As calls for government reform persist, SC agency fraud costs swell to $1.7M
Amid the national clamor for the elimination for waste, fraud and abuse and the trumpeting of South Carolina government efficiency movements inside and outside the State House, the state’s Inspector General’s office quietly posted its annual Fraud Report at end of June. It showed the cost of fraud done by state employees grew sixfold in the past fiscal year, driven by one procurement case.
The state’s watchdog for wrongdoing in the executive branch found over $1.7 million in losses associated with fraud stemming from agencies. Around 90% of the losses came from one procurement fraud case that involved “falsified vendor certifications” submitted to the federal government.
The $1.7 million was found between July 2024 and June 2025, the highest cost detected in any year since the program began in fiscal year 2013-2014. Fraud cost the state nearly $1.2 million in fiscal year 2015-2016, the second priciest year on record.
In fiscal year 2023-24, the Inspector General’s office detected $278,444 in fraud costs, and the previous year, $12,000.
Still, South Carolina has a low risk of state employee fraud, according to the report. The report attributed the growing costs and incidents to more enforcement and oversight from the agencies and law enforcement.
Last year, 12 incidents involved 13 employees, up from seven incidents in the previous fiscal year, according to the report. The state had almost 62,000 employees in agencies as of July 2025.
“The premise on doing this [fraud reports] was that there’s this perception that state government employees, or just government employees in general, particularly state government employees are dishonest or corrupt,” said Brian D. Lamkin, the state’s Inspector General. “Is there anything behind that?”
Earlier this year, Gov. Henry McMaster vetoed a budget item that would have funded independent third parties to investigate “wasteful government spending” in two state agencies under the auspices of the Legislative Audit Council. In a June memo, McMaster argued the plan was duplicative of existing oversight programs, including the Inspector General’s office.
Businessman and Isle of Palms property owner Rom Reddy has also formed his own government-efficiency organization, titled DOGE SC. The private organization and political action committee advocates for cutting government regulation using artificial intelligence.
Fraud scheme categories identified in the report include bribery/kickbacks, procurement fraud, theft, forgery and misconduct. The most expensive incident last year, which cost the state nearly $1.5 million, was a procurement fraud scheme where two state workers were charged.
The report does not identify specific agencies involved. The Inspector General’s office was not immediately able to provide details on the most expensive fraud incident.
The second most expensive incident cost at least $159,000 after a state employee received checks from contractors that they “conducted business with in the course of his/her regular job duties.” The employee is currently under active investigation, according to the report.
The fraud report is conducted annually, and the most recent audit was published at the end of June, according to Lamkin. Lamkin said the report is partially aimed at increasing awareness among agencies about fraud schemes. Awareness can help increase detection, he said. The report recommended that agencies make sure employees understand policies around procurement, make multiple people responsible for transactions to increase oversight and continue enforcing policies and procedures.
“I think it’s more being aware of what’s going on, because that’s one of the reasons why we do this report,” Lamkin said.
This story was originally published July 31, 2025 at 5:30 AM with the headline "As calls for government reform persist, SC agency fraud costs swell to $1.7M."