Accelerating The Fight Against Fraud

March 6, 2025 | Washington, DC

Much attention—finally—is being focused on fraud and improper payments made by the federal government. The Government Accountability Office (GAO) estimates the federal government loses somewhere between $233 billion and $521 billion annually just to fraud. Whatever the exact figure, the sheer magnitude of the problem should demand a response of equal urgency and scale. There have been a number of recent, positive developments, including a Treasury pilot that saved millions. Yet, despite the availability of proven solutions, the government remains frustratingly slow to act.

Congress is showing renewed interest in tackling this challenge. A series of hearings this session scrutinized the issue. And Senators Kennedy, Peters, and Warner introduced the Ending Improper Payments to Deceased People Act, aiming to expand access to the Social Security Administration’s Death Master File. But here’s what the Congressional Budget Office said about the bill when it was introduced in the last Congress: “[L]arge benefit-paying agencies generally already use the complete death file . . . enacting [the bill] would reduce direct spending by an insignificant amount.”

Regardless of CBO’s assessment, there are far more practical, immediate, and proven steps that federal agencies can take to stem the flow of improper payments and fraud. This was precisely the motivation behind Allocore’s recent roundtable, where industry and government experts convened to confront the issue head-on. The event was designed to bridge the gap between the government’s fraud detection efforts and the well-honed fraud prevention tactics used in the financial sector.

The discussion opened with a framing of the challenge at hand: fraud prevention in government lending and other programs isn’t just an issue of efficiency—it’s about protecting taxpayer dollars and restoring public trust. The roundtable participants acknowledged that while Congress has held hearings and passed fraud-related legislation, meaningful progress in preventing fraud remains elusive. 

A group of fraud experts representing a cross-section of government watchdogs, financial institutions, technology firms, and policy think tanks, introduced themselves, setting the stage for an unfiltered and candid exchange about the root causes of fraud and the most promising solutions to curb it. The central question posed: Why is government slow to adopt solutions the private sector has been using successfully for decades? 

The session began with brief remarks from Pandemic Response Accountability Committee Executive Director Ken Dieffenbach, the American Bankers Association’s Paul Benda, and Allocore Founder and Executive Chair Ben Wallace, whose combined experience covers virtually every aspect of the challenges associated with financial fraud. 

The group wasted no time dispelling the illusion that fraud is an isolated issue. Instead, it is a structural vulnerability fraudsters have exploited at scale, particularly in pandemic relief programs, disaster assistance, and federal grant distributions. “We shouldn’t be giving money to people using Social Security numbers that were never issued, or those belonging to the deceased,” said one of the presenters bluntly. Yet, this happened repeatedly during early implementation of pandemic-era programs, revealing just how porous government fraud prevention tactics remain. There is a cultural barrier within government: “For a government employee, is it good news or bad news to find fraud in their program? Does the culture encourage reporting, or does it incentivize looking the other way?” The answer is not always clear. 

Another presenter reinforced the point the culture in government makes it hard to keep up with evolving fraud trends. Fraud has become a highly organized, professionalized industry. “The criminals are adapting faster than we are. They’re moving at the speed of technology, while government fraud detection is still stuck in a paper-based world.” And one of the presenters added, “Banks saw massive unemployment fraud happening in real-time during the pandemic, but they had no clear government point of contact to report it to. When they froze fraudulent accounts, they were hit with regulatory penalties” rather than the thanks they should have gotten. 

One of the presenters posed a fundamental strategic question: “Is the goal to eliminate fraud entirely? Or is it to minimize it to an acceptable level?” The private sector never manages to zero fraud—it balances fraud prevention with efficiency and user experience. The government, by contrast, often refuses to define its risk tolerance, leading to rigid, inefficient, and outdated fraud controls that fail to prevent fraud while slowing down legitimate payments. A prime example? The Paycheck Protection Program (PPP), where overly lax controls initially enabled widespread fraud, and later overly rigid controls blocked legitimate applicants from accessing relief. 

Fraud detection needs to move at the speed of crime—and right now, it isn’t even close. The roundtable explored how emerging technologies could revolutionize fraud prevention if properly deployed. 

Several policy proposals were debated: 

The message from the roundtable was clear: Fraud prevention must shift from a reactive, punitive model to a proactive, technology-driven approach. 

Stakeholders at the roundtable emphasized the importance of a multi-pronged strategy to enhance the government’s capacity to detect, prevent, and respond to fraud, particularly in high-risk programs. Leveraging technology, improving data sharing, fostering public-private partnerships, and establishing a coordinated fraud prevention framework across agencies were all seen as integral to the effort. The following priority actions were identified: 

Fraud is no longer just a problem to be reported—it is a systemic vulnerability that demands urgent action and prevention. The government has the tools and private-sector expertise at its disposal to dramatically reduce fraud losses. The only question is: will it act to take advantage of it? The solutions are known. The time for action is now. With fraud schemes growing more sophisticated every day, inaction is not just costly—it is negligent. 

Ken Dieffenbach has served as the Deputy Assistant Inspector General for Investigations at the Department of Energy OIG since July 2021. With a federal law enforcement career spanning nearly three decades, he began as a special agent with the Air Force Office of Special Investigations, handling major fraud, counterintelligence, and protective service operations. He later joined the Department of Justice OIG’s Fraud Detection Office, where he led high-profile investigations into procurement fraud, ethics violations, and public corruption. A Certified Fraud Examiner since 1999, Ken was elected Regent Chair of the Association of Certified Fraud Examiners in 2020. His work has been widely recognized, including the Attorney General’s Distinguished Service Award for his role in the racketeering conspiracy trial of U.S. Representative Chaka Fattah. An adjunct instructor at the Federal Law Enforcement Training Center for a decade, Ken is a sought-after speaker on fraud prevention and investigation. 

Paul Benda is the Executive Vice President for Risk, Fraud, and Cybersecurity at the American Bankers Association, where he leads initiatives on cybersecurity, fraud prevention, and physical security while also serving as a media spokesman for the banking industry. Since joining ABA in 2018, he has chaired the ABA Fraud Coordination Group and played a key role in industry-wide security strategies. Previously, Paul held leadership roles at the Department of Homeland Security, overseeing research and development, and at the Department of Defense as a DARPA Program Manager, where he designed security systems for the Pentagon. He began his career in the U.S. Air Force before transitioning to the private sector as a consultant with Booz Allen. Paul also serves as Vice Chair of the Financial Services Sector Coordinating Council, advising Treasury and Homeland Security on cybersecurity and resiliency issues in the financial sector. 

Ben Wallace is a Technology and Operations professional with extensive experience in large-scale banking conversions and integration projects, specializing in consumer banking. With a growing focus on cybersecurity, he helps develop solutions and frameworks for community and regional financial institutions. His background includes significant legal and financial expertise, particularly in entity formation, small business taxation, and corporate tax planning. Ben has also worked within the Delaware Court of Chancery and the Pennsylvania Courts of Common Pleas, bringing a unique legal perspective to financial and operational challenges in the banking sector.  

Allocore powers leading government loans, grants, and fraud prevention programs with a unified platform built for efficiency and security. With trillions in loans and grants processed and billions in fraud prevented, Allocore brings the precision of commercial banking technology to the public sector.