COVID related recovery fraud is an American embarrassment

In response to COVID 19, congress and the Trump and Biden administrations overreacted and hastily distributed $5,000,000,000,000 in loans and grants to millions of Americans through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and American Recovery Plan (ARP). 

While fraud is often present in such programs, the level of fraud involved with CARES and ARP funds is the largest fraud in American history and should be an embarrassment to us all.

Two recent documents serve to provide a sense of scale for the fraud perpetrated. 1) The statement of Michael Horowitz, Chair of the Pandemic Response Accountability Committee, and Inspector General of the DOJ, to the US House of Representatives Coronavirus Crisis subcommittee in June 2022 (read it here), and 2) David Fahrenthold’s article for the New York Times on 8/16/22 (read it here).

Some estimates conclude the fraud to the American taxpayer will top $221,000,000,000, including $163,000,000,000 in improper unemployment benefits alone. The Department of Labor’s inspector general’s office has experienced an incredible 1,000% increase in suspected unemployment fraud cases compared to pre-pandemic levels. 

This level of fraud represents a massive afront to American values and must not be ignored or dismissed.

The investigative effort underway is being coordinated by the Pandemic Response Accountability Committee (PRAC), which was created in 2020 as part of the original CARES Act. PRAC serves to coordinate the efforts of 21 separate federal Inspectors General who are working with state and local partners to hold accountable those who have perpetrated fraud, to ensure transparency in pandemic spending, and to reduce fraud in future pandemic spending.

PRAC’s budget is $120,000,000 over approximately 10 years.  Interestingly, that compares poorly to the $175,000,000 budgeted over 7 years for the Recovery and Accountability Transparency Board that coordinated the investigation of fraud involved in the much smaller $800,000,000,000 stimulus package to address the financial crisis in 2009.

Some of the absurd abuses that have occurred because of the lack of safeguards in place include:

• Unemployment benefits being issued to prisoners, false names, and deceased individuals
• Funds dispersed to “farms” that turned out to be front yards
• Funds dispersed to people who were on the government’s “Do Not Pay List”
• Loans given to 342 people who listed their name as “N/A”
• Unemployment benefits being paid to the same person in 29 states
• A $82,900 loan to a postal employee for a business called the “US Postal Service”
• Ten individual loans to the same person for ten non-existent remodeling businesses that used an email address belonging to a burrito shop

Investigations have led to 1,500 charges and 450 convictions so far (see here). Millions of additional fraudulent acts are being investigated. These investigations are important and need our support. They will serve to hold the guilty responsible and establish safeguards to prevent repeats of this fraud.  

While these acts might not stimulate our emotions in the same way violent crime does (and should), they none the less represent horribly corrupt behavior by far too many Americans — behavior that requires a firm and resolute response by any society serious about crime.