By Kate Scanlan of Keller Grover, LLP
Although we are all weary of the widespread disruption caused by the COVID-19 pandemic, it continues to affect our daily lives. Unfortunately, the tragic loss of life and economic turmoil caused by the pandemic have been compounded by fraud in COVID-19 relief efforts.
When state and local governments began ordering COVID-19 shutdowns starting in March 2020 Congress moved quickly and in rare bi-partisanship to pump more than $3 trillion in supplemental spending into every aspect of the U.S economy. While these massive expenditures provided lifelines to struggling American businesses and individual taxpayers, lawmakers knew to expect fraud on these crucial programs.
For example, Senator Chuck Grassley (R-Iowa), the sponsor of the modern amendments to the False Claims Act, said: “The massive increase in government spending to address the COVID-19 crisis has created new opportunities for fraudsters trying to cheat the government and steal hard-earned taxpayer dollars.” Of course, Senator Grassley was not saying anything we didn’t all see coming. It even got its own name: COVID-19 fraud.
Among the programs created as COVID Relief was the Paycheck Protection Program, or PPP, a Small Business Administration-backed loan program that helped businesses keep their workforce employed during the pandemic. Early frauds on the PPP came with splashy headlines about fraudsters using taxpayer money to buy sports cars, yachts and jewelry. In October 2020 a specially-formed House Sub-Committee on the Coronavirus Crisis published a report identifying at least $4 billion in fraud on the PPP program.
Now, a study out of the University of Texas at Austin’s McCombs School of Business that looked for patterns in the loans awarded conservatively estimates that as many as “1.8 million of the program’s 11.8 million loans – more than 15 percent – totaling $76 billion had at least one indication of fraud." $76 billion would be enough for a check for another $469 to each of the 162 million U.S. households who received a stimulus check in 2020.
While the Sub-Committee Report and the UT study both point to massive fraud on the PPP, neither provides the government with specific evidence to make cases against individual fraudsters. For that, whistleblowers empowered by the False Claims Act are the government’s best hope for fighting COVID-19 fraud. Senator Grassley again: “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.”
More recently, introducing bi-partisan legislation to fight fraud, waste and abuse by strengthening the False Claims Act Senator Roger Wicker (R-Miss.) said: “For over 30 years, whistleblowers have helped the federal government recover billions of taxpayer dollars lost to fraud…Now that Congress has spent trillions responding to the COVID-19 pandemic, it is important to ensure the False Claims Act remains the most effective tool for combatting fraud and rewarding those who expose it.”
Whistleblowers are being called upon, again. This time it is to help recover taxpayer money lost in the new epidemic of fraud on the government spawned out of the global pandemic.