If you're surprised or upset by news about the fraudulent acquisition of government money by private actors responding to incentives - you might not be a libertarian at all, just a plain old right-winger who thinks "liberty" is when the government works in the interest of the people.
Discussion
Libertarians are as retarded a communists
You believe in a utopia that will never exist
Libertatrian/Minarchist utopiae have existed, they were called the United States of America (1776-1861), West Germany (1948-1971), the Free State of Fiume (1920-1924), among others.
There are Próspera and Morazan right now which may or may not succeed.
Those libertarian countries all ended because of socialist takeovers failing to create socialist utopiae, even though they've consumed all the wealth the formerly free people there had accumulated.
The two Honduran free cities mentioned above are under constant attack by socialist governments so they might well die the same death.
So from my point of view, the important question is not: "How can we bring about an impossible utopia of free people?" but "The next time people become free, how can they defend themselves against those who would enslave them?"