House Republicans kick off fraud investigation into billions in COVID pandemic relief money

(WASHINGTON) — Kicking off its investigations into the Biden administration, the Republican-led House Oversight Committee on Wednesday held a hearing on the billions of dollars that were apparently scammed from COVID-19 relief programs.

Republicans argued the programs were a “prescription for waste, fraud and abuse” and haven’t been investigated thoroughly enough by Democrats over the last two years of Biden’s administration, though much of the COVID relief money was also discharged under the Trump administration.

“We owe it to the American people to get to the bottom of the greatest theft of American taxpayer dollars in history,” Republican Chairman James Comer of Kentucky told the committee in his opening remarks.

“We must identify where this money went, how much ended up in the hands of fraudsters or ineligible participants and what should be done to ensure it never happens again,” Comer said.

A total of about $5 trillion was used for pandemic response and recovery under the Trump and Biden administrations, with nearly 90% of it spent by last November, according to the Government Accountability Office (GAO).

The Oversight Committee intends to evaluate that money, which was given out largely as grants or loans to businesses who had to shut down during the pandemic and unemployment insurance to people who lost their jobs, so as “to ensure those funds were appropriately used to respond to the pandemic, and not wasted on ineligible payees or unrelated matters,” Comer said.

While Republicans argued that Democrats should’ve done more to wrangle the programs into better shape over the last two years while they had majority control in Congress, Democrats pushed back. They said longstanding bureaucratic problems within the Small Business Administration and the Department of Labor created the ripe opportunity for fraud because of understaffing and underinvestment.

And at one point, Rep. Alexandria Ocasio-Ortez, D-N.Y., also took a shot at Comer, charging that he was using the committee to specifically investigate pandemic-era fraud in blue states, pushing responsibility on Democrats, when his own state reportedly gave unemployment insurance to people who were employed with the state government itself.

The ranking member of the Oversight Committee, Maryland Democrat Jamie Raskin, also pushed back on the notion that fraud hasn’t been properly investigated over the last two years by citing multiple past hearings — while also acknowledging that more investigation, in a bipartisan fashion, was necessary.

“Democrats have systematically ferreted out fraud, waste and abuse in pandemic-relief programs, although we all certainly can do a more effective job and that’s what this hearing should be about,” Raskin said.

He noted that the programs were “by no means perfect” — an issue he largely blamed on “anachronistic government IT systems, many running obsolete software,” that were unable to efficiently respond when unemployment insurance claims ballooned by 30-fold over just three weeks in March 2020.

But he heralded their benefits, even with their flaws.

“Recall that, while the former president [Donald Trump] denied and trivialized and dismissed the COVID-19 pandemic, it was Congress which acted responsibly and swiftly and in bipartisan fashion to create and supercharge programs that saved countless businesses and families from bankruptcy and ruin throughout the pandemic,” Raskin said.

Three witnesses from nonpartisan groups that have been tracking COVID 19-era fraud testified before the committee on Wednesday. Each group found evidence indicating billions of dollars were stolen from programs intended to help people during the height of the pandemic.

One of those groups, the Pandemic Response Accountability Committee (PRAC), reported on Monday that nearly $5.5 billion of pandemic aid that was supposed to reach small businesses suffering from COVID-19 shutdowns may have been eaten up by fraudsters instead.

The report found that in the rush to get assistance out the door, the Small Business Administration granted billions of dollars under the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) to applicants who used Social Security numbers that ultimately didn’t match up with the person applying.

“We determined that 69,000 questionable [Social Security numbers] were used to obtain $5.4 billion in pandemic loans and that another 175,000 questionable [Social Security numbers] were used in applications that were not paid or approved,” Michael Horowitz, the PRAC chair, told the committee.

The proper checks and balances were not in place in time, PRAC found, but there was tremendous pressure to get massive amounts of money quickly to businesses that were on the brink of failure because of COVID-19 interruptions.

The result was that many pandemic aid programs were left open to fraud.

That conclusion was from David Smith, the assistant director of the Office of Investigations within the U.S. Secret Service, which has been overseeing criminal investigations into COVID-19 relief fraud.

“My colleagues and I have seen and countered the full spectrum of pandemic-related fraud to date,” Smith said.

“From N95 mask non-delivery schemes to synthetic accounts used in identity theft scams to apply for millions of dollars in loans. From medical facilities targeted with ransomware attacks at the height of the pandemic to prison inmates applying for unemployment benefits,” Smith said.

And while a “similar dynamic” has been seen with other major relief efforts and natural disasters, the money stolen amid COVID-19 “was and is substantial,” Smith said.

The Secret Service has clawed back more than $1.43 billion in funds that were wrongfully obtained, Smith said, with 2,300 investigations into unemployment insurance fraud and 2,900 investigations into loans and grants given to businesses.

Over 1,000 people have also been charged, forced to return money or convicted for defrauding the programs, though that work is ongoing, according to Comptroller General Gene Dodaro of the Government Accountability Office, another witness before the Oversight Committee on Wednesday.

But Dodaro also pointed to improvements that could be made to weed out fraud before it happened.

“We have found a range of internal control shortcomings across a wide range of programs and made many recommendations that agencies are in the process of implementing,” Dodaro said.