Inspectors general tell committee that more than $276 billion in COVID relief funds were lost to fraud

March 11, 2023
Ben Marquis

In reaction to the COVID-19 pandemic in 2020, the federal government hurriedly authorized several trillion dollars in taxpayer-funded relief programs, a sizeable portion of which was swiftly exploited or lost through waste, fraud, and abuse.

According to the recent testimony of three inspectors general, at least $276 billion -- and likely much more -- in pandemic relief funds was cumulatively lost and diverted into the pockets of fraudsters all around the globe, Breitbart reported.

Action is being taken to try and recover some of those lost funds and prosecute those who fraudulently obtained it, but the reality is that much of that money -- and the individuals who improperly obtained it -- are long gone and will never be seen again.

Total fraud likely larger than GDP of some nations

On Thursday, a subcommittee of the House Oversight and Accountability Committee, the Subcommittee on Government Operations and the Federal Workforce, held a two-hour hearing titled "Waste, Fraud, and Abuse Go Viral: Inspectors General on Curing the Disease."

Testifying before the subcommittee were the inspectors general of the Departments of Labor and Treasury, along with the deputy inspector general of the Small Business Administration, and what they revealed was not particularly reassuring to American taxpayers.

"Hearing from the experts last month, this Committee heard that federal -- and state -- agencies, were not prepared for the massive infusion of funds, unprecedented demand, and accelerated timelines that came with the pandemic," Chairman Pete Sessions (R-TX) said in his opening statement. "But the reality is, fraud and improper payments in federal programs had been growing problems for decades, despite a number of laws having been enacted. And another reality is that the amount of fraud and improper payments in COVID-relief programs is likely larger than the Gross Domestic Product of most countries."

"The biggest fraud in a generation"

Breitbart reported that according to Labor IG Larry Turner, it was estimated that at least $76 billion earmarked for "unemployment insurance" was lost to fraudulent claims, though he acknowledged that the estimate was "on the low end" as it did not include an analysis of funds spent through the Pandemic Unemployment Assistance program that was first created in 2020.

Turner further expressed the unlikelihood that a substantial portion of those funds would ever be recovered from the "fraudsters" who stole it, as he told the subcommittee members, "Once fraud goes out of the door, it’s hard to get it back."

SBA deputy IG Sheldon Shoemaker estimated that at least $86 billion was lost to fraud and waste out of the taxpayer funds earmarked to help small businesses, and similarly suggested that the true total was likely higher, perhaps more than $100 billion, as his office had not yet fully assessed the Paycheck Protection Program or the COVID-19 Economic Injury Disaster Loan program.

Shoemaker described the losses his office had found to the subcommittee members as "the biggest fraud in a generation."

Some accountability for fraudsters

A "Hearing Wrap Up" released from the subcommittee revealed that, according to the IGs, the agencies tasked with disbursing the trillions of dollars in relief funds were grossly unprepared for the task, as well as that the usual guardrails in place to protect against waste, fraud, and abuse were purposefully lowered or ignored in the interest of expediency.

To be sure, there has been some accountability for fraudsters, as Labor IG Turner said there'd been approximately "1,200 indictments and 600 convictions" to date, while SBA deputy IG Shoemaker more precisely stated, "Our investigative work so far has resulted in 793 indictments, 635 arrests and 446 convictions, and 500 cases ongoing at present. The wrongdoers are getting significant sentences."

"The unprecedented infusion of federal funds gave fraudsters a high-value target to exploit. That combined with ease of identity theft and system weaknesses, previously identified by the OIG, allowed criminals to defraud the programs," IG Turner said. "Department of Labor recently reported an annual improper payment rate of 21.52 percent for FY ’22.  When applied to the approximate $888 billion dollars in UI benefits paid during the pandemic, at least $191 billion dollars could have been paid improperly."

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