autism services.
He warned the money lost to these schemes is only part of the damage, saying the profits often fuel much larger criminal operations.
“They are using our money against us, whether it’s in social media campaigns, whether it is for human trafficking, drugs, disrupting our economy,” Talcove said.
“When you think about fraud, don’t think about, ‘It’s great that we stopped a fraud ring that stole $5 million.’ Think about that as a criminal enterprise that goes beyond just stealing out of a benefit program.”
Why Minnesota Stood Out
Talcove singled out Minnesota as “particularly egregious,” saying the state had little incentive to root out fraud once schemes took hold.
“Minnesota was particularly egregious once they started looking because it was really easy to find,” he said.
He pointed to weak verification during the LLC registration process and reliance on self-reported information as a key vulnerability nationwide, not just in Minnesota.
“In the case of Minnesota, you went and got your LLC, you opened up a child care facility, and then the next thing you knew you were billing CMS for child care or autism care, and nobody checked.”
The Trump administration launched an anti-fraud crackdown this year following Minnesota’s Feeding Our Future scandal, standing up a task force led by Vice President JD Vance. That scheme allegedly stole $250 million from a federally funded child nutrition program during the pandemic, and many of those charged have since been convicted or sentenced to prison.
Talcove said the lack of third-party audits lets criminals rack up millions before anyone notices.
“One of the fundamental problems with these programs that are literally spending trillions of taxpayer dollars, they have nobody doing investigations or such a small, tiny amount of people that it’s not even possible to investigate,” he said.
Beyond the Fraud Itself
Talcove said investigations that dig deeper often find fraud is just one part of a broader criminal operation.
“They’re not just involved in stealing Medicare, Medicaid, or food stamps, or unemployment insurance,” he said. “They have other interests.”
He alleged some criminals use stolen funds to finance sex trafficking, bringing women from other countries and “renting them out” across the United States while profiting from the proceeds.
“What they have to look for is beyond the fraud that they found to see if they’re involved in drugs, human trafficking, threats to our democracy, weapons,” he said.
Talcove called the problem a “national security issue,” citing investigations that have uncovered links to foreign cybercrime groups, including the Chinese-linked hacking group APT41.
“When you start looking at the criminal groups that are involved, APT41 and some of their peers and associates, as well as some of the other groups from North Korea and other countries, it is, right now, a national security issue,” he said.
Ohio has also seen related enforcement action: the FBI recently launched a “Most Wanted Fraudsters” list as the Justice Department charged Ohio defendants in a $30 million Medicaid scheme involving children.
Not all the stolen money leaves the country, Talcove said.
“Now, some of it, granted, is being used for luxury goods, homes, cars, vacations, but a lot of it is just going right back to the transnational location that it came from,” he said.
He warned that investigations too often stop once the fraud itself is uncovered, allowing the broader criminal networks behind it to keep operating.
“They tend to get away with it because the investigation stops once you find the fraud,” he said.
Talcove said addressing the nation’s growing debt will require both parties to take fraud more seriously.
“My hope is the fiscal situation that we’re currently in, driven by what’s going on with the bond market, is going to force elected leaders at the state and federal level to start paying attention,” he said.
