Hundreds of suspects are accused of bilking pandemic-era government programs, even using the funds to finance violent crime at times
In one of the largest national crackdowns on fraud targeting federal coronavirus aid, the Justice Department on Wednesday said it had brought 718 law enforcement actions in connection with the alleged theft of more than $836 million.
The vast array of criminal charges and other sanctions — part of a federal sweep conducted over the past three months — reflected the ongoing, costly work in Washington to recover stolen pandemic funds roughly three years after the peak of the public health crisis.
To save an economy in free fall, congressional Democrats and Republicans starting in 2020 adopted a series of coronavirus aid packages totaling roughly $5 trillion. The money aimed to ease the strain on the hospitals and doctors, save cash-starved small businesses from financial ruin and support millions of Americans suddenly without a job.
But the speed at which Washington tried to dole out the funds — combined with decades of state and federal mismanagement — ultimately opened the door for waste, fraud and abuse that law enforcement officials are now beginning to identify.
The Justice Department said Wednesday that it had filed charges or at least launched investigations related to roughly $8.6 billion in alleged coronavirus aid fraud since the start of the pandemic. That included hundreds of new cases, pleas, sentences and other developments secured as part of an enforcement campaign it ramped up from May through July.
Federal prosecutors said in May they indicted 30 individuals believed to be tied to a Milwaukee street gang, alleging they had improperly obtained federal benefits for out-of-work Americans to purchase guns, drugs and jewelry and to “solicit murder for hire.”
U.S. officials said they also took action in July against a New Jersey man accused of filing more than 1,000 false tax returns, allegedly in a bid to claim roughly $124 million in federal tax credits that were supposed to help small businesses retain their workers.
And federal law enforcement announced they brought a civil case that same month against a Maryland man who allegedly bilked $7 million from Medicare — falsely billing the program for coronavirus tests and other procedures that weren’t ordered or, in some cases, were never actually completed.
In a statement, Attorney General Merrick Garland said the raft of new enforcement “should send a message COVID-19 public health emergency may have ended, but the Justice Department’s work to identify and prosecute those who stole pandemic relief funds is far from over.”
The new push to prosecute fraud comes roughly five months after President Biden promised to penalize those who stole untold billions in coronavirus funds. This March, Biden urged lawmakers to adopt $1.6 billion to help the Justice Department pursue criminals that stole pandemic money, along with new powers that might help the government prevent future abuse in other aid programs.
“Congress should act on the President’s full proposal to triple such strike forces, invest more in fraud and identity-theft prevention efforts, and double the statute of limitations on these crimes,” White House press secretary Karine Jean-Pierre said in a statement late Wednesday.
But lawmakers have repeatedly ignored the president’s requests for money to fight fraud, while underfunding the budgets at the Justice Department and other top federal watchdog agencies. Instead, the two parties have sniped at each other politically, with Republicans accusing Biden of mismanaging federal funds — even though much of the country’s pandemic spending originated during the Trump presidency.
The lack of action has added to the pressure on the Justice Department, which commissioned a national task force to oversee coronavirus fraud investigations starting in May 2021. The agency has also tapped five U.S. attorneys’ offices nationwide to lead probes into the theft of government funds. Two of those teams known as “strike forces,” in Colorado and New Jersey, were announced Wednesday.
“We have so much work to do based on the reports that have come out [from oversight agencies] about the scope of the fraud,” said Michael Galdo, the acting director of covid-19 fraud enforcement at the Justice Department. “It’s hard work to recoup these funds. It’s very hard on the enforce side to track where all the money has gone.”
Some of the worst abuses targeted the nation’s unemployment system, as criminals seized on a period when roughly 1 million workers found themselves out of a job each day. Once Congress augmented these Americans’ weekly checks, malicious actors set their sights on outdated, overwhelmed state offices — and collected federal benefits in the names of real people.
The rampant theft often harmed innocent Americans, some of whom learned that their identities had been stolen only after they applied — and were denied — for jobless benefits. The caper contributed to an estimated $191 billion in potential losses, including fraud, according to a federal projection issued this year.
Others targeted the Small Business Administration, which ignored repeated warnings dating back to the Trump administration as it raced to dole out more than $1 trillion in aid — an amount that dwarfed the agency’s own annual budget.
In a report, the agency estimated that the SBA disbursed more than $200 billion in potentially fraudulent loans and grants, including to people who used fake Social Security numbers. In its haste, the agency for years did not check its applicants for obvious warning signs, even neglecting to compare the names of those who sought aid against a federal anti-fraud list known as “Do Not Pay.”