The U.S. Treasury Department is launching a new whistleblower initiative aimed at exposing massive health care fraud schemes, offering informants a share of the penalties collected from offenders in an effort to curb billions in losses tied to Medicare and Medicaid.
Treasury Secretary Scott Bessent is set to roll out the program Monday, which will compensate individuals who provide actionable information with as much as 30% of fines levied against those committing fraud, according to details obtained by The New York Post.
Officials estimate that fraud involving Medicare and Medicaid costs tens of billions annually, with figures reaching roughly $70 billion each year.
Under the structure of the program, rewards will be paid directly from the financial penalties imposed on wrongdoers, rather than drawing from taxpayer funds, according to internal Treasury materials reviewed by The NY Post.
“Individuals located in the United States or abroad who provide information may be eligible for awards if the information they provide leads to a successful enforcement action that results in monetary penalties exceeding $1,000,000,” one of the documents reads.
The approach is modeled after a similar whistleblower system operated by the Internal Revenue Service, which also falls under Treasury oversight.
Bessent, a 63-year-old former hedge fund executive, plans to grant informants between 10% and 30% of recovered funds when enforcement actions result in penalties exceeding $1 million.
At the same time, Treasury is preparing to alert financial institutions to heightened risks, warning that sophisticated fraud networks are increasingly using foreign nationals to siphon money from government programs.
Federal authorities are already examining cases in Minnesota involving Somali-linked networks accused of setting up sham autism clinics, fake food distribution programs, and fraudulent housing operations. These schemes allegedly relied on “straw owners” to channel taxpayer money into overseas assets, and in some cases, investigators suspect links to extremist groups such as Al-Shabaab.
“Our citizens have a right to know that their tax dollars are not being diverted to fund acts of global terror or to fund luxury cars for fraudsters,” one Treasury official briefed on the matter told The Post.
One major case in Minnesota involving an organization called Feeding Our Future allegedly diverted $250 million intended to feed children. Prosecutors say the funds were instead used to purchase luxury vehicles, designer goods, and real estate abroad.
With the exception of the alleged ringleader, most of those involved in that case are reported to be of Somali background.
The new measures follow a March 2025 executive order signed by President Trump directing a government-wide crackdown on fraud tied to federal benefits programs.
Vice President JD Vance also convened the first meeting Friday of a newly established anti-fraud task force as part of broader efforts to tighten enforcement.
The Treasury’s Financial Crimes Enforcement Network is expected to issue guidance instructing banks to remain alert to suspicious financial activity linked to health care fraud.
Financial institutions are required under federal law to file Suspicious Activity Reports when they detect potential money laundering or fraudulent behavior.
Attempts to conceal or move illicit funds violate core anti-money laundering statutes in the United States.
The advisory, expected to be released Monday, outlines common tactics used by fraud rings, including bribery and identity theft to obtain patient information, followed by the submission of false claims for treatments that were never provided.
Funds obtained through these schemes are often transferred through wire transactions or cryptocurrency, or spent on high-end goods.
“Fraud, including health care fraud and government benefits fraud, also continues to be one of the largest sources of illicit proceeds in the United States,” the document to be published on Monday reads, adding that “health care fraud has increased significantly since the COVID-19 pandemic.”
Treasury officials warn that unchecked fraud ultimately drives up costs and undermines public trust in both the health care system and financial institutions.
“These schemes threaten the integrity of both the US health care and financial systems, impose enormous costs on taxpayers, waste critical resources for beneficiaries of these programs, and increase the cost of health care in the United States,” the 18-page missive states.
According to the advisory, many schemes begin with “straw owners,” sometimes using immigrants or stolen identities of retired doctors to create shell companies posing as legitimate providers of medical equipment, home care services, laboratory testing, medications, or adult care programs.
Investigators say fraudsters frequently bill for services never rendered, prescribe unnecessary treatments, or inflate claims by categorizing simple procedures as more expensive ones.
“This is often facilitated by paying kickbacks and bribes through recruiters and marketers to complicit doctors, nurses, pharmacists, and other medical professionals for fraudulent, non-existent, exploitative, or unnecessary medical care,” the advisory reads.
Once payments are issued, funds are often quickly transferred abroad, making recovery more difficult for authorities.
Last year, the Justice Department charged 324 individuals in connection with an alleged $10 billion health care fraud operation.
The case was part of Operation Gold Rush, described as the largest crackdown of its kind, targeting a network that allegedly acquired legitimate medical supply companies to submit fraudulent claims, steal identities, and defraud Medicare.
A 2022 study by Colorado State University’s Global White Collar Crime Task Force estimated that Medicare and Medicaid fraud costs at least $68.7 billion annually.
The Treasury’s internal guidance highlights up to 24 warning signs for banks, including claims submitted by individuals without U.S. residency, sudden spikes in billing from newly formed medical entities, and large transfers to foreign accounts immediately after receiving government payments.
Although the advisory is not legally binding, financial institutions that ignore such warnings risk regulatory scrutiny and significant penalties.
In a recent enforcement action, Treasury imposed an $80 million civil fine on New York-based investment firm Canaccord Genuity for failing to properly monitor suspicious transactions.
Authorities said the firm neglected to file at least 160 required reports between 2019 and 2022, allowing thousands of questionable transactions to go unexamined for extended periods.
That case was unrelated to health care fraud, focusing instead on a Cyprus-based operation accused of helping Russian oligarchs move funds out of Russia.
{Matzav.com}
