Expert: Stimulus Fraud May Hit $50 Billion

Tuesday, June 16, 2009 11:54 AM

By: Dan Weil

Any large government endeavor is susceptible to fraud, and that’s certainly the case with the $787 billion fiscal stimulus package.

Up to $50 billion of that total could be siphoned off by fraudsters in current months, says David Williams, who runs Deloitte Financial Services Advisory.

He estimates that $500 billion of the package will flow through the traditional government procurement network.

"The rule of thumb typically is that of the… money that's going to run through the procurement process, somewhere between 5 percent and 10 percent… usually finds its way into potential problems," Williams tells MarketWatch.

"That's sort of the benchmark that I use."

The fact that the money flows electronically puts companies even more at risk of being ripped off, Williams points out.

"We're telling our clients to be very careful and to make sure their firms are resilient in terms of dealing with the potential opportunities for fraud and waste," he says.

"It becomes ever more important that firms remain diligent about their data."

FBI Director Robert Mueller also warns of fraud stemming from the stimulus package.

“These funds are inherently vulnerable to bribery, fraud, conflicts of interest, and collusion,â€