Invoice / Procurement Fraud

Overbilling government is as old as procurement; the first notorious US cases were Civil War contractors selling the Union Army sawdust as gunpowder and lame horses, which led Congress to pass the False Claims Act in 1863.

Billing governments and businesses for goods never delivered, or at inflated prices, is as old as organised procurement. Contractor fraud during the American Civil War prompted the US False Claims Act of 1863 (the 'Lincoln Law'), which still underpins US procurement enforcement. In the late 1980s the FBI's Operation Ill Wind exposed bribery and bid-rigging in Pentagon purchasing. From around 2013 the method moved online as Business Email Compromise, where criminals send fake or altered supplier invoices by email; the FBI began tracking BEC as a category in 2013. The Rimasauskas case (2013-2015), in which fake invoices mimicking a real hardware supplier fooled Google and Facebook, showed that even large tech firms were exposed.

A fraudster sends an invoice that looks like it comes from a real supplier, or tells the finance team that a supplier's bank details have changed, so payment goes to an account the criminal controls. Inside procurement, a corrupt employee or contractor may inflate prices, bill for work not done, split contracts to avoid oversight or rig bids with fake competing quotes. Criminals often first take over or imitate a genuine email account so the request fits an existing conversation. Funds are quickly moved through mule or shell-company accounts, often abroad.

A fake or inflated invoice looks like ordinary business, and accounts-payable staff process thousands a month without checking each one; the email version (BEC) needs nothing but a look-alike domain. It succeeds often: the FBI recorded $3.05 billion in BEC losses in 2025, and Rimasauskas's fake invoices fooled Google and Facebook for two years. Domestic procurement fraud is prosecuted under the False Claims Act, which brought a record $6.8 billion in recoveries in fiscal 2025, but email-based invoice fraud is rarely solved because the senders are abroad.

US BEC losses were $3.05 billion in 2025 (FBI IC3), and False Claims Act recoveries, most of them for false billing of government programmes, hit a record $6.8 billion in fiscal 2025 (US DOJ, Jan 2026). The largest single fake-invoice case is Rimasauskas's $122 million from Google and Facebook; the largest procurement scandal is 'Fat Leonard', who overbilled the US Navy by at least $35 million and corrupted dozens of officers. Taxpayers pay for goods never delivered, and honest suppliers lose contracts.