The scale of theft during the COVID-19 relief aid distribution was unprecedented and the methods used by fraudsters were often brazen and simple.
For instance, Social Security numbers of deceased individuals and federal prisoners were used to obtain unemployment checks, multiple payments were stolen by cheaters, and a Treasury Department database that could have identified dodgy borrowers was not utilized.
The ill-gotten funds were claimed by gangs, criminals, and even a US soldier in Georgia, pastors of a no-longer-existing church in Texas, a former state lawmaker in Missouri, and a roofing contractor in Montana. Overall, it is considered the largest grift in the annals of American history, which saw billions of dollars meant to battle the worst pandemic in a century and stabilize a faltering economy being looted.
According to a comprehensive analysis by the Associated Press, fraudulent activities by thieves resulted in a potential loss of over $280 billion of COVID-19 relief aid. Additionally, a sum of $123 billion was either squandered or misused during the distribution process.
Together, these losses account for 10% of the overall $4.2 trillion disbursed by the U.S government to tackle the pandemic.
As investigations into thousands of potential fraudulent schemes continue, the amount stolen or misused is expected to increase.
Experts analyzing the cause of such widespread fraud believe that the government’s haste to distribute trillions of dollars in relief aid during the early stages of the pandemic led to insufficient oversight and insufficient restrictions on applicants.
As a result, the potential for abuse was too easy. In summary, those investigating this matter claim that the sheer magnitude of the grift was due in part to the government’s overly lax approach to monitoring the distribution of relief funds.
Dan Fruchter, who is the chief of the fraud and white-collar crime unit at the U.S. Attorney’s office in the Eastern District of Washington, expressed a similar sentiment, saying that during the pandemic, there seemed to be an endless amount of money that anyone could potentially access.
He believed that people deluded themselves into thinking that it was socially acceptable to take advantage of the situation, despite it being illegal.
To date, the government has charged over 2,230 individuals with pandemic-related fraud crimes, and thousands of ongoing investigations are still ongoing.
The majority of the stolen funds came from the Trump administration’s three major pandemic-relief initiatives, which President Biden inherited when he took office.
Aimed at helping small businesses and unemployed workers survive the economic turmoil caused by the pandemic, these programs were primarily targeted by fraudsters.
Although the headlines often focused on cases involving millions of dollars, the theft of COVID-19 relief funds was not always at such a scale. However, both large and small swindles are indicative of a widespread epidemic of fraudulent activity that plagued America during a time where the country was already grappling with overburdened hospitals, closed schools, and businesses shutting down.
The reality of the situation is that since the onset of the pandemic in early 2020, more than 1.13 million people in the United States have lost their lives to COVID-19, as per the Centers for Disease Control and Prevention.
The COVID-19 pandemic has led to an unprecedented amount of fraudulent activity in the United States where billions of dollars in federal relief aid funds were stolen or wasted. Fraudsters used various tactics, including using the Social Security numbers of the deceased or federal prisoners to collect unemployment benefits, which led to a potential theft of more than $280 billion.
An Associated Press analysis found that a further $123 billion was wasted or misspent, a combined total of 10% of the $4.2 trillion disbursed in COVID relief aid so far. Although many high-profile cases involving millions of dollars have made headlines, investigators believe there are many small-scale scams and swindles that contributed to the widespread theft.
The government is conducting thousands of ongoing investigations, and over 2,230 individuals have already been charged with pandemic-related fraud crimes. A lack of oversight and restrictions made it easy for fraudsters to take advantage of the situation, said outside experts and investigators.
The final accounting of losses is still a few years away but is estimated to exceed $100 billion, said Michael Horowitz, the U.S. Justice Department inspector general who chairs the federal Pandemic Response Accountability Committee.
Former President Donald Trump approved emergency aid measures amounting to $3.2 trillion before leaving office, as per data from the Pandemic Response Accountability Committee.
President Biden’s 2021 American Rescue Plan authorized an additional $1.9 trillion in spending. According to the committee’s latest accounting, approximately a fifth of the total $5.2 trillion has not yet been distributed.
This emergency aid injection is unprecedented, and U.S. Comptroller General Gene Dodaro called it “the largest rescue package in American history” when presenting to Congress.
Despite the size of the emergency aid package, there were still multi-billion dollar mistakes made. For instance, the IRS program worth $837 billion experienced a 99% success rate in getting economic stimulus checks to the right taxpayers, according to the tax agency.
However, that 1% failure rate still resulted in nearly $8 billion being paid out to “ineligible individuals,” as reported by a Treasury Department inspector general to AP. While the IRS disputed some numbers, even if the figures were correct, the amount lost represented only a small percentage of the program’s overall budget.
The pandemic thrust the Small Business Administration, an agency that typically operated under the radar, into an unprecedented role. In the seven decades before the outbreak, the SBA had disbursed only $67 billion in disaster loans.