In a secret federal law enforcement warehouse in Southern California, dozens of Ferraris, Lamborghinis and stacks of coveted sports memorabilia – like Mickey Mantle rookie cards and game-worn Kobe Bryant sneakers – offer a modest testament to the mountains of taxpayer money being illegally diverted through fraud, law enforcement officials told CBS News.

By some government estimates, at least $500 billion is lost to fraud schemes each year, though other sources, including those who consult with the government to track fraudulently obtained funds, said the real figure is over $1 trillion. As the Trump administration has launched a crackdown on those cheating federal programs like Medicare, food assistance and hospice care, it is difficult to claw back the stolen funds, said Bill Essayli, the top federal prosecutor in Los Angeles.

"It should offend every American taxpayer that these people are taking advantage of the system," Essayli said. 

Seizing physical assets has been a first step in those efforts, Essayli said as he climbed the driveway of an eight-bedroom, 10-bathroom compound on an isolated Orange County hilltop – the former home to convicted serial fraudster Paul Randall.

"He was living like a king off us," Essayli said.

Randall, who declined to be interviewed, was convicted of diverting more than $270 million in taxpayer funds in one of the largest California Medicaid fraud schemes in the state's history. He pleaded guilty in April to wire fraud and faces up to 30 years in prison when he's sentenced this summer. 

Essayli said Randall was out on bond awaiting sentencing on another federal fraud charge, one of six prior fraud convictions, when he started this latest scheme.

"Obviously there's a breakdown in the criminal justice system if this guy was able to have six convictions and never did any real prison time," Essayli said.

The vast majority of the stolen funds move out of the country before authorities have a chance to confiscate it, said Haywood Talcove, the CEO of LexisNexis Risk Solutions, Government.

Talcove consults with the government on tracking illicit funds. He projects that $1 trillion is lost to fraud each year — and believes about 70% of that ends up in the hands of transnational criminal gangs.

"It goes to Russia, it goes to China, it goes to Nigeria, it goes to Romania," Talcove said.

Talcove's investigations have shown criminals are getting more sophisticated. "Taxpayers are funding transnational criminals who are using this money for horrible things — child trafficking, drugs, threats to our democracy," he said. 

Essayli said that federal law enforcement is working on ways to better find and recover the stolen funds. But with money easily converted to digital currency and channeled overseas, federal agents are at a disadvantage.

"That is why it is so important that the money never goes out in the first place; that's why it's important that we have systems in place to detect and prevent fraud," he said.