U.S. House panel probes extent of fraud in federal COVID-19 relief programs

WASHINGTON — From 2020 to 2022, a group of Minnesotans pretended to be serving meals to low-income children, all the while filing for reimbursement under a federal COVID-19 relief program aimed to buoy child nutrition as schools and childcare centers closed. 

In all, the schemers defrauded the government of $250 million, the Minnesota Reformer reported. Three defendants pleaded guilty in October.

Lawmakers on Capitol Hill Wednesday highlighted the conspiracy as just one example — albeit, a massive one — of the government’s blind spots in tracking its pandemic relief funds.

Rep. James Comer gaveled in the House Committee on Oversight and Accountability’s first hearing this Congress, promising to make sure government “works in an efficient manner” and guards American taxpayers from “fraudsters” — with a particular focus on the “massive waste, fraud and abuse in COVID relief programs,” he said.

The Kentucky Republican accused Democrats of pandemic overspending last Congress when they held the majority and then failing to track whether those dollars were reaching intended targets.

“We owe it to the American people to get to the bottom of the greatest theft of American taxpayer dollars in history,” Comer said in his opening statement.

Ranking member Jamie Raskin disagreed with the blame being directed toward Democrats, highlighting several held by the last Congress’ House Select Committee on the Coronavirus Crisis.

“We used the spotlight and bully pulpit of a small subcommittee to expose and reverse colossal frauds taking place against the American people,” Raskin, of Maryland, said, criticizing a lack of anti-fraud controls under former President Donald Trump that led to about $84 billion in fraudulent small business loans, among other examples.

“I confess I’m troubled that some of our colleagues seem to want to cherry pick facts and deploy distorted figures to attack the underlying 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 direct relief checks to Americans, sent federal money to bolster state unemployment insurance and launched the Paycheck Protection Program, which gave small businesses forgivable or low-interest loans to cover payroll and employee benefits for eight weeks, as well as mortgages, rent or utilities.

The December 2020 Consolidated Appropriations Act extended some of those programs.

In March 2021, the $1.9 trillion American Rescue Plan Act passed the 117th Congress along party lines and was enacted 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 how much of those funds ended up in the wrong hands?

GOP committee members say hundreds of billions have been stolen, though a final total remains unclear. 

“It will be a while before the full extent of fraud is known,” Gene Dodaro, U.S. comptroller and head of the U.S. Government Accountability Office, testified before the panel.

Dodaro told the committee that more than 1,000 people have been convicted or pleaded guilty to pandemic-related fraud, and over 600 charges are still pending against others. 

Meanwhile, the Small Business Administration, the agency that administered the PPP loans, currently has 536 active investigations open by its inspector general, and the Department of Labor is opening roughly 100 new cases per week, Dodaro said.

“So this is going to go on for a while. There are definitely indications of widespread fraud,” he said.

Urgency, improper payments

Dodaro cited lack of agency preparedness to track the funds, an urgency to quickly disburse the money and a “pervasive” government issue with improper payments, as factors that contributed to abuses of pandemic relief dollars.

Among their recommendations to the panel, Dodaro and Michael Horowitz, inspector general at the Department of Justice, advocated for congressional support for a permanent data analytics platform where programs and spending can be efficiently monitored.  

“Taxpayers need that sophisticated tool to continue to exist,” said Horowitz, who serves as the chair of the Pandemic Response Accountability Committee, established under the CARES Act.

Horowitz also advocated for adjusting the dollar figure threshold so that investigators can inspect fraud at lower dollar amounts, and he recommended extending the statute of limitations for pandemic unemployment insurance fraud to 10 years, up from five.

“The PRAC and the IG community is committed to using all of the tools we’ve been provided — criminal, civil and administrative — to pursue for the taxpayers every dollar that fraudsters stole from pandemic programs,” Horowitz testified.

Comer promised more hearings examining pandemic relief fraud.

The Select Committee on the Coronavirus Crisis during the 117th Congress held hearings on the federal response to pandemic relief fraud, including in small business loan programs.