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US House Panel Examines Extent of Fraud in Federal COVID-19 Relief Programs

WASHINGTON – From 2020 to 2022, a group of Minnesota citizens pretended to serve meals to low-income children, while seeking reimbursement under a federal COVID-19 relief program aimed at supporting infant feeding when schools and kindergartens closed.

In all, the schemers defrauded the government of $250 million, reported the Minnesota Reformer. Three defendants pleaded guilty in October.

Capitol Hill lawmakers on Wednesday highlighted the conspiracy as just one example, albeit a huge one, of the government’s blind spots in tracking its pandemic relief funds.

Congressman James Comer hammered into the House Oversight and Accountability Committee’s first congressional hearing, vowing to make sure the government “works efficiently” and protects American taxpayers from “crooks” — with a focus on “massive waste, fraud and abuse in COVID relief programs,” he said.

The Kentucky Republican accused Democrats of spending too much on the pandemic last Congress when they held a majority and then failed to test whether those dollars were meeting their intended goals.

“We owe it to the American people to get to the bottom of the largest theft of American taxpayer dollars in history,” Comer said in his opening statement.

Ranking member Jamie Raskin disagreed with the blame aimed at Democrats, highlighting several detained by the latest House of Congress Select Committee on the coronavirus crisis.

“We used the spotlight and the bullying pulpit of a small subcommittee to expose and reverse the colossal frauds taking place against the American people,” said Raskin, of Maryland, criticizing the lack of anti-fraud controls under former President Donald Trump who has resulted in an estimated $84 billion in fraudulent small business loans, among other examples.

“I confess to being disturbed that some of our colleagues seem to be picking at the facts and handing out distorted figures to attack the underlying legitimacy of the programs themselves,” Raskin said.

Trillions in aid

The $2 trillion Coronavirus Aid, Relief and Economic Security Act received nearly unanimous support from lawmakers and was signed into law by Trump in March 2020.

The massive stimulus package provided direct relief checks to Americans, sent federal money to bolster state unemployment insurance, and launched the Paycheck Protection Program, which gave small businesses low-interest or low-interest loans to cover wages and employee benefits for eight weeks, as well as mortgages, rent, or utilities.

The Consolidated Appropriations Act of December 2020 extended some of these programmes.

In March 2021, the $1.9 trillion American Rescue Plan Act passed the 117th Congress along party lines and was enacted by President Joe Biden.

The law expanded and added new pandemic relief programs, including providing approximately $350 billion in flexible spending to state and local governments.

So how many of those funds ended up in the wrong hands?

GOP committee members say hundreds of billions have been stolen, though the final total remains unclear.

“It will be a while before the full extent of the fraud is known,” Gene Dodaro, the US comptroller and head of the US Government Accountability Office, testified before the panel.

Dodaro told the committee that more than 1,000 people have been convicted or pleaded guilty to fraud related to the pandemic, and more than 600 charges are still pending against others.

Meanwhile, the Small Business Administration, the agency that administered the PPP loans, currently has 536 active investigations opened by its inspector general, and the Labor Department is opening about 100 new cases a week, Dodaro said.

“So this will go on for a while. There are definitely indications of widespread fraud,” she said.

Urgency, improper payments

Dodaro cited the agency’s lack of preparedness to track the funds, an urgency to disburse the money quickly, and a “pervasive” government problem with improper payments, as factors that contributed to the abuses of pandemic relief dollars.

Among their recommendations to the panel, Dodaro and Michael Horowitz, inspector general at the Department of Justice, supported Congressional support for a permanent data analytics platform where programs and spending can be tracked efficiently.

“Taxpayers need this sophisticated tool to continue to exist,” said Horowitz, who serves as chair of the Pandemic Response Accountability Committee, established under the CARES Act.

Horowitz also advocated adjusting the dollar figure threshold so investigators can inspect frauds at lower dollar amounts, and recommended extending the statute of limitations for pandemic unemployment insurance fraud to 10 years. from five.

“PRAC and the IG community are committed to using every tool we have been provided – criminal, civil and administrative – to pursue for taxpayers every dollar that fraudsters have stolen from pandemic programs,” Horowitz testified.

Comer has promised more hearings to look into pandemic relief fraud.

The Select Committee on the Coronavirus Crisis during the 117th Congress held hearings on the federal response to pandemic relief fraud, including in small business loan programs.

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