COVID-19-related spending resulted in what the Associated Press is calling the “greatest grift in U.S. history.”
According to a new report, fraudsters may have stolen more than $280 billion in COVID relief funding, while another $123 billion was either wasted through mismanagement or misappropriation. And the combined total, which now stands at 10 percent of the $4.2 trillion the government spent on COVID relief, is bound to grow as more schemes are uncovered.
How did it all happen? According to investigators and analysts, because the government was looking to disburse so much so quickly, proper oversight was not conducted and there were too few restrictions on applications.
Early on, for example, the government did not utilize the Treasury Department’s “Do Not Pay” database that prevents money from going to felons, debarred contractors, people convicted of tax fraud, etc. Spending a small amount of time doing some due diligence could have rooted out thousands of ineligible applicants, said Michael Horowitz, the U.S. Justice Department inspector general and chair of the federal Pandemic Response Accountability Committee.
Most of the looted money was swiped from three large pandemic-relief initiatives launched during the Trump administration and inherited by President Joe Biden. Those programs were designed to help small businesses and unemployed workers survive the economic upheaval caused by the pandemic.
The pilfering was wide but not always as deep as the eye-catching headlines about cases involving many millions of dollars. But all of the theft, big and small, illustrates an epidemic of scams and swindles at a time America was grappling with overrun hospitals, school closures and shuttered businesses. […]
Never has so much federal emergency aid been injected into the U.S. economy so quickly. “The largest rescue package in American history,” U.S. Comptroller General Gene Dodaro told Congress.
The enormous scale of that package has obscured multibillion-dollar mistakes. […]
When the pandemic struck, the agency was assigned to manage two massive relief efforts — the COVID-19 Economic Injury Disaster Loan and Paycheck Protection programs, which would swell to more than a trillion dollars. SBA’s workforce had to get money out the door, fast, to help struggling businesses and their employees. COVID-19 pushed SBA’s pace from a walk to an Olympic sprint. Between March 2020 and the end of July 2020, the agency granted 3.2 million COVID-19 economic injury disaster loans totaling $169 billion, according to an SBA inspector general’s report, while at the same time implementing the huge new Paycheck Protection Program.
In the haste, guardrails to protect federal money were dropped. Prospective borrowers were allowed to “self-certify” that their loan applications were true. The CARES Act also barred SBA from looking at tax return transcripts that could have weeded out shady or undeserving applicants, a decision eventually reversed at the end of 2020.
“If you open up the bank window and say, give me your application and just promise me you really are who you say you are, you attract a lot of fraudsters and that’s what happened here,” Horowitz said. (Associated Press)
Small Business Administration Inspector General Hannibal “Mike” Ware said his staff has a backlog of more than 80,000 actionable leads to investigate, which is enough work to keep them busy for the next 100 years.
“Death by a thousand cuts might be death by 80,000 cuts for them,” Horowitz said about the workload Ware's office has. “It’s just the magnitude of it, the enormity of it.”
The budget deal President Biden signed earlier this month includes one measure that takes back $27.1 billion in unspent COVID relief funding from multiple programs.