JD Vance Says Current Law Misses 99% Of Fraud. He’s Close, And Here’s How Congress Can Fix It

On a Tuesday afternoon in the Oval Office, Vice President JD Vance made a striking claim while helping launch the administration’s new reward program for fraud tipsters. He said that over 99% of the fraud the government is finding isn’t covered by the False Claims Act.

A lawyer could pick that sentence apart, since most of the cases on the administration’s fraud list involve federal programs the law was written to protect. I would rather give Vance the benefit of the doubt and treat his number as hyperbole with a hard truth inside. Measured by what the law recovers, he is close to right.

Start with the size of the problem. The Government Accountability Office, Congress’s nonpartisan watchdog, estimates the federal government loses between $233 billion and $521 billion to fraud every year, or 3% to 7% of everything Washington spends. Abraham Lincoln signed the False Claims Act in 1863 to stop crooked contractors from selling sick mules and spoiled food to the Union Army. Today, it lets the government sue anyone who knowingly cheats it, and it lets ordinary citizens sue on the government’s behalf and keep 15% to 30% of the recovery. In fiscal year 2025, the Justice Department collected a record $6.8 billion under the law.

Do the math. A record year under Lincoln’s law recovered somewhere between 1 and 3 cents of every fraud dollar the GAO estimates. The other 97 to 99 cents were never recovered from the fraudsters. I have written about where some of that money goes, including one charity’s funds that became his to spend. Whether stolen money falls outside the arm of the law or the fraudster never gets caught, taxpayers end up footing the bill. To no one’s surprise, a law last rebuilt in 1986 has blind spots, and fraudsters have had 40 years to find the loopholes. Four stand out, and Congress can and should close them.

First, tax fraud is walled off. The law states plainly that it does not apply to claims made under the tax code. Tax cheats answer to a separate IRS program, which guarantees a whistleblower 15% to 30% of what is collected, but only when more than $2 million is at stake. A bookkeeper who spots a $500,000 tax scheme has little reason to risk her job. Congress can lower that threshold and offer a reward in smaller cases.

Second, small frauds have no champion under current law. Whistleblower lawyers take these cases on contingency, so they chase big frauds with solvent targets. A $200,000 food-stamp scheme rarely attracts a whistleblower lawyer, and criminals know it. In 2024, Congress gave agency inspectors general the power to pursue frauds of up to $1 million on their own under the new Administrative False Claims Act, but that law offers no reward to the person who reports the fraud. The White House’s new program, with its $25 million fund, is trying to fill that hole by executive action, and any future administration could end it. Congress needs to write this type of reward into the Administrative False Claims Act so it survives.

Third, paying a bill can excuse fraud. In 2016, the Supreme Court ruled in Universal Health Services, Inc. v. United States ex. rel. Escobar that a lie must be “material” to the government’s decision to pay. Defendants have since argued that if an agency kept paying after it learned of a problem, the problem must not have mattered. In a sprawling bureaucracy, one office often pays while another investigates. Sen. Chuck Grassley wrote a fix that passed the Senate Judiciary Committee 15 to 7 in 2021, but it never reached a floor vote. Congress should pass it.

Fourth, the citizen lawsuit itself faces a constitutional challenge. In 2024, a federal judge in Florida ruled that the law’s whistleblower suits violate the Constitution. On Sept. 1, the Eleventh Circuit unanimously reversed that ruling, but it sent other constitutional questions back to the lower court. Justices Thomas, Kavanaugh, and Barrett have signaled interest in the issue. If the Supreme Court strikes down the citizen lawsuit, the government loses the tool that recovered $5.3 billion last year. Congress should not and cannot wait. It can strengthen the Justice Department’s oversight of these cases now, which answers the constitutional objection and keeps citizens in the fight.

Vice President Vance is in a strong position to lead. He knows the Senate, he chairs the White House task force on fraud, and he has the country’s attention. He can carry these four fixes to Capitol Hill, where Sen. Grassley has spent four decades building the case for them. Lincoln’s law has recovered more than $85 billion since Congress last rebuilt it in 1986. Closing its blind spots would honor the law, the whistleblowers who use it, and the taxpayers who fund every program on the White House’s list. If 99% of the fraud gets away, the fix is waiting in Congress, and the responsibility rests with the people who write the law.

Jonathan Dever is a retired attorney and former two-term Ohio state representative who chaired the House Financial Institutions Committee. He writes the Dever Dialogue.

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