BIG MONEY, BIG WASTE
Everyone makes questionable financial choices. But most people's money mistakes are chump change compared to the waste, fraud, and just plain dumb decisions made by politicians, private companies, and billionaires every year. So, as another comes to a close, let's review the most staggering instances of financial waste that either occurred or were made public in 2018.
MEDICAL EQUIPMENT SITTING IN A WAREHOUSE
Money wasted: $1.4 million
The US Department of Veteran Affairs (VA) has a long history of improper and wasteful spending. Case in point is a report made public earlier this year, detailing an investigation at the Durham, N.C., VA Medical Center. Investigators found that $1.4 million worth of equipment ordered by hospital officials was never used. Instead, it sat in an off-site warehouse for several years.
APOCALYPSE NEW ZEALAND
Money wasted: $8 million+
New Zealand has become something of a playground for the elite of Silicon Valley, some of whom have paid millions for some very unusual real estate. According to Bloomberg Business News, hedge-fund manager Julian Robertson and Fidelity Chairman Bill Foley are among those buying land in New Zealand, believing it to be the safest, most sustainable society in the event of a nuclear war or ecological collapse. (A bomb shelter shipped to New Zealand by doomsday prep company Rising S cost $8 million.) The trend of wealthy foreigners buying up property and obtaining citizenship — PayPal cofounder Peter Thiel received his after just 12 days in the country — prompted New Zealand voters to ban the practice in August.
ONE HECK OF A HOTEL BILL
Money wasted: $200,000
In April, Saudi Arabia's Crown Prince Mohammed bin Salman found time for hobnobbing in Hollywood. For his weeklong visit, the royal heir rented out the entire Four Seasons hotel in Hollywood, along with 40 extra rooms at the neighboring L'Ermitage to wow his high-powered local guests, including Oprah Winfrey and Disney CEO Bob Iger. The price tag for such an event reportedly cost about $200,000.
Money wasted: $72 billion+
You have essentially the same chance of winning the lottery whether you play or not, but that doesn't stop Americans from spending $72.6 billion a year — or $223 per person. Residents of Massachusetts spend the most on average ($763), while North Dakotans spend the least ($45), according to research by online lender LendEdu. In Illinois, residents spent $75 million on Mega Millions tickets between July and November alone.
Money wasted: $161 billion
One third of the world's food goes to waste each year, according to the UN. Americans alone throw away an estimated 133 billion pounds of edible goods worth more than $161 billion annually. That's enough to feed the nearly 800 million people starving worldwide.
Money wasted: $1.4 million
On Oct. 5, a framed spray-painted stencil titled "Girl With Balloon" by the artist Banksy spontaneously shredded itself as hundreds looked on, moments after the work had sold at a Sotheby's auction for $1.4 million. Though apparently satirizing the uneasy relationship between outsider art and private money, Banksy's work actually became even more highly valued following the stunt, with the anonymous purchaser ultimately deciding to keep the shredded, framed remains of "Girl With Balloon."
COSTLY COURT RENOVATIONS
Money wasted: $3 million+
West Virginians were outraged to learn that members of the state supreme court had spent more than $3 million on office renovations over a period of years, even as other parts of the state government were slashing budgets. In August, legislators in the House of Delegates impeached four of the five justices on charges stemming from those expenditures, which also included a $42,000 antique desk and $7,500 for an inlaid wooden floor map of the state's 55 counties. The court's fifth justice resigned a month earlier, avoiding impeachment on the same charges.
REDUNDANT GOVERNMENT PROGRAMS
Money wasted: $527 million (estimated)
An annual report by the Government Accountability Office released in April outlined how the federal government might save billions by taking 68 different actions to eliminate redundancies between programs. Potential targets for cuts included reducing overlap between 163 separate STEM (science, technology, engineering, and math) initiatives and closing 256 storage facilities owned but largely unused by the Department of Defense, an action that would save $527 million over five years.
