‘A Culture That Defers To Fraud’: Witnesses Reveal How Hardworking Families Pay Higher Taxes

Two witnesses who testified at a House committee hearing Wednesday said a culture that allows for the widespread defrauding of government programs ultimately causes working people who play by the rules to pay higher taxes.

Republican Kentucky Auditor Allison Ball and Dr. OJ Oleka, CEO of the State Financial Officers Foundation (SFOF), were among the four total witnesses who testified at a hearing on “Fraud Prevention: Understanding Fraud in Federally Funded Programs Run by the States,” which the House Oversight Committee’s Subcommittee on Government Operations held Wednesday. Ball and Oleka explained their experience combating such fraud—particularly in their shared home state of Kentucky—and why the issue should concern all taxpaying Americans, in interviews with the DCNF conducted after the hearing.

“When you have a culture that defers to fraud and allows it to stand, then you spend more money,” Oleka said as part of his testimony during the hearing, explaining why he thinks fraud is such a “big deal.” “When you spend more money that then mandates, based on your political philosophy, an increase in taxes. So, if you increase taxes on hardworking families, now they’re faced with the choice of putting gas in their car [or] paying [for] diapers for their children.”

“There’s a real cost that families have to go through all because fraud wasn’t detected. And it [fraud] also sows distrust, because you have people who are trying to survive on WIC [Women, Infants, and Children] or SNAP [Supplemental Nutrition Assistance Program] or government benefits, and they look to their left and they see one of their neighbors who’s a fraudster riding around in a Benz buying as much food as they can,” he added.

“I would hope that nobody’s trying to make fraud a partisan issue. I think it’s really important that you’ve got the American people who feel not only compelled but interested in making sure their money is being spent efficiently,” Oleka told the DCNF. “I’m an American citizen and I pay taxes. I want to make sure my government’s spending it efficiently. So, however you approach that as a government leader, I think really it probably demonstrates the kind of leader that you are.”

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Ball told the DCNF that her office found $836 million of wasted taxpayer money after it conducted a massive audit of Medicaid.

“It’s because people were listed as living in Kentucky and then listed as living in other states. You have both states, Kentucky and somewhere else, paying for their medical bills,” she said. “So, we did this real deep dive into why this happened, and one of the things we found, it was a cultural issue.”

The Republican noted that she found that “leadership at the top of” Democratic Kentucky Gov. Andy Beshear’s administration “actually told them, ‘Hey, this is low priority, you know, just get to it if you can. But it’s just not something that we’re really concerned about.’”

“So, if you have that kind of attitude, then obviously it opens the door for all kinds of problems, which is what we saw,” Ball told the DCNF. ” I have been disappointed and frustrated because Governor Beshear, he sees everything as politics. And I say to him, ‘No, some of these real problems must need to be resolved.’”

She added that the governor’s response to the finding of the more than $800 million in Medicaid waste was, “Well, other states have the same problem.”

Ball said that this was not the only time the Beshear administration was dismissive of one of her office’s findings.

“An issue that we just did a report on was foster children in Kentucky have been housed in office buildings and other places, and that’s another one where we really wanted to work for the governor, we really want to work with the cabinet, and they just were not that interested,” she told the DCNF.

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Beshear, who twice won election as a Democrat in a state that voted overwhelmingly for President Donald Trump, is a rumored 2028 presidential candidate and has previously said he will “consider” a potential White House run.

“And you can’t help but wonder if his [Beshear’s] presidential ambitions make him — he doesn’t want to talk about it. And that’s just sort of the impression I get,” Ball said.

She told the DCNF that she thinks former Kentucky Secretary of Transportation Jim Gray moving to a different position in the Beshear administration Tuesday indicates the governor is gearing up for a White House run.

“I think it’s pretty clear he wants to run for that office. And when you’re running for that kind of thing, how you’ve done as a governor becomes all the more relevant, all the more important,” Ball said.

During the hearing, Oversight Committee Chair James Comer — who, like Ball, is a Kentucky Republican— asked his home state’s auditor if Beshear had worked with her “any” during her audit and if his administration was “helpful in turning over information or anything to help come to the conclusion that you came to with respect to the amount of fraud.”

“I really do believe these are nonpartisan issues, and we should be able to work together. Unfortunately, I have to say it’s not been a great system of cooperation,” Ball said. “Boots on the ground people have been helpful. When it comes to rising levels of leadership, it does get to be more difficult to get information from them, and it’s only gotten more difficult as time has gone by.”

“So, the unfortunate answer is no. It’s actually been disappointing that I’ve not had good cooperation from the top level of the Beshear administration,” she said.

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Ball told Comer that the administration’s response that fraud is happening in other states conveys an attitude that makes it less likely for fraud in Kentucky to ultimately be addressed.

Moreover, Oleka told the DCNF that Democrats may be less likely to admit fraud takes place in their states because drawing attention to fraud may make the public more skeptical of the expansive government programs their policies favor.

“I think sometimes, there can be an ideological interest in expansive government programs. And so, if your interest is [that] we need to expand more government, because if we think that helps people — that’s your position ideologically — then it becomes difficult to admit that expansion, in fact, leads to some fraud occurrences,” Oleka said. “Whereas, if your ideological position is maybe we shouldn’t have government doing everything for everybody. In fact, it’s probably inefficient. Then you’re more apt to look for fraud, and then you can detect it when it’s there.”

“I think it’s less partisan in terms of the political parties, more ideological in terms of philosophy,” he said. “If you believe in expansive government, you’re probably more reluctant to go after fraud. If you believe in limited government, you’re probably more likely to.”

The SFOF is “a national organization dedicated to advancing fiscally responsible public policy, protecting taxpayer dollars, and promoting economic freedom in a free-market economy,” according to its website.