ASSOCIATED PRESS
An uncut $100 expense sheet is inspected during the printing procedure at the Western Currency Engraving and Printing Office in Fort Worth, Texas, on Sept. 24. An investigation by The Associated Press, published today, found that scammers could steal more than $280 billion in COVID-19 relief funds; Another $123 billion was wasted or wasted.
WASHINGTON>> Much of the brazen theft, if not simple.
The scammers used the Social Security numbers of other deceased people and federal prisoners to download unemployment checks. Federal loan applicants were not verified compared to a Treasury Department database that allegedly set off red flags about questionable borrowers.
Criminals and gangs seized the money. But so did an American gentleman in Georgia, the pastors of a Texas church, a former Missouri state legislator and a roofer from Montana.
All of this led to the largest scam in U. S. history. The U. S. Navy has thieves looting billions of dollars in federal COVID-19 aid to fight the worst pandemic in a century and stabilize a plummeting economy.
An investigation through The Associated Press found that fraudsters potentially stole more than $280 billion in COVID-19 relief funds; Another $123 billion lost or wasted. Collectively, the loss represents 10% of the $4. 2 trillion the U. S. government has lost on the U. S. government. The U. S. has so far delivered in COVID relief aid.
That number is sure to increase as researchers dig deeper into thousands of possible schemes.
How is it possible that so much has been stolen? Researchers and outdoor experts say the government, in trying to temporarily spend trillions on humanitarian aid, oversaw the early stages of the pandemic very little and instituted very few restrictions on applicants. In short, they say, the manipulation was too easy. .
“There was this kind of endless cash that everybody could access,” said Dan Fruchter, leader of the white-collar crime and fraud unit at the U. S. Attorney’s Office in the Eastern District of Washington. It was socially appropriate, even if it wasn’t legal. “
The United States has prosecuted more than 2230 defendants for fraud crimes related to the pandemic and is conducting thousands of investigations.
Most of the looted money was taken from the three major pandemic projects introduced under Trump’s direction and inherited by President Joe Biden. These systems were designed to help small businesses and the unemployed with the economic turmoil caused by the pandemic.
The looting was broad but not as deep as catchy headlines about multimillion-dollar cases. But all the thefts, large and small, illustrate an epidemic of scams and scams at a time when America was suffering with battered hospitals, school closures and closed centers. business. Since the pandemic began in early 2020, more than 1. 13 million people in the United States have died from COVID-19, according to the Centers for Disease Control and Prevention.
Michael Horowitz, the inspector general of the U. S. Department of Justice. The U. S. Department of Agriculture, which chairs the Federal Pandemic Response Accountability Committee, told Congress that the fraud “clearly amounts to tens of billions of dollars” and could eventually exceed $100 billion.
Horowitz told the AP he stands by that estimate, but probably won’t be sure of the amount until he gets more powerful data.
“I’m also hesitant to say how much it is,” he said. But it is transparent that it is really extensive and that there are still at least two years to go until the final count. “
Mike Galdo, acting director of COVID-19 fraud at the U. S. Department of JusticeA U. S. Department of Defense said, “This is an unprecedented amount of fraud.
Before leaving office, former President Donald Trump approved emergency relief measures totaling $3. 2 trillion, according to figures from the Pandemic Response Accountability Committee. be paid, according to the committee’s most recent count.
Never before has so much federal emergency been pumped into the U. S. economy. “We get to the U. S. so quickly. ” The largest bailout program in the history of the United States,” the U. S. Comptroller General told Congress.
The sheer scale of this package has masked billions of errors.
An $837 billion IRS program, for example, succeeded 99 percent of the time in getting stimulus checks to the right taxpayers, according to the tax agency. However, that 1% failure rate translated into nearly $8 billion going to “ineligible people. “a Treasury Department inspector general told the AP.
An IRS spokesman said the company did not agree with all the numbers cited by the watchdog and noted that while true, the loss was a small fraction of the program’s budget.
The aptitude crisis has pushed the Small Business Administration, a company that receives little attention, into an unprecedented role. In the seven decades leading up to the pandemic, for example, the SBA had provided $67 billion in crisis loans.
When the pandemic hit, the company was tasked with managing two major relief efforts: the COVID-19 Economic Disaster Loan and Paycheck Protection programs, which would be successful in more than a trillion dollars. The SBA workforce had to pull out money, quickly, to help suffering corporations and their employees. COVID-19 has boosted the SBA’s speed from a walk to an Olympic race. Between March 2020 and the end of July 2020, the company issued 3. 2 million COVID-19-related economic crisis loans totaling $169 billion, according to an SBA inspector general report, while implementing the new paycheck hedging program.
Safeguards to protect federal cash were quickly removed. Potential borrowers were allowed to “certify themselves” that their loan programs were true. a resolution that eventually revoked in default in 2020.
“If you open the bank window and say, give me your application and just promise me that you are who you say you are, you attract a lot of scammers and that’s what happened here,” Horowitz said.
The SBA’s Office of Inspector General estimated fraud in the COVID-19 economic crisis loan program at $86 billion and the paycheck hedging program at $20 billion. The watchdog is expected to revise the loss figures in the coming weeks, which are expected to be much higher.
In an interview, SBA Inspector General Hannibal “Mike” Ware declined to say what the new fraud estimate would be for the programs.
“This will be a fair number, 1000% defensible through my office, fully supported by our criminal investigation activity taking a stand in this space,” Ware said.
Ware and his team are defeated through pandemic-related audits and investigations. It has an order book of more than 80,000 exploitable tracks, or nearly a hundred years of work.
