Analyst: AI could accelerate costly taxpayer-funded government fraud
Fraud costs government agencies more than four times the amount stolen, according to a national fraud analyst, who warns artificial intelligence could make the problem even worse.
That comes as Minnesota’s multibillion-dollar fraud problem is increasingly being recognized as part of a much larger nationwide crisis.
In an exclusive interview with The Center Square, Haywood Talcove, CEO of LexisNexis Risk Solutions’ government group, warned that taxpayers may not fully understand the scope and cost of the fraud affecting government programs.
“I don’t think people fully understand at this point how much of their hard-earned taxpayer dollars are being stolen,” Talcove said.
LexisNexis Risk Solutions is a data and analytics company that helps businesses and government agencies assess and manage risk, including fraud. Talcove has worked in the industry for more than 20 years and has testified before Congress numerous times, warning lawmakers about emerging fraud threats.
“What we do is just three simple things: we stop fraud, we catch bad people, and we enable equitable access to government programs,” Talcove said, explaining that he thinks many of the fraud estimates currently cited are grossly understated.
“My estimate right now is it’s a trillion dollars a year,” Talcove said. “The people that are stealing it . . . are not people making mistakes. These are real criminal groups doing real damage to our democracy.”
Talcove’s government group recently released its fifth annual “True Cost of Fraud” study, which surveyed 150 SNAP agency leaders responsible for administering the program.
The study found that fraud now costs agencies $4.29 for every $1 in fraudulent losses, the highest rate in the study’s history. That means just 23% of the total cost comes from the stolen benefits, while the remaining 77% comes from the costs of addressing the fraud, including labor, investigations and recovery efforts.
Talcove said he is hopeful this study shines a light on how critical it is to quickly put new systems in place.
“These government programs, for the most part, do not have safeguards,” Talcove said.
He added that the real problem for many of these government programs, especially ones administered by the states but funded primarily by the federal government, is they don’t have real incentives to stop the fraud.
“There is a fundamental problem with government that makes it so much different than the private sector,” Talcove said. “You can’t bankrupt government.”
Organized criminal groups are at the root of much of the widespread fraud, according to Talcove.
He also warned that emerging technologies like artificial intelligence, and particularly AI agents, could make the problem even worse by allowing criminals to automate and scale their fraudulent operations.
“These agents are going to be incredible in terms of productivity tools for people. They’re also going to be unbelievable for criminals,” Talcove said. “There is going to be a wave of fraud that is going to occur in the next six months that the government is ill prepared for. These agents are going to be unleashed on these benefit systems.”
Minnesota has emerged as a focal point in concerns over fraud, especially after reports emerged in late 2025 detailing widespread fraud across taxpayer-funded programs.
Officials in the Trump administration have called the widespread welfare fraud in Minnesota “the single greatest theft of taxpayer dollars through welfare fraud in American history,” while State Rep. Kristin Robbins, R-Maple Grove, stated in a hearing in the spring that the fraud is a “web.”
“This is a web and we keep finding these webs over and over,” Robbins said. “I just feel like we are still missing the mark to dismantle these webs of fraud.”
Republican lawmakers have also accused state Democrats, including Gov. Tim Walz, of “enabling” fraud, with some estimates suggesting the total could reach between $9 billion and $20 billion in Minnesota alone.
But Talcove said Minnesota is not an exceptional case.
“Minnesota is not unique. It happens in every state,” Talcove said. “It’s not a Democratic issue or a Republican issue. It happens everywhere.”
Taxpayer-funded programs in Minnesota are already seeing the risks posed by AI.
Hennepin County shut down its Small Business Recovery Fund after more than two-thirds of the applications it received were flagged as fraudulent, as previously reported by The Center Square. Many of the applications were completed using AI, according to Hennepin County Commissioner Jeffrey Lunde.
Beyond the cost of the fraud itself, Lunde also explained how these schemes can impose additional costs on taxpayers through efforts to detect and prevent them.
“We were spending probably two to three times the amount of money in administrative overhead to try to combat fraud,” Lunde said.
Talcove also flagged this as an issue, explaining that many federal and state agencies just don’t have the resources to adequately address fraud.
“They just don’t have enough bodies to do the work,” he said.
Since returning to office, President Donald Trump has made combating fraud a priority, declaring a “War on Fraud” and establishing a federal task force to target fraud, waste and abuse. Talcove said he believes those efforts are making criminals nervous.
“With criminals, if they think they can get away with it, they will get away with it,” he explained. “What is going on right now is really making a difference in creating an environment where they’re getting a little bit nervous . . . saving taxpayers a lot of money.”
While Talcove said he believes the Trump administration’s efforts have had some positive effects, he said much more needs to be done, starting with acknowledging the scope of the fraud problem.
“For too long, the narrative was there’s no fraud in these programs,” he said. “There is a lot of fraud, but you can only find it if you look for it.”
Talcove said he is hopeful the growing fiscal pressures, including government debt and the cost of fraud, will eventually force policymakers to address the problem.
“The politicians will sit and point fingers at each other for a while,” he said. “But then they are going to have to figure out what to do.”
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