MEDICAID IMPROPER PAYMENTS
Money wasted: $37 billion
The same GAO report also estimated the amount of state and federal funds wasted in 2017 on improper Medicaid payments, including on fraudulent or incorrectly billed claims. Of the $596 billion annual cost to taxpayers, an estimated $37 billion, or more than 6 percent, was spent on such payments. And that's up from $29 billion two years prior.
Money wasted: $1 billion
Consumers spend more than $130 billion on gift cards each year, of which roughly $1 billion never gets spent. A lot of this is chump change — a dollar or two left on one gift card, a couple cents on another — but it adds up. And most of the time, it goes unspent. The upside is that there is a thriving market in buying, selling, and trading "used" gift cards online, including sites like Raise and Cardpool.
Money wasted: billions
The average American spends about $100 per year on bottled water, despite it costing 600 times more and requiring up to 2,000 times as much energy to produce than tap water. The vast majority of bottles aren't recycled, either, generating more than $1 billion worth of recyclable plastic waste each year.
SPORTS STADIUM SUBSIDIES
Money wasted: billions
Federal, state and local governments in America have all been known to subsidize the construction of sports stadiums through tax-exempt municipal bonds, despite 83 percent of economists agreeing that they cost taxpayers more than any economic benefits that are generated. The ongoing waste of tax dollars continued unabated in 2018 as Clark County, Nev., leaders approved $750 million in tax-free municipal bonds to lure the Oakland Raiders to Las Vegas and build the team a $1.8 billion indoor stadium.
ONLINE AD FRAUD
Money wasted: $19 billion+
Marketers pay for online advertisements based on the clicks they generate, but many of those clicks are generated by bots, not people, with as many as 1 in 5 ad-serving websites visited exclusively by bots. Juniper Research estimates that digital advertisers waste $51 million on such ad fraud every single day, or $19 billion over the whole year.
HIGH-DOLLAR DOMAIN NAMES
Money wasted: $1.2 million
There's an entire multimillion dollar industry dedicated to purchasing and reselling desirable URLs to companies or individuals willing to pay top-dollar for highly visible domains like CarInusrance.com, valued at $49.7 million. In 2018, the most expensive domain sold was Super.com for $1.2 million in an online auction in February. Nothing's been done with the site so far.
Money wasted: $800 million
A $1.3 billion oil-rights deal in 2011 between two petrochemical giants and the government of Nigeria has long been considered one of the most corrupt ever. This year, additional evidence of the extent of that corruption emerged, suggesting that Nigeria's then oil minister Dan Etete spent $800 million in funds skimmed from that 2011 deal on two luxury properties in Emirate Hills, also known as the Beverly Hills of Dubai. Etete and several former employees of Shell and Eni, the two companies implicated, are awaiting trial in Italy on related charges.
EUROPEAN MONEY LAUNDERING
Money wasted: $229 billion
A big financial scandal broke this year in Europe when it was revealed that more than 200 billion euro, the equivalent of $229 billion, was laundered through the Estonian operation of Denmark's Danske Bank. The bank's chairman was forced to resign after admitting the institution knew that nearly half of the accounts in Estonia were being used to launder money coming from Russian and British sources. A number of employees are also suspected of having colluded in the transactions, according to investigators.
THE WAR ON DRUGS
Money wasted: $1 trillion
John Erlichman, one of President Richard Nixon's closest aides, has admitted America's "War on Drugs" was a hoax designed to vilify and disrupt "the antiwar left and black people" when it was launched in 1971. Since then, more than $1 trillion has been spent on federally funded anti-drug efforts, according to the Center for American Progress.
ILLICIT FINANCIAL FLOWS IN AFRICA
Money wasted: $80 billion+
Illicit financial flow (IFF) refers to the deliberate loss of financial resources through under-invoicing practices that may include natural resource plundering and illicit wildlife trades. Harming its developing infrastructure, Africa incurs as much as half of the world's losses through IFFs, with one estimate putting the amount lost through illegal mining practices alone at $80 billion annually.