“Death through a thousand cuts can simply be death through 80,000 cuts for them,” Horowitz said of Ware’s workload. “It’s just the magnitude, the enormity. “
A 2022 study from the University of Texas at Austin found nearly five times as many suspicious paycheck coverage loans as the SBA’s $20 billion inspector general has reported so far. The study, led by finance professor John Griffin, found as many as $117 billion in most likely fraudulent loans, showing signs such as unregistered businesses and loans to the same address.
Horowitz, the president of the pandemic watchdog, criticized early on that the government did not use the Treasury Department’s “Do Not Pay” database, designed to prevent government money from going to excluded contractors, fugitives, criminals or convicted of tax evasion. These revisions, he said, may have been made quickly.
“It’s a false narrative that’s been put forward, that there are only two selections,” Horowitz said. “One selection is to withdraw cash immediately. And the only other choice is to spend weeks and months looking for who is eligible.
In less than a few days, a week at most, Horowitz said, the SBA could have discovered thousands of ineligible candidates.
“24 hours? 48 hours? would I have disappointed the program?” said Horowitz. “I don’t think that’s the case. ” And it was the knowledge that stayed there. It has not been verified.
Biden’s management has established stricter regulations to stop pandemic fraud, adding the use of the “Do Not Pay” database. Biden also recently proposed a $1. 6 billion plan to boost law enforcement efforts to prosecute pandemic aid scammers.
“I think the bottom line is, the number, overwhelmingly comes from 3 systems that were designed and introduced in 2020 with too many big holes that opened the door to fraud,” said Gene Sperling, White House rescue coordinator. in an interview.
“We went live when the fraud amounts had already left the barn,” Sperling added.
In a statement, an SBA spokesman declined to say whether the company agreed with the figures released through Ware’s office and said the federal government had developed an accepted formula for assessing fraud in government programs. According to the statement, previous analyses have highlighted “potential fraud. “” or “fraud indicators” in a way that conveys those figures as an actual estimate of fraud when they are Array
The coronavirus pandemic has plunged the U. S. economy into a short but devastating recession. Unemployment rates have skyrocketed to double digits and Washington has sent piles of billions of dollars to states to help the unemployed.
For scammers, it’s like throwing bait into the sea to attract fish. Many of those state unemployment agencies used outdated computer systems or were too understaffed to save you from paying false claims.
“Yes, states have been outperformed in terms of demand,” said Brent Parton, acting assistant secretary of the U. S. Department of Labor’s Employment and Training Administration. U. S. We had never noticed an increase like this in a global event like a pandemic. The systems were underfunded, resilient and, most importantly, I would say vulnerable to complicated attacks from fraudsters.
Fraud in pandemic unemployment assistance systems amounts to $76 billion, according to congressional testimony through Labor Department Inspector General Larry Turner. That’s a conservative estimate. According to his testimony, another $115 billion mistakenly went to others who did not benefit.
Turner declined AP’s interview request.
Turner’s task of identifying all pandemic unemployment insurance frauds has been confusing due to a lack of cooperation from the Federal Bureau of Prisons, according to a “warning note” issued in September through his office. million dollars in benefits.
His office does not yet know exactly how many were stolen in this way. The crime bureau declined to provide an update on federal criminals. The company did not respond to a request for comment.
Ohio State Auditor Keith Faber saw the challenges that lay ahead when guarantees were lowered to ensure unemployment assistance went only to other legitimately qualified individuals, making situations ripe for fraud and waste. The state-owned unemployment company got rid of the controls because, on the one hand, they were literally drinking from a chimney hose,” Faber said. “They had a year of claims in a matter of weeks. Worry less about security. They took it seriously. I think it was a mistake. “
The Ohio Department of Labor and Family Services reported $1 billion in fraudulent pandemic unemployment claims and another $4. 8 billion in overpayments in February.
The ubiquitous mask that has become a symbol of the COVID-19 pandemic is noticeable in fewer and fewer faces. Hospitalizations from the virus have declined, according to CDC data, and Biden ended the national emergency in April to respond to the pandemic.
But on the politically divided Capitol, lawmakers have not blamed the pandemic and are engaged in a fierce debate over the good fortune of aid spending and who is to blame for the theft.
Too much government money, Republicans say, breeds fraud, waste and inflation. Democrats countered that all of Washington’s monetary might has saved lives, businesses and jobs.
However, Republicans and Democrats found an unusual floor last year in spending to give the federal government more time to catch scammers. Biden signed legislation in August to increase the statute of limitations from five to 10 years for crimes related to the SBA’s two main programs. .
The extra time will help federal prosecutors get to the bottom of pandemic fraud cases, which occasionally involve identity theft and scammers overseas. But there is no guarantee that they will catch everyone who took advantage of the possibility of a simple payday. crimes unrelated to pandemic relief funds.
“Do we have enough cases and leads to deal with them in 2030? We surely could,” said Fruchter, the U. S. attorney for the Eastern District of Washington. “But my experience tells me that there will probably be other priorities that you will stand up and want to be addressed. And sadly, in our office, we don’t have a compromised pandemic fraud unit.
Congress has yet to pass a measure that would give prosecutors five more years to prosecute unemployment scammers. This worries Turner, the labor ministry’s watchdog. Profits may escape justice.
Sperling, the White House official, said any long-term crisis that requires government intervention is not a choice between helping those in need and arresting scammers.
“The prevention strategy to follow is that, in a crisis, you can make a quick delivery to other people in desperate conditions without feeling like you can only get that speed by cutting the common sense anti-fraud barriers,” he said.
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