Much of the theft was brazen, even simple.
The scammers used the Social Security numbers of deceased individuals and federal prisoners to obtain unemployment checks. Cheaters collected those benefits in several states. And federal loan applicants were not matched against a Treasury Department database that would have raised red flags about sketchy borrowers.
Criminals and gangs seized the money. But so did a US soldier in Georgia, the pastors of a defunct church in Texas, a former state legislator in Missouri and a roofing contractor in Montana.
All of this led to the biggest scam in American history, with thieves looting billions of dollars in federal COVID-19 relief aid intended to combat the worst pandemic in a century and stabilize an economy in free fall.
An Associated Press analysis found that scammers potentially stole more than $280 billion in COVID-19 relief funds; another $123 billion was wasted or wasted. Taken together, the loss represents 10% of the $4.2 trillion the US government has disbursed so far in COVID humanitarian aid.
That number is sure to rise as researchers delve into thousands of potential schemes.
How can you steal so much? Researchers and outside experts say the government, trying to quickly spend trillions on humanitarian aid, did little oversight during the early stages of the pandemic and placed few restrictions on applicants. In short, they say, the scam was too easy.
“Here was this kind of endless stream of money that anyone could access,” said Dan Fruchter, head of the fraud and white-collar crime unit at the US Attorney’s office in the Eastern District of Washington. “People fooled themselves into thinking it was socially acceptable, even though it wasn’t legal.”
The US government has charged more than 2,230 suspects with pandemic-related fraud crimes and is conducting thousands of investigations.
Most of the looted money was stolen from three large pandemic relief initiatives launched during the Trump administration and inherited by President Joe Biden. Those programs were designed to help small businesses and unemployed workers survive the economic upheaval caused by the pandemic.
Theft was broad but not always as deep as the flashy headlines about cases involving many millions of dollars. But all the thefts, large and small, illustrate an epidemic of scams and scams at a time when the United States was dealing with overwhelmed hospitals, school closures, and shuttered businesses. Since the pandemic began in early 2020, more than 1.13 million people in the US have died from COVID-19, according to the Centers for Disease Control and Prevention.
Michael Horowitz, the US Justice Department inspector general who chairs the federal Pandemic Response Accountability Commission, told Congress that the fraud is “clearly in the tens of billions of dollars” and could eventually exceed 100,000 million.
Horowitz told the AP he was sticking with that estimate, but he won’t be sure of the number until he gets more solid data.
“I hesitate to exaggerate too much about how much it is,” he said. “But clearly it’s substantial and the final accounting is still at least a couple of years away.”
Mike Galdo, the US Justice Department’s acting director for COVID-19 Fraud Enforcement, said: “This is an unprecedented amount of fraud.”
Before leaving office, former President Donald Trump approved emergency relief measures totaling $3.2 trillion, according to figures from the Pandemic Response Accountability Committee. Biden’s 2021 American Rescue Plan authorized the spending of another $1.9 trillion. About a fifth of the $5.2 trillion has yet to be paid, according to the committee’s most recent accounting.
Never before has so much federal emergency aid been pumped into the US economy so quickly. “The largest bailout package in the history of the United States,” US Comptroller General Gene Dodaro told Congress.
The sheer scale of that package has hidden multi-billion dollar mistakes.
An $837 billion IRS program, for example, was successful 99% of the time in getting economic stimulus checks to the right taxpayers, according to the tax agency. However, that 1% failure rate translated to nearly $8 billion for “ineligible individuals,” a Treasury Department inspector general told The Associated Press.
An IRS spokesman said the agency disagreed with all the figures cited by the watchdog, noting that even if they were correct, the loss represented a small fraction of the program’s budget.
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