A BOND SCAM
Money wasted: $3.4 million
The Rev. Kirbyjon Caldwell, pastor of one of the nation's largest Protestant churches and a one-time advisor to President George W. Bush, was charged in March with bilking $3.4 million from 29 people in an investment scam. According to court documents filed by the Securities and Exchange Commission, Caldwell and Gregory Smith, a broker, allegedly sold investors pre-World War II Chinese government bonds, claiming they would receive a return 15 times their initial payment in just 30 days. The case has yet to go to trial.
RAIDING PUBLIC FUNDS
Money wasted: $4.2 billion
Under former Prime Minister Najib Razak, Malaysia's state-owned investment fund, known as 1MDB, attracted at least $4.2 billion in questionable transactions since 2009. Razak and other ranking government officials concocted elaborate financial schemes that enriched themselves and their supporters while pretending to invest in national infrastructure projects. Voters ousting Najib in the May general election, ending his party's 61 years of rule over the nation.
Money wasted: $46 million+
A penny costs more to make than it's worth, which has been the case for 13 years and counting. In 2016, the U.S. Mint wasted $46 million by producing more than 9 billion pennies at a cost of 1.5 cents apiece. The nation's annual loss is closely related to global metal prices, which reached their peak in 2011, when pennies cost 2.41 cents apiece. On top of that, an estimated $62 million in pennies are lost every year in circulation, simply because Americans end up hording the near-worthless coins in glass jars or couch cushions.
Money wasted: billions
In another instance of governments giving tax dollars to a profitable industry, states continue to subsidize film productions with large tax exemptions, which rarely affect filming location decisions and often provide negligible returns on taxpayers' investment. Louisiana's subsidy cost taxpayers $1 billion in the past decade.
SCOTT PRUITT'S SPENDING
Money wasted: $4.6 million+
The Trump Administration has had no shortage of spending scandals, but the spending by former Environmental Protection Agency chief Scott Pruitt stands out. Between February 2017 and July of this year, his spending on security measures and sweeping his office for listening devices reached $4.6 million. Other instances of waste include Pruitt's spending $9,600 — almost twice the approved limit — on redecorating his office and $43,000 on a soundproof phone booth.
BEN CARSON'S DINING SET
Money wasted: $200,000
Another Trump Administration official plagued by financial scandal this year is Housing and Urban Development Secretary Ben Carson, who spent nearly $200,000 redecorating his new offices. His questionable expenses include spending $31,651 on a new dining set and $165,000 on lounge furniture — despite a $5,000 federally mandated limit on such expenditures. Designated Acting Secretary Craig Clemmensen defended Carson's spending, saying $5,000 "would not even buy a decent chair."
UNAUTHORIZED USE OF GOVERNMENT VEHICLES
Money wasted: $151,000
Yet another administration official criticized for his spending habits is Federal Emergency Management Agency chief Brock Long. In September, Reuters reported that Long had been ordered to repay the government for his unauthorized use of departmental vehicles to drive from Washington D.C. to his home North Carolina on a weekly basis. The total cost of Long's use of SUVs, including fuel, was estimated to be about $151,000.
DETAINING AND DEPORTING IMMIGRANT FAMILIES
Money wasted: $4 billion
The US Department of Homeland Security spent $4 billion in fiscal year 2018 to detain and deport immigrants in accordance with the Trump Administration's family separation policy, at least $10 million of which was diverted from the operating budget of the Federal Emergency Management Administration (FEMA) after Immigration and Customs Enforcement (ICE) blew through its budget last summer. The cost of holding migrant children separated from their parents in newly created tent cities is approximately $775 per person per night, far higher than the cost of keeping them with parents in established detention centers or other more permanent structures (about $298 per night). In addition, the separated children's average stay in the pop-up facilities is nearly two months, compared to a maximum of 20 days before the new zero tolerance policy.