Pandemic aid fraud to keep US prosecutors busy for 10 years

WASHINGTON • In the midst of the Covid-19 pandemic, the US government gave unemployment benefits to the incarcerated, the imaginary and the dead.

It sent money to "farms" that turned out to be front gardens. It paid people who were on the government's "Do Not Pay" list. It gave loans to 342 people who said their name was "N/A". As the virus shuttered businesses and forced people out of work, the federal government sent a flood of relief money into programmes aimed at helping the newly unemployed and boosting the economy.

That included US$3.1 trillion (S$4.3 trillion) that then President Donald Trump approved in 2020, followed by a US$1.9 trillion package signed into law in 2021 by President Joe Biden.

But those dollars came with few strings and minimal oversight. The result: One of the largest frauds in US history, with billions of dollars stolen by thousands of people. Now, prosecutors are trying to catch up.

There are 500 people working on pandemic-fraud cases across the offices of 21 inspectors general, plus investigators from the FBI, the Secret Service, the Postal Inspection Service and the IRS.

The federal government has already charged 1,500 people with defrauding pandemic aid programmes, and more than 450 people have been convicted. But those figures are dwarfed by the many tips and leads that investigators still have to chase.

Agents in the Labour Department's Inspector-General's Office have 39,000 active investigations.

About 50 agents in a Small Business Administration office are sorting through two million potentially fraudulent loan applications.

This month, Mr Biden signed Bills extending the statute of limitations for some pandemic-related fraud to 10 years from five, a move aimed at giving the government more time to pursue cases.

"My message to those cheats out there is this: You can't hide. We're going to find you," Mr Biden said during the signing.

Investigators say they hope the extra time will allow them to ensure that those who defrauded the government are ultimately punished.

"There are years and years and years of work ahead of us," said Mr Kevin Chambers, the Department of Justice's chief pandemic prosecutor. "I'm confident we'll be using every last day of those 10 years."

The federal government provided about US$5 trillion in relief money in three separate legislative packages - an enormous sum that is credited with reducing poverty and saving the country from a prolonged, painful recession.

But investigators say that Congress designed all three packages with the same flaw: relying on the honour system. For example, an expanded unemployment benefit gave workers an extra US$600 per week in federal jobless funds, on top of what they received from their state. Applicants did not need to provide proof that they had lost income because of Covid-19; they simply had to swear it was true.

Some used the money on necessities, such as mortgage bills or car payments. But many seemed to act out of opportunism and greed, splurging on a yacht, a mansion, a US$38,000 Rolex or a US$57,000 Pokemon trading card.

The Justice Department has charged people with about U$1 billion in fraud so far, and is investigating other cases involving U$6 billion more, investigators said.

NYTIMES