The More We Scrutinize COVID Aid Programs, the More Fraud We Find

(Image by kalhh from Pixabay.)

There was a big COVID fraud case in Minneapolis involving $250 million in COVID food aid for poor people that ended up in the pockets of 70 individuals associated with two charities. Five of the first seven defendants who went on trial were found guilty.

The Minnesota Department of Education just published an audit of the "Feeding Our Future" food program at the center of the fraud trial and discovered the same thing that federal oversight has found:  "The Minnesota Department of Education's inadequate oversight of Feeding Our Future 'created opportunities for fraud,' according to the Minneapolis Star-Tribune.

"Inadequate oversight" is a repeating refrain of COVID-19 fraud. And the enraging thing about this lack of oversight is that it was deliberate.

The Subcommittee on Government Operations and the Federal Workforce held hearings on why so much COVID-19 aid was fraudulently obtained. The short answer is that bureaucrats didn't care about oversight. This was a national emergency! We didn't have time to see if people really qualified for the aid or not.

Richard Delmar, the Acting Inspector General for the U.S. Department of the Treasury in March 2023, testified, “Emergencies such as COVID-19 heighten oversight challenges as agencies work to stand up programs and distribute large-scale funding quickly. Agencies should not solely rely on self-certification by entities without other validation controls, failure by agencies and grantees to implement or effectively modify critical internal controls created risks for pandemic programs, and failure to stand up timely reporting capabilities created program monitoring challenges and increased program risk.”

Incompetence, laziness, and stupidity. That's the trifecta of bureaucratic idiocy.

The Mercury News reports, "COVID-19 fraud scheme lands Bay Area restaurateur behind bars." The restaurant "misused" $3.6 million.

The Wisconsin State Journal reports, "Madison business owner convicted of COVID-19 business relief fraud." They got the guy for applying for 14 PPP loans worth $400K.

13 News reports, "Former N.C. corrections officer pleads guilty to Hertford County COVID fraud scheme, DOJ says." The officer got 10 years in prison for submitting fictitious tenant lease agreements.

You didn't have to be clever. You didn't have to be a master criminal. All you needed was a pen and the right form to fill out. The government was just too busy dealing with the emergency to check if your name really was "Mickey Mouse."

Michael Horowitz (who none of us should envy) has the grim task of going through the loans and the grants, looking for fraud, It's an impossible job, and Horowitz, far more than Antony Fauci, deserves some kind of medal.

Horowitz testified, "Today, federal Inspectors General are charged with overseeing 494 pandemic relief programs across more than 40 agencies. Just one of those programs alone—the Paycheck Protection Program (PPP) —has distributed approximately $800 billion in funding, or roughly the same amount as the entire American Recovery and Reinvestment Act of 2009. Moreover, in just its first 14 days in April 2020, about 1.7 million PPP loans were issued with disbursements of upwards of $343 billion. These loans were approved with few, if any, controls to check if the applicant was legitimate and qualified for aid." (author emphasis)

Two key takeaways from that subcommittee hearing:

1. Federal agencies were unprepared to implement massive pandemic relief programs, which opened the door to waste, fraud, and abuse.

2. Agencies’ failure to utilize tools to prevent misuse of taxpayer dollars resulted in billions of dollars lost due to improper payments.

Even though the agencies had tools to prevent fraud, they didn't bother to use them because they had to shovel the cash out the door as fast as possible. This was an emergency! No time to check and see if someone really existed or if they were created to commit fraud!

Sheldon Shoemaker, the deputy inspector general for the U.S. Small Business Administration, explained, “Small Business Administration’s first round of PPP loans resulted in 14 years worth of lending in 14 days. As the program swelled to more than one trillion dollars, so did the risk to taxpayers. A simple system control that disallowed payments over one thousand dollars for each employee or validation with tax identification records, could have prevented these improper payments. We also found in PPP, the Department of Treasury’s do-not-pay list was not included within the initial internal control environment, allowing billions of dollars of likely improper payments.”

The SBA deliberately and consciously gave money to known fraudsters — the Treasury Department's "do-not-pay" list — because it was too much work to integrate that list into their "internal control environment."

As far as I know, no one at the SBA or any other federal agency has lost their job over the fraud. None of the managers, none of the department heads, and none of the directors or cabinet members have been fired. 

And at least $500 billion of taxpayer money has been flushed in literally thousands of fraud schemes involving 24 agencies and more than $5 trillion. 

Biden has helped more crooks than he has ordinary Americans.



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