A single Social Security number was used to apply for pandemic benefits in at least 29 different states, investigators revealed to Congress on Wednesday, illustrating the size of the fraud that the government faced in doling out trillions of dollars in benefits.
Watchdogs said it could be years before they have a full handle on the amount of fraud, and said there’s not much chance of recapturing the money.
The recovery rate is likely to be about 10%, Comptroller General Gene Dodaro told the House Oversight and Accountability Committee.
He said there have been 1,000 guilty pleas or convictions related to pandemic fraud, but there are still more than 600 pending cases. The inspector general at the Small Business Administration has 536 active investigations and the Labor Department’s inspector general is opening 100 new cases on pandemic unemployment fraud every week.
“This is going to go on for a while,” Mr. Dodaro said.
The Secret Service confirmed that some pandemic money was stolen by criminal syndicates backed by governments in Russia and China.
“There are some commonalities between some of the thousands of bank accounts we’ve seen to move illicitly gained pandemic fraud resources that are also being used by some of those transnational criminal organization groups,” David M. Smith, an assistant director at the Secret Service, told lawmakers.
Among those links is a Chinese hacking outfit known as APT41, which stole at least $20 million in pandemic unemployment benefits and small business loans.
Mr. Smith said investigators also spotted a major Nigerian fraud gang that branched out from its normal activities of human trafficking and drug smuggling to try to grab U.S. pandemic aid.
“I often say the pandemic didn’t create any new criminals, it just provided more opportunities for them to exploit,” Mr. Smith said.
Oversight Chairman James Comer, Kentucky Republican, ticked off some of the public estimates of fraud: Up to $400 billion in total bogus pandemic unemployment claims, more than $100 billion in fraudulent Small Business Administration loans and $266 billion in erroneous Medicaid payments.
Mr. Comer called it “the greatest theft of American taxpayer dollars in history.”
But some Democrats on the committee called that overheated, and said they feared focusing on who stole what could sour Americans on government assistance programs.
“The pandemic relief was literally the difference between life and death,” said Rep. Summer Lee, Pennsylvania Democrat.
“What I know is getting the money out quickly to people desperately in need saved lives,” said Rep. Becca Balint, Vermont Democrat.
The investigators said it shouldn’t have to be a choice between fast and correct.
“The problem is we’ve seen substantial amounts of that money not going to people it was intended to help,” said Michael E. Horowitz, the inspector general at the Justice Department and leader of a consortium of inspectors general that has been tasked with policing pandemic fraud.
Mr. Horowitz pointed out that the fraud in unemployment benefits meant that when some people with legitimate claims applied, they were blocked because a fraudster had already submitted their identity and was being paid a bogus claim.
The consortium, known as the Pandemic Response Accountability Committee, has ascertained that tens of thousands of federal employees double-dipped by claiming small business loans they weren’t entitled to.
Sen. Joni Ernst, Iowa Republican, has called for those employees to be fired. She also said she wants to see the same analysis done on federal employees who may have taken unemployment money while still collecting their federal salary.
Mr. Horowitz said he hopes to see double-dippers prosecuted.
But he also said it’s a major lift to make cases, because it involves identifying suspect cases and then checking to see if the claims were actually from an eligible spouse or in some other way allowed.
He said lack of data has been a major hindrance to sniffing out fraud.
For example, he said the Small Business Administration didn’t have access to the Treasury Department’s “Do Not Pay” list, which meant that more than $3 billion was paid out in pandemic loans to people who were on that list.
And he said the Labor Department’s inspector general, which is pursuing unemployment fraud, has to subpoena records from all the states because the federal government doesn’t automatically collect them.
A Republican congressman wondered why the Small Business Administration’s inspector couldn’t just check past tax records to see if a business was misstating its income to inflate its pandemic loan claims.
“We don’t have access to that data,” Mr. Horowitz said, adding that it would probably take an act of Congress to make the IRS provide those kinds of records to investigators.
Mr. Dodaro pointed back to the Social Security number that was used to claim unemployment benefits across 29 states. He said states can’t track what the others are doing.
“That shouldn’t be able to happen,” he said.
The watchdogs also said Congress needs to double the statute of limitations for going after pandemic unemployment fraud from its current five years. Unless it’s changed, the first unemployment fraud claims will age out in about two years.
Congress already has doubled the time frame for pursuing pandemic loan fraud to 10 years.
Mr. Horowitz also asked Congress to increase the level of money that can be recovered through the Program Fraud Civil Remedies Act from its current $150,000 to $1 million. He said that wouldn’t boost prosecutions but it would allow the government to recapture more of the misspent money.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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