Biden administration struggles to recover billions in stolen pandemic aid

Billions of dollars intended to help people cope with the pain of the pandemic have disappeared in fraud schemes large and small, and the government is only now taking stock of the extent of the abuse.

The Ministry of Justice
accused
48 people this week tapped into a massive fraud ring in Minnesota that drained $240 million from a pandemic hunger relief program meant to feed children.

Dozens of people allegedly made up names and ages for the children they claimed to have fed and then pocketed the money for these fake meals.

While the scale of the program was unusual, the approach was not.

So much money has been poured into programs with so little oversight that people around the world have successfully siphoned off stacks of cash that the government will likely never get back.

“Congress has not implemented any monitoring, accountability, [or] monitoring one of the programs, one of the funding they’ve issued over the last three years,” said Deborah Collier, vice president of policy and government affairs at Citizens Against Government Waste, at the Washington Examiner. “It’s just non-existent.”

WATCHDOG IDENTIFIES $45 BILLION PAID IN FRAUDULENT COVID-19 UNEMPLOYMENT CLAIMS

The Inspector General of the Department of Labor
valued
that the abusive payment rate of unemployment programs in the event of a pandemic exceeded 19%.

In California, for example, authorities felt that fraud could
account for
up to 27% of the pandemic unemployment benefits she paid in 2020.

In Maryland, officials
detected
An astonishing 508,000 fraudulent claims in a single six-week window last summer.

The huge amount of money available and the speed at which the government moved it out created many opportunities for fraud.

“Obviously any time you have a disaster, and this was a rather unprecedented disaster… there’s an urgency to get the money out, and some level of oversight and some of the brakes are expected. and counterweights can be reduced in order to expedite getting that money out,” said Sean Moulton, senior policy analyst at the Project on Government Oversight. Washington Examiner. “It’s a different balancing point that agencies are trying to find in recognition of this urgent need.”

“Unfortunately, I think we haven’t even tried to find a new balance,” he added. “We just got rid of the idea of ​​oversight and accountability.”

Some people have applied for pandemic unemployment benefits in several states. A fraudster managed to collect $222,000 in payments from 29 states using a single Social Security number.

Others used the social security numbers of deceased people or anonymous email accounts to obtain additional payments.

And some of the fraud took place away from home.

More sophisticated pandemic unemployment programs involved conspirators hiring low-wage workers in China, Brazil, Bolivia, Mexico and several West African countries to file mass unemployment benefit claims for United States, according to
ProPublica
.

Pandemic unemployment benefits have also gone to jail, despite the program barring incarcerated people from collecting payments. The Department of Labor estimated that at least $98 million in pandemic unemployment relief went to federal prisoners.

Two inmates at a California prison have faced criminal charges after allegedly using fellow inmates’ birthdates and social security numbers to file a flurry of unemployment claims. The pair raised $1.4 million, according to
court documents
.

In total, pandemic unemployment programs may have lost up to $163 billion due to abusive payments and fraud, Labor Department inspector general says
theorize
that the actual amount was “probably higher”.

On Thursday, the Inspector General of the Department of Labor issued a
note
claiming his team had identified $45.6 billion in pandemic unemployment insurance fraud. That figure had risen significantly since the watchdog last provided an update on its fraud findings.

The Paycheck Protection Program has also sent billions of dollars to people who have inflated — or, in many cases, invented — their small businesses. Lawmakers designed the PPP to help companies keep workers on the payroll during the height of shutdowns, and the program aimed to get money into company accounts as quickly as possible.

More than a year after the program expired, prosecutors are still pursuing the stolen funds.

A man in Washington, DC, was sentenced to 10 years in prison on Tuesday for creating false corporate documents to apply for more than two dozen PPP loans. He managed to steal more than $2.3 million and used the proceeds to buy a Tesla, according to the
justice department
.

Department of Justice officials
grasped
four luxury cars and jewelry after investigating a PPP scheme in Georgia that allegedly earned a man $11.1 million from 14 fraudulent PPP loans made to fake companies.

A woman in California apparently set up a fake business to apply for nine PPP loans and, according to
prosecutors
“spent most of the loan money on personal indulgences, including private jet travel, hotel stays, boat rentals, expensive automobiles, luxuries purchased from Louis Vuitton and Neiman Marcus, and specialty items purchased from Sunglass Hut and the San Francisco Giants Dugout Store.

Some people have invented fake farms to collect pandemic aid.

In South Dakota, a woman learned her home address had been listed as a potato farm only when a local reporter
contacted her for a story
on fake agricultural regimes.

A fraudster had pocketed $42,700 for the non-existent potato farm. When the woman called the Small Business Administration to report the fraud the news station had alerted her to, she then learned that her home had also been listed as a tomato farm for a second loan.

In Ohio, a single family is said to have created 72 fake farms, claiming to grow everything from organic berries to garlic, to take out more than $7 million in pandemic loans.

The three addresses used by family members in their loan applications were apparently regular homes, not farms.

But federal authorities did not uncover the scheme. In fact, journalists from Bloomberg News are the ones who discovered it
while pointing out
on the government’s lack of enforcement of the most basic requirements associated with the loan program, such as prohibiting loans to companies that did not exist before Congress created the PPP.

Ineligible – but, unlike much of the PPP fraud, at least in existence – companies also reaped pandemic loans.

Two women from Massachusetts faced
criminal charges
after the Department of Justice said it collected pandemic aid for their prostitution rings, for example.

Researchers estimated last year that PPP fraud could have topped $100 billion, according to a
analysis
in the Finance Journal.

It would be a big part of the program, which eventually dispensed $793 billion in loans.

The Biden administration has stepped up efforts to crack down on fraud, which began under the Trump administration but continued under President Joe Biden.

Last week, the Department of Justice
unveiled
three Strike Force teams focused on combating pandemic program fraud.

Attorney General Merrick Garland said federal authorities recovered $1.2 billion in stolen pandemic aid, just a fraction of the known fraud.

Last month, Biden signed a bill that
extended
the statute of limitations for certain types of PPP fraud from five to 10 years, giving investigators more time to dig into the millions of loan applications filed during the pandemic.

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Republican Senators Mike Crapo and Rob Portman introduced a bill in July that would help recover money lost to fraud in pandemic unemployment programs.

“Fraud associated with pandemic unemployment programs has reached staggering levels,” Portman said in a
statement
at the time. “Billions of hard-working American taxpayer dollars that were supposed to help out-of-work Americans have gone to criminals and cheaters.”

But Collier said tracking down and recovering stolen pandemic funds is an incredibly difficult task.

“A lot of it is because the agencies now have to investigate where the money is going, and that’s really difficult, especially with a lot of these fraud cases – they have to build records around the fraud,” a- she declared. “And if the money is already spent on God knows what… The money is gone, all they can do is sue people who abused the programs.”

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