Lawmakers Sound Alarm on Massive Government Fraud

From Medicaid billing schemes to missing homeless funds, officials say accountability has been missing for years — and the bill is coming due.

A growing series of fraud revelations involving Medicaid, federal aid, and homelessness funding is drawing sharp reactions from Republican lawmakers, who say the scale of abuse uncovered should surprise no one who has been paying attention.

The latest controversy stems from remarks by CMS chief Dr. Oz, who revealed that a former linen factory in St. Paul was allegedly home to roughly 400 separate Medicaid billing businesses, all operating from a single building. According to Oz, those entities billed an estimated $380 million to Medicaid — a figure that immediately raised red flags for federal investigators.

“It looks like potentially more fraud,” Oz said, noting that the structure and density of the operations defy any reasonable explanation for legitimate healthcare services. For critics of unchecked government spending, the discovery became a symbol of a much larger problem.

“One Building, 400 Businesses, $400 Million”

During a recent interview, Senator Ashley Moody, former Florida Attorney General and a member of the Senate Judiciary Committee, said the situation fits a troubling pattern.

“This really shouldn’t shock anyone,” Moody said. “One building — a former linen factory — housing 400 different businesses, billing the American taxpayer nearly $400 million through Medicaid. That’s not innovation. That’s a warning sign.”

Moody pointed out that many of the billed services were reportedly tied to claims involving vulnerable populations, including children with special needs — a detail that makes the allegations even more disturbing. She also noted that similar exposés have already uncovered “ghost students” and fraudulent enrollments tied to federal education funding.

To her, these are not isolated incidents but symptoms of lax oversight combined with political incentives to inflate economic success.

Politics, Optics, and Oversight Failures

Moody argued that political ambition may have played a role in allowing questionable operations to flourish unchecked. She suggested that state leaders eager to promote economic growth statistics were reluctant to scrutinize whether new “businesses” were legitimate.

“If you’re running nationally and bragging about how many new businesses are opening in your state,” she said, “you’re not exactly incentivized to expose the fact that many of them may be fraudulent.”

That criticism extended to California, where the Department of Justice is reportedly investigating multiple fraud cases tied to homelessness spending. U.S. Attorney Bill Saley has confirmed probes into situations where billions of dollars earmarked to address homelessness cannot be fully accounted for.

California in the Crosshairs

The scrutiny intensified after allegations that as much as $24 billion in homelessness funding has effectively disappeared under Governor Gavin Newsom’s administration. While state officials insist the spending is accounted for, recent arrests and indictments tell a different story.

One contractor is accused of stealing at least $5 million in taxpayer money meant to house hundreds of homeless individuals. Prosecutors say the funds were instead used to purchase a $7 million mansion, private jet travel, a vacation home in Greece, luxury trips, and a $125,000 Land Rover.

Vice President J.D. Vance added fuel to the fire, stating that the Small Business Administration identified $7 billion in fraudulent loan payments in California alone.

A Tale of Two Models

Moody contrasted these cases with states like Florida, which she says focus on strict enforcement, pro-business policies, and aggressive fraud prevention.

“When you drive out legitimate businesses and law-abiding taxpayers,” she said, “you’re left leaning harder on federal money — and that’s when fraud explodes.”

She also criticized what she described as the reckless pace of federal spending during the Biden years, arguing that money was “pushed out the door” faster than agencies could responsibly oversee it.