It's pretty disgusting that those that are supposed to be stopping crimes are knowingly and intentionally committing fraud to get additional money from the state. Between this and the recent civil asset forfeiture scandals, I'm amazed people aren't more outraged.
I would argue that police are inherently no more ethical than the average reasonable citizen.
The solution of course is transparency. Stop treating police as holier than thou. They're just government workers. "Trust but verify" works wonders for keeping people honest. Good people as well as bad, because it removes temptation.
Outrage requires awareness as a first step. Our mainstream sources of journalism are often too preoccupied with party talking points when covering welfare programs to get to the real issues of corruption, fraud, and systemic brokenness underneath. It seems to be slowly changing, however. Articles like this one are a good start.