Over the past several weeks, we have been inundated with stories concerning government waste and fraud. You could not escape this unless you have been living in an isolated part of the world, i.e., hiking in the rainforests of Brazil or the outback in Australia.
From now on, the entire narrative of fraud will change, as will how we, as a society, view and respond to these allegations. What has been exposed to this point is far more than a 24-hour outrage cycle or an elaborate plan to place the blame on a convenient scapegoat. This is what I will refer to as the Elon Musk–DOGE effect in how fraud is discovered and prosecuted. I have been involved in various forms of fraud investigations for four decades, and most fraud cases followed a familiar narrative. It did not matter whether the fraud was in the private or the public sector. The steps included:
- A whistleblower came forward – think Enron.
- An audit, either internal or external, uncovered a scheme.
- In the private sector, an audit/accounting firm was hired.
- In the public sector, an inspector general was requested.
- Reports were issued detailing all types of anomalies, including:
- Internal policies and procedures were ignored.
- Authority levels were over-ridden.
- Segregation of duties was abandoned.
- If the issues were taken seriously, a few prosecutions were announced.
- And then, after a few weeks or months, the systems that allowed this type of behavior were allowed to continue, and it was business as usual.
If you noticed, the above steps depended on human discovery, which has been slow to respond, easily manipulated, and often buried in layers of bureaucracy.
Here is what has changed or will shortly. Detection of fraud used to depend on human morality, political will, and courage to speak up; however, from now on, fraud is no longer challenged by human behavior and its biases. AI and ML are hunting it. When this type of scrutiny is applied in real time, entire schemes are identified and exposed. These events will be identified in real time, not weeks or months later.
The recent Somali scandal did not happen over just the past few weeks or months. The patterns that enabled this have been in place for years. These events were classic fraud, involving the presentation of false claims to obtain government funds.
Venezuela’s collapse did not begin with Nicolás Maduro, nor even with Hugo Chávez. It started decades earlier, quietly and invisibly, when corruption stopped being an outlier and became a government policy. Long before slogans, sanctions, or revolutions, the warning signs were already apparent to people whose job was to identify risk rather than political ideology.
It was well known among the logistics industry that the Port of Caracas was considered one of the most corrupt ports in the world, along with the Port of Lagos, Nigeria. Insiders told me that containers routinely disappeared and that paperwork was forged. This was easy to manipulate because of the human element.
I saw this firsthand in several of the countries where I lived and worked. In most of these countries, the State Customs Agency or Committee was generally the second-most-powerful government agency after the military. FYI: The customs agency is responsible for customs clearance for all imports and exports within the country. In fact, in one of the countries where I worked, the Chairman of the State Customs Committee was so powerful and wealthy that he had his own military, which rivaled the government’s. In fact, it was stated that the primary function of the Customs Committee was to protect the monopolies linked to the ruling family.
Why is this time different?
- Fiscal fatigue – people are tired of their taxpayer dollars being wasted.
- Clarity – this is not government waste or inefficiency, but a systemic process that has been repeated over the years.
- AI or ML certainty creates statistical confidence that can be measured, and therefore discretion disappears.
- You cannot shame a model or algorithm.
- Machine-verified evidence is relentless in reducing complexity and human emotions.
Once fraud investigations are detected and proven by simple mathematical certainty, it will never be the same. What has changed is not morality or political will. The change encompasses visibility and certainty. The good old days of stealing money from the government will end when machines are allowed to expose fraud. In my view, this is the legacy that Musk and DOGE will leave. The current Secretary of the Treasury, Scott Bessent, recently said that 10% of the US federal budget is lost to waste, fraud, and abuse.
One last point. A good friend of mine who is in the health care business asked me why Tim Waltz has not been arrested. She is like most Americans who cannot fully comprehend the magnitude of the fraud across various government agencies and why it has been allowed to persist for so long. We need to continue innovating and improving citizen services while restoring public trust. This won’t be easy given the current political divide.
Prepared by Terry L. Stroud – January 2026
