A recently published report by the Associated Press has revealed the extent of what experts are now deeming the “greatest grift in U.S. history” concerning COVID-19. The findings reveal that fraudsters managed to pilfer an astonishing $280 billion from COVID relief funding, while an additional $123 billion was squandered due to mismanagement or misappropriation.
This combined total accounts for a shocking 10 percent of the $4.2 trillion the government allocated for COVID relief efforts, with the potential for the numbers to soar even higher as more fraudulent schemes come to light.
Astounding reporting: the biggest grift in US history. “fraudsters potentially stole more than $280 billion in COVID-19 relief funding; another $123 billion was wasted or misspent.” @AP https://t.co/mLnQVHqIt3
— Rocky Kistner (@therockyfiles) June 12, 2023
The urgent need to swiftly disburse funds in the face of the pandemic led to shortcuts in the vetting process. For instance, the government initially failed to utilize the Treasury Department’s “Do Not Pay” database, designed to prevent funds from reaching felons, debarred contractors, and individuals convicted of tax fraud.
With a small investment of time for due diligence, investigators assert that thousands of ineligible applicants could have been identified and excluded.
While some cases involved substantial sums of money, the breadth of the theft varied. This injection of federal emergency aid into the U.S. economy on an unprecedented scale has not been without severe repercussions. As U.S. Comptroller Gen. Gene Dodaro aptly put it, this represents “the largest rescue package in American history.”
The Small Business Administration (SBA), entrusted with managing two colossal relief efforts — the COVID-19 Economic Injury Disaster Loan and the Paycheck Protection Program — found itself under immense pressure to quickly distribute funds to struggling businesses and their employees.
The pace at which the SBA had to operate accelerated from a leisurely stroll to an Olympic sprint. In the span between March 2020 and July 2020 alone, the agency approved a staggering 3.2 million COVID-19 economic injury disaster loans, totaling an astounding $169 billion, as revealed by a report from the SBA inspector general.
The SBA was also tasked with implementing the mammoth Paycheck Protection Program. In the rush to provide crucial assistance, safeguards to protect federal funds were hastily discarded.
Prospective borrowers were allowed to “self-certify” the accuracy of their loan applications, and the CARES Act initially barred the SBA from scrutinizing tax return transcripts that could have detected fraudulent or undeserving applicants. This decision was eventually reversed towards the end of 2020.