Ohio Becomes First State to Share Business Data With Feds to Hunt Fraudsters

COLUMBUS, Ohio—Ohio will be the first state in the country to share its corporate registration records with the Justice Department’s new National Fraud Detection Center, as fraud scandals continue to drain taxpayer dollars nationwide.

The first-of-its-kind partnership will give federal investigators immediate access to the state’s public business registration data, which could help expose shell companies, suspicious networks, shared addresses, and other signs of taxpayer fraud.

“This is what I consider to be a historic day in our fight against fraud,” Assistant Attorney General Colin M. McDonald said. “Americans deserve a government that stewards their money wisely and protects it from wrongdoers. Up until the creation of the DOJ’s Fraud Division, the DOJ had never before adopted a comprehensive and coordinated approach to investigating and prosecuting fraud against taxpayer dollars and taxpayer-funded programs. That has now changed.”

McDonald, who leads the Justice Department’s newly created National Fraud Enforcement Division, participated at Thursday’s inaugural DOJ Fraud Division State Partnership Roundtable with state officials including Attorney General Dave Yost, Auditor of State Keith Faber, Treasurer of State Robert Sprague, and Secretary of State Frank LaRose.

“I’m proud, around the table with these great fraud-fighting partners, to announce the inaugural DOJ Fraud Division State Partnership Roundtable right here in Ohio, building what will ultimately be the national model for federal-state cooperation to rapidly detect, investigate, and prosecute taxpayer fraud across the United States,” McDonald said.

LaRose’s office signed a memorandum of understanding with the Justice Department to streamline the flow of corporate registration data, allowing investigators to more quickly identify warning signs of fraud.

“The memorandum of understanding … will streamline data sharing between the task force and the Secretary of State’s Office,” LaRose said. “When someone forms an LLC, an LLP, or another entity in Ohio, we want investigators to receive that publicly available information immediately so they can cross-check it against other data sources and identify potential fraud much faster.”

Federal agencies participating in the broader effort included representatives from the Federal Bureau of Investigation; the Internal Revenue Service; Homeland Security Investigations; the Department of Agriculture; the Department of Health and Human Services; the Small Business Administration; the Department of Housing and Urban Development; and the Department of Labor.

Under the partnership, state officials will provide high-quality data and operational support, while federal investigative agencies will deploy artificial intelligence tools and federal prosecutors will deliver legal expertise and enforcement authority to translate fraud detection into rapid disruption and accountability.

McDonald argued that perpetrators of fraud are exploiting information gaps between agencies. For instance, a business may be registered with the secretary of state’s office, receive funding through one or more government programs, and operate through related entities that are not connected in separate databases. However, McDonald said that “we are breaking the silos down.”

“We are focused on big data, and one of the things we have fought for is access to data. Many of these agencies want to keep their data secret,” Faber said.

“Franklin County has about three times what you would expect to find in a similarly sized county, and two ZIP codes account for 40% of the spending. Clearly, something unusual is happening in that community,” Faber said.

“We identified people who are being paid to play cornhole, for instance, with the activity labeled as therapy. That represents $1.4 million in waste,” he added.

“We need prosecutors and staff who can do this 24/7 and have the resources to act.”

The Justice Department recently announced $300 million in funding through its Special Attorneys Program, which supports qualified prosecutors from state, local, tribal, and territorial agencies serving in federal roles within the National Fraud Enforcement Division, the Criminal Division, or a U.S. attorney’s office.

Faber applied for funding through the program on June 2, seeking to detail three prosecutors to the National Fraud Enforcement Division.

“You cannot rip off the United States of America or the state of Ohio and not suffer consequences for it,” McDonald said.