Influencer, White House welfare fraud claims are distorted, but the system has risks

The Trump administration has escalated its campaign against alleged benefits fraud, freezing social services funding for five Democratic-led states and announcing a new fraud-focused position in the Justice Department that will report directly to the White House. Officials also point, without evidence, to immigrants as the primary drivers of the fraud.

Late Friday a district judge in New York blocked the funding freeze for now.

Public policy experts say the structure of U.S. safety-net programs does create opportunity for scammers, and more could be done to tackle that. At the same time, there’s concern that the Trump administration’s mounting drumbeat of unfounded fraud allegations could undermine public trust in a system that millions of people rely on.

The issue gained traction late last month after right-wing media influencer Nick Shirley alleged corruption at Somali American owned daycare centers in Minnesota. Even though his accusations were unsubstantiated they’ve fueled a political firestorm. They also focused renewed attention on a massive years-long benefits scandal in Minnesota that’s already seen more than 60 people convicted and dozens of others charged.
Here’s a look at some of the issues.

Accusations of benefit fraud are as old as the programs themselves

The first major American social welfare program was pensions for Civil War veterans, “and that likewise was associated with a lot of accusations of fraud and mismanagement by the government,” says public policy expert Don Moynihan at the University of Michigan.

He says longstanding tropes around welfare fraud persist today, along with actual fraud, but the Trump administration is politicizing the issue.

The extent of benefits fraud is not known since presumably not all criminal behavior is caught. But “the bottom line is there are billions and billions of dollars that are lost by taxpayers to improper payments, including fraud, every year,” says Matt Weidinger, who studies poverty at the conservative American Enterprise Institute and has worked on unemployment benefits policy.

Most fraud is by providers or outside scammers, not as much by recipients. Individuals who have been convicted of such fraud are overwhelmingly U.S. citizens. In fact, undocumented immigrant workers pay billions into Social Security every year, effectively subsidizing a program they will never collect from.

Wrongdoing occurs despite required procedures to prevent it, along with investigations by inspectors general, state audits, and criminal prosecutions.

The structure of the U.S. safety net creates opportunities for fraud

It’s common for states to administer programs with federal money, which Weidinger says undermines their incentive to be “super vigilant.”

“This is the same reason why you don’t wash rental cars, right? It really belongs to somebody else,” he says.

He notes there are also more than 80 federal social service programs for low-income people, a sprawling network that is confusing for people who need help and “too complicated to efficiently administer.”

A lot of benefits also flow through private contractors for services already performed. Moynihan says this reflects an American desire for smaller government, but comes with a trade-off.

“Once you make that choice, then that also invites more opportunities for bad apples to engage in fraud,” he says. “Government then has to do more to monitor that behavior to try to prevent it.”

Democrats say Trump aims to “punish” them, not actually address fraud 

The Trump administration has specifically alleged “extensive and systematic fraud” in five Democratic-led states: California, Colorado, Illinois, Minnesota and New York. Letters sent to each this week say there is “reason to believe” they are “illicitly providing illegal aliens” with benefits, although the administration has offered no evidence of any ongoing fraud.

“For too long, Democrat-led states and Governors have been complicit in allowing massive amounts of fraud to occur under their watch,” said Department of Health and Human Services spokesman Andrew Nixon in a statement to NPR. “Under the Trump Administration, we are ensuring that federal taxpayer dollars are being used for legitimate purposes. We will ensure these states are following the law and protecting hard-earned taxpayer money.”

In all, the agency is seeking to withhold $10 billion in cash aid, childcare subsidies, and other social services for low-income families until states provide a large amount of data – going back years – on recipients, providers, and anti-fraud measures.

The five Democratic-led states have filed suit arguing the funding freeze is unlawful and violates congressional authority over spending. In a press conference Friday, New York Attorney General Letitia James called the move cruel and said it was about “punishing Democratic states that oppose the President.”

California Attorney General Rob Bonta compared it to the pause in SNAP food aid during the recent federal shutdown, saying it amounts to “a political attack on the most vulnerable in our society.”

Fraud happens in every state, blue and red, says researcher Weidinger, because criminals “will find weakness wherever it is.”

One massive recent scandal over cash aid was in Mississippi. In December 2024 the Biden administration notified the state it must pay back $101 million in welfare money that was misspent. Last year the Trump administration rescinded that penalty letter, agreeing to the state’s request for more time.