The True Cost of Fraud
My New Year's Eve Thoughts as We Close Out 2025
As 2025 closes, this isn’t a “year in review” note—it’s a warning shot about what comes next.
The real story of the past few years isn’t just inflation, elections, or markets. It’s the quiet collapse of trust as we discover just how much fraud, misallocation, and institutional failure have been hiding in plain sight. My New Year’s Eve message is simple: 2026 will be defined by how we respond.
Do we treat these revelations as another scandal to scroll past—or as a signal that the social contract itself is being repriced?
I break this down in a new long-form piece I just published on LinkedIn: how fraud at scale reshapes incentives, fractures the social contract, and changes the way productive people choose to work, build, invest, and pay taxes in the years ahead.
If you’re thinking seriously about where to allocate your energy and capital in 2026, I think you’ll find it worth your time. Have a great New Year's Eve, and I will see you on the other side!
Fraud at scale is not just about “waste, fraud, and abuse.” It is a balance‑sheet event on the most important asset any society has: trust.
When misconduct is revealed as systemic (not an anomaly, but a feature of how money and power actually flow), it does something subtle but profound to productive citizens. It changes their internal calculus about effort, compliance, and loyalty.
History gives some useful markers.
Watergate didn’t just remove a president. It ended the post‑WWII era of high trust in the federal government. Trust metrics fell sharply in the 1970s and never returned to prior levels. The downstream effect: a more cynical electorate, a permanent suspicion that “they’re all lying,” and a political culture that assumes bad faith as the default.
Enron didn’t just bankrupt a company. It shattered confidence in audited financials, “world‑class” boards, and the gatekeepers that were supposed to protect investors and employees. The response (Sarbanes‑Oxley) raised the bar on governance and controls, but the episode taught an entire generation to be skeptical of complex structures and too‑good‑to‑be‑true returns.
The 2008 financial crisis didn’t just wipe out trillions in wealth. It cemented the perception that sophisticated finance and policymaking were aligned to protect institutions, not citizens. Bailouts for Wall Street, foreclosures for Main Street. That narrative has fueled over a decade of populism, anti‑elite sentiment, and deep skepticism toward experts and large-scale systems.
Across these episodes, a consistent pattern emerges:
Immediate shock and anger. Trust in implicated institutions collapses. There is a demand for visible accountability and punishment. This is followed by:
Near‑term reform and repricing. New rules, new oversight bodies, re‑rating of certain risk premia. Some practices are cleaned up; others just migrate to new surfaces.
Long‑term trust reset. Even when reforms work technically, trust rarely returns to prior highs. Citizens and markets internalize: “This is how the game is played.”
The result for high‑agency, productive people is a rational shift in behavior:
More focus on tax minimization and regulatory arbitrage when they believe funds are being misallocated or stolen.
Greater appetite to exit: new jurisdictions, second passports, private education and healthcare, gated communities, private arbitration and security.
Less willingness to depend on public promises and more emphasis on self‑provisioned systems and parallel institutions.
Now look at the moment we are in, as each hour this New Year’s Eve brings more evidence and revelations via our social feeds that our public trust has been violated at grotesque levels for a decade or more by multiple states and the federal bureacracy.
Nick Shirley’s viral investigative journalism video was merely the tipping point of decentralized journalism and citizen activism that will bring many disturbing abuses to light in the coming months. We are not talking about one rogue contractor or governor. We are talking about the emerging picture of:
Hundreds of Billions in questionable or fraudulent claims.
Programs that, in some cases, look structurally vulnerable—or even “entirely fraudulent” in design.
Oversight mechanisms that were either asleep, captured, or technically incapable of catching abuse at the scale it occurred.
If that pattern is confirmed and generalized, this is not just a Minnesota story, or a blue‑state story, or a news cycle. It is a revelation about how much leakage exists whenever large flows of federal money move through state agencies and intermediary organizations.
And as always, the truly systemic impact will show up in the psychology of the productive class:
Taxpayers who conclude that a meaningful slice of their contribution is being routed into fake nonprofits, corrupt networks, or captured bureaucracies will rationally demand lower taxes, tighter conditions, or both.
Voters will become even more polarized on questions of welfare, immigration, and social spending, because they do not believe the existing architecture can deliver honest implementation.
Entrepreneurs and investors who interface with public programs will either lean into radical transparency and real‑time auditability, or avoid those ecosystems altogether and build in cleaner, more predictable jurisdictions.
From an institutional perspective, this moment can go one of two ways:
1) Regenerative path. The fraud revelations trigger serious, structural reform in how public money is designed, disbursed, and audited. Data and technology are used to tighten eligibility, track funds, and align incentives. High‑profile prosecutions are matched with durable changes in process and accountability. Trust does not fully return, but the system earns back some credibility over time.
2) Degenerative path. We get televised outrage, a handful of convictions, some new paperwork, and a return to business as usual. Citizens internalize that large theft and institutional failure rarely carry meaningful consequences. Trust steps down another notch. More people choose exit over voice. Capital and talent flow into private parallel systems and away from shared public projects.
For leaders, builders, and capital allocators, the strategic implications are clear:
Treat fraud‑at‑scale events as regime‑changing signals, not PR problems. They tell you something about the underlying governance and incentive structure.
Where you must interact with public dollars, design for extreme transparency: clear flows, third‑party verification, and audit‑ready systems.
Be intentional about jurisdictional selection. Over the next decade, there will be a sharper divergence between places that address institutional fraud seriously and those that normalize it.
The societal cost of fraud is not just the money that goes missing. It is the quiet, compounding conclusion across millions of productive minds that the rules are optional, the game is rigged, and the only rational response is to opt out.
2026 arrives in a few hours, regardless, and what we individually and collectively make of it will be based upon where we put our creative and productive energy. Be safe, stay positive, and proactive.
Yours in wealth and health,
~Chris J Snook