At Least $403B Covid Aid Lost or Stolen
Fraudsters stole $280 billion in Covid relief funds, while another $123 billion was wasted or misspent, adding up to $403 billion in wasted Covid funds, or about 10% of total Covid related expenditures, according to a new report from The Associated Press.
For two years, our auditors at OpenTheBooks.com estimated the likely Covid-aid fraud at $500+ billion.
The Covid relief funds came predominantly from programs like the Paycheck Protection Program, the CARES Act, and the American Rescue Plan Act, with total spending on Covid relief nearing about $4.2 trillion over about a three year period.
The money was sent out quickly, at the expense of oversight and verification, leading to lax oversight and rampant fraud.
“Here was this sort of endless pot of money that anyone could access,” Dan Fruchter, chief of the fraud and white-collar crime unit at the U.S. Attorney’s office in the Eastern District of Washington, told the AP.
The PPP was one of the most fraudulent programs, thanks to features like self-certification of loan applications that made falsifying identities easy. Other provisions also made oversight hard, like a CARES Act provision that barred the Small Business Administration from examining tax return transcripts that could have identified fraudulent activities.
Now, efforts to reclaim the money and hold the fraudsters accountable are slowly materializing, with the Department of Justice charging 2,230 defendants so far with pandemic-related fraud crimes, and with thousands of investigations ongoing. “It is an unprecedented amount of fraud,” Mike Galdo, the Justice Department’s acting director for COVID-19 Fraud Enforcement, told AP
The federal government’s response to the pandemic amounted to one of the largest spending programs in U.S. history, and the government now needs to learn from its mistakes to ensure fraud and waste on this scale never happens again.
The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com
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