During this chaotic time, we can look back and learn from the lessons from the most recent historical crisis: the Great Recession. The government’s response from the 2008 financial crisis can serve as an important and relevant case study to understand the COVID-related law enforcement will play out in 2020 and forward and understand the role of whistleblowers in fraud investigations.
The 2008 Financial Crisis
The Emergency Economic Stabilization Act of 2008 (EESA) established the Troubled Asset Relief Program (TARP) with a $700 billion relief fund from the Treasury to aid financial institutions and homeowners and to stabilize the economy. Where the money is, there will be a fraud. Congress created oversight bodies: Congressional Oversight Panel (COP), Financial Stability Oversight Board (FSOB), Government Accountability Office, and the Office of the Special Inspector General for TARP (SIGTARP). SIGTARP established a hotline where private citizens could provide information about potential fraud schemes.
By June 30, 2009, SIGTARP had 35 ongoing criminal and civil investigations that ranged from accounting fraud, securities fraud, insider trading, mortgage servicer misconduct, mortgage fraud, public corruption, false statements, and tax investigations. According to SIGTARP, the majority of its investigations were developed through leads from SIGTARP’s hotline.
More than ten years after its creation, SIGTARP continues to investigate financial institution fraud related to TARP. As of March of 2020, the SIGTARP has charged 443 defendants, and 302 of them were sentenced to prison and has recovered $11 billion. It received 11 prosecutorial refers from other federal government agencies and state and local agencies and 334 hotline complaints, showing the importance of the private citizens’ participation in fighting against fraud. The report by the SIGTARP reveals that common fraud types were travel/conference charges violating federal regulations and fraudulent certification or perjury as to the eligibility.
The COVID-19 Pandemic
Among other measures to combat the impact of the COVID-19, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which includes roughly $2.2 trillion to assist businesses. The CARES Act initially authorized about $349 billion for the Paycheck Protection Program (PPP), overseen by the Small Business Administration (SBA). Similar to the TARP, the CARES Act established oversight bodies: the CARES Act Oversight Commission, the House Select Subcommittee on the Coronavirus Crisis, and the Special Inspector General for Pandemic Recovery.
The CARES Act Oversight Commission has the authority to hold hearings, call witnesses, take testimony, and receive evidence from federal agencies. The commission is comprised of three members of Congress and Bharat R. Ramamurti, a former aide to Sen. Warren who chaired the TARP Congressional Oversight Commission. The House Select Subcommittee on the Coronavirus Crisis has no legislative authority but can issue subpoenas and compel witness testimony.
The Special Inspector General for Pandemic Recovery is similar in purpose and legal authorities to the Special Inspector General for the Troubled Asset Relief Program and possesses authorities defined in Section 6 of the Inspector General Act. It can also obtain, upon request, information or assistance from any federal department, agency, or entity and required to report to Congress whenever information or assistance, in the judgment of the SIGPR, is “unreasonably refused or not provided.”
The government agencies have already unearthed several fraudulent activities from fraudulent receipt of the PPP loans and price gauging of personal protective equipment to stock market manipulation. Some are expanding their existing kickback schemes to COVID-19 testing as well.
Congress has been debating about another round of pandemic relief bill, which has been slightly cooled off after an unforeseen positive job report in May. Several states have already implemented reopening plans, and the federal government has actively pursued investigations against fraud targeting the historic government funds available. However, the number of confirmed cases of COVID-19 in the United States has passed 2 million marks and turbulent economic performance poses further uncertainty, re-igniting talks about expanding government aids. During his press conference on June 10th, Federal Reserve Chair Jerome Powell stated that Congress might need to authorize additional government funds to prevent long-term damage to the economy. The U.S. Treasury Secretary Steven Mnuchin hinted that the White House would be open to more PPP loans, among other measures, while he previously had been reluctant to the expansion.
The Treasury and the SBA agreed to provide full access about the PPP loans to the Congressional oversight bodies, which will ignite further scrutiny and investigations. More criminal and civil investigations and actions related to COVID-19 will surely follow, similar to the still-ongoing enforcement related to the 2008 financial crisis.
Yoo Jung Hah is a former staffer of Taxpayers Against Fraud Education Fund. She served as the Public Interest Advocacy Fellow and is currently pursuing a Juris Doctorate at Duke University.
 Dep’t of the Treasury Office of Financial Stability, Citizen’s Report on the Troubled Asset Relief Program Fiscal Year 2009, https://www.treasury.gov/initiatives/financial-stability/reports/Documents/09%20OFS_CitizensReport%20MAR2.pdf; Economic Emergency Stabilization Act, Pub. L. No. 82 110–343 (2008), https://www.congress.gov/110/plaws/publ343/PLAW-110publ343.pdf
 Office of the Special Inspector General for the Troubled Asset Relief Program, Quarterly Report to Congress, 5, July 21, 2009, https://www.sigtarp.gov/Quarterly%20Reports/July2009_Quarterly_Report_to_Congress.pdf.
 CARES Act, H.R. 748, § 402(e)(1)
 Press Release, Pat Toomey, Congressional Oversight Commission Publishes Initial Report, May 18, 2020, https://www.toomey.senate.gov/?p=op_ed&id=2639#:~:text=The%20Congressional%20Oversight%20Commission%20is,Department%20and%20the%20Federal%20Reserve..
 Cristina Marcos, House votes to create select committee to oversee coronavirus response, The Hill (Apr. 23, 2020), https://thehill.com/homenews/house/494340-house-votes-to-create-select-committee-to-oversee-coronavirus-response
 CARES Act, H.R. 748, , § 4018(d)(4)(A), (B).
 Niv Elis, Mnuchin indicates openness to more PPP loans in next COVID-19 relief bill, The Hill, June 10, 2020, https://thehill.com/policy/finance/502079-mnuchin-indicates-support-for-new-ppp-loans-in-next-covid-19-relief-bill
 Centers for Disease Control and Prevention, Coronavirus Disease 2019, https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html.
 Press Conference, Fed. Reserve Sys., Transcript of Chair Powell’s Press Conference June 10, 2020, https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20200610.pdf
 See Niv. Elis.