US House of Representatives Commission Investigates Extent of Fraud in Federal COVID-19 Relief Programs
WASHINGTON. From 2020 to 2022, a group of Minnesotans pretended to distribute meals to underprivileged children while filing for reimbursement under the federal COVID-19 relief program to support baby food as schools and daycare centers are closed.
In total, the scammers defrauded the government of $250 million, according to the Minnesota Reformer. In October, the three defendants pleaded guilty.
Lawmakers on Capitol Hill on Wednesday called the conspiracy just one example – albeit a massive one – of the government’s blind spots in tracking its pandemic funds.
Rep. James Comer hit the gavel at the first hearing of this Congress in the House Committee on Oversight and Accountability, vowing to make sure the government “works effectively” and protects American taxpayers from “scammers” while focusing on “massive waste, fraud.” and abuse in COVID relief programs,” he said.
The Kentucky Republican accused the Democrats of overspending in the last Congress when they were in the majority and then of failing to track whether those dollars hit their intended targets.
“We owe it to the American people to get to the bottom of the biggest theft of American tax dollars in history,” Comer said in his opening remarks.
Ranking member Jamie Raskin took issue with Democrats being blamed, singling out several conducted by last Congress’s House Select Committee on the coronavirus crisis.
“We have used the spotlight and the intimidating podium of a small subcommittee to expose and reverse the colossal frauds being perpetrated against the American people,” Maryland-based Raskin said, criticizing the lack of fraud control under former President Donald Trump, which led to some of the fraudsters, among other examples. $84 billion in small business loans.
“I confess I am concerned that some of our colleagues seem to want to pick facts and use distorted numbers to attack the legitimacy of the programs themselves,” Raskin said.
Trillions in aid
The $2 trillion Coronavirus Aid, Relief, and Economic Security Act received near-unanimous support from lawmakers and was signed into law by Trump in March 2020.
The massive stimulus package provided Americans with direct relief checks, funneled federal money to support state unemployment insurance, and launched the Paycheck Protection Program, which gave small businesses forgivable or low-interest loans to cover eight weeks of payroll and employee benefits, as well as mortgages. , rent or utilities.
The December 2020 Consolidated Appropriations Act expanded some of these programs.
In March 2021, the $1.9 trillion American Rescue Plan Act passed through the partisan 117th Congress and was passed by President Joe Biden.
The law expanded and added new pandemic relief programs, including providing approximately $350 billion in flexible spending to states and local governments.
So what part of these funds ended up in the wrong hands?
GOP committee members say hundreds of billions were stolen, although the final amount remains unclear.
“It will be some time before the full extent of the fraud is known,” Gene Dodaro, US comptroller and head of the US Government Accountability Office, told the panel.
Dodaro told the committee that more than 1,000 people have been convicted or pleaded guilty to pandemic-related fraud, and more than 600 charges against others are still pending.
Meanwhile, the Small Business Administration, the agency that managed the PPP loans, is currently running 536 active investigations opened by its inspector general, and the Department of Labor is opening roughly 100 new cases a week, Dodaro said.
“So this will continue for a while. There are definitely signs of widespread fraud,” he said.
Urgent, incorrect payments
Dodaro cited the agency’s unwillingness to track funds, the urgent need for quick payouts and the government’s “everywhere” problem with improper payments as factors that contributed to the misuse of pandemic aid dollars.
Among their recommendations to the group, Dodaro and Michael Horowitz, Inspector General of the Department of Justice, argued for Congressional support for a permanent data analysis platform where programs and spending could be effectively monitored.
“Taxpayers need this sophisticated tool to continue to exist,” said Horowitz, who chairs the Pandemic Response Accountability Committee created under the CARES Act.
Horowitz also advocated adjusting the dollar amount threshold to allow investigators to investigate fraud at lower dollar amounts, and recommended extending the statute of limitations for unemployment insurance pandemic fraud to 10 years instead of five.
“PRAC and the IG community are committed to using every tool given to us—criminal, civil, and administrative—to pursue every dollar of taxpayers stolen by scammers from pandemic programs,” Horowitz said.
Comer promised to hold additional hearings in the pandemic aid fraud case.
The Select Committee on the Coronavirus Crisis during the 117th Congress held hearings on the federal response to pandemic fraud, including in small business lending programs.
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