As we approach the third year of the COVID-19 pandemic, it’s about time we check in on the fraud against the government relief programs.
CARES Act/PPP Fraud
Did you know the first civil settlement involving fraud against the Paycheck Protection Program (PPP) was announced in January 2021, more than a year ago! And since, we’ve seen case after case settle.
And just how much PPP money was lost to fraud? Last month, the U.S. Secret Service announced fraudsters potentially stole nearly $100 billion in PPP funds and the agency has over 900 open criminal investigations centered around pandemic-related relief funds.
With hundreds of cases around the country, the Department of Justice and other governmental agencies remain serious about pursuing COVID-19 fraud. Unfortunately, the cases represent a drop in the bucket—most of the frauds and schemes involve under $1 million.
Meanwhile, as the United States continues to report hundreds of thousands of COVID-19 cases daily, multiple investigations were launched into the massive testing company, Center for COVID Control, which operated more than 300 locations across the country.
The company’s main lab, Doctors Clinical Lab, reimbursed more than $124 million for the federal government’s COVID-19 uninsured program. Multiple state attorneys general also opened civil investigations into the firm and shut down several of its sites.
Fake sales of PPE to States
The uncertain, fast-changing situation of the pandemic was also an attractive target for fraudsters. States we’re trying to manage the situation the best they could and needed to act quickly in the face of crises. Fraudsters took that as an opportunity to contract with Indiana for masks no one had possession of, sell the Massachusetts Bay Transit Authority hand sanitizer with no germ-killing properties, and do the same to Boston area schools.
With state spending on personal protective equipment in the billions, there are sure to see many more cases, and many more whistleblowers, reporting fake contracts, useless equipment, and exploitation of crises.
Unemployment Insurance Fraud
States are still continuing to uncover just how much unemployment insurance was lost to fraud during the first year of the pandemic.
In Michigan, a new audit found the state paid up to $8.5 billion in fraudulent unemployment assistance claims during the pandemic. Last year, Ohio reported $3.8 billion lost to fraudulent claims and California reported at least $20 billion.
To combat the losses, California and other states have also established task forces and the United States Attorney’s Offices continue to bring charges, but similar to PPP fraud the cases represent a drop in the bucket.
The Secret Service has either seized or returned $3.5 billion of unemployment insurance and loan fraud, but the Department of Labor estimates around $87 billion of improper payments.
Recovering the billions in stolen taxpayer dollars continues to be a priority for the Department of Justice. Last year, Attorney General Merrick Garland announced the COVID-19 Fraud Enforcement Task Force to enhance the DOJ’s response to COVID-19 related fraud.
While these task forces and other agencies generated results, the recovered funds are just a fraction of the money lost to fraud. With the low-hanging fruit (fraudsters using stolen taxpayer dollars to buy luxury cars, watches, and designer clothing) being cleared away, COVID-19 fraud cases are only going to get more difficult to prosecute.
To better combat fraud with specific evidence to make cases against individual fraudsters, the government needs to embrace whistleblowers.
As Senator Chuck Grassley (R-Iowa) said last year: “As the country continues to battle the global pandemic, the False Claims Act has never been more important than it is right now… As history has shown all of us, fraudsters thrive during times of crises and large-scale government spending.”
Whistleblowers empowered by the False Claims Act are the government’s best hope to recover stolen taxpayer dollars.
Written by James King, of the Taxpayers Against Fraud