What You Need to Know
- As Congress doled out relief funds, crooks and con men lined up to get their share via fake companies and employees, stolen identities and other tactics.
Corruption is “a cancer that eats away at a citizen’s faith in democracy,” said a certain vