Coronavirus pandemic is still here but a lot of taxpayer money is missing

Nearly $100 billion at minimum has been stolen from COVID-19 relief programs set up to help businesses and people who lost their jobs due to the pandemic, according to the U.S. Secret Service.

The estimate is based on Secret Service cases and data from the Labor Department and the Small Business Administration, said Roy Dotson, the agency’s national pandemic fraud recovery coordinator, in an interview.

The Secret Service didn’t include COVID-19 fraud cases prosecuted by the Justice Department, which so far include 150 con artists that made off with another $75 million from taxpayers fraudulently obtained through Paycheck Protection Program scams.

“The onset of the pandemic had a massive impact on crime in the U.S., with large drops in almost all types of crime except for homicides and shootings, but the CARES Act approved by Congress and former President Donald Trump was easily exploited by criminals,” said Lisa McCormick, a progressive Democrat who criticized the law when it was rushed through the legislative process.

The CARES Act is 880 pages of outrage and corruption, that gave Republican President Donald Trump a $6 trillion slush fund without adequate oversight or guidance to prevent abuses,” said McCormick shortly after the measure was enacted. “Instead of stabilizing the economy, it enriches the rich and insults the 99 percent of Americans who follow the rules. This is worse than the TARP bailouts under Bush.”

“While many criminal acts were made possible by this incredibly poorly crafted spending bill, some of the worst taxpayer ripoffs were perfectly legal,” said McCormick. “Apollo Global Management converted $1.64 billion in COVID stimulus grants and loans to profits by selling—from one of its private equity funds to another—a rural hospital company that it owns and which collected the federal money made available under the CARES Act.”

New Jersey lawmakers were frustrated when they sought answers about the disposition of $23.46 billion in Garden State grant money, and Secret Service cases were just as confusing.

While roughly 3% of the $3.4 trillion dispersed, the amount stolen from pandemic benefits programs shows “the sheer size of the pot is enticing to the criminals,” Dotson said.

Most of that figure comes from unemployment fraud. The Labor Department reported about $87 billion in unemployment benefits could have been paid improperly, with a significant portion attributable to fraud.

The Secret Service said it has seized more than $1.2 billion while investigating unemployment insurance and loan fraud and has returned more than $2.3 billion of fraudulently obtained funds by working with financial partners and states to reverse transactions. The Secret Service says it has more than 900 active criminal investigations into pandemic fraud, with cases in every state, and 100 people have been arrested so far.

The Justice Department said last week that its fraud section had prosecuted over 150 defendants in more than 95 criminal cases and had seized over $75 million in cash proceeds derived from fraudulently obtained Paycheck Protection Program funds, as well as numerous real estate properties and luxury items purchased with the proceeds.

One of the best-known programs created through the March 2020 CARES Act, PPP offered low-interest, forgivable loans to small businesses struggling to meet payroll and other expenses during pandemic-related shutdowns.

Law enforcement early in the pandemic focused on fraud related to personal protective equipment, the Secret Service said. Authorities have now prioritized the exploitation of pandemic-related relief because the federal funding through the CARES Act attracted the attention of individuals and organized criminal networks worldwide.

“Can we stop fraud? Will we? No, but I think we can definitely prosecute those that need to be prosecuted and we can do our best to recover as much fraudulent pandemic funds that we can,” said Dotson, who is the Secret Service’s assistant special agent in charge of the agency’s field office in Jacksonville, Florida.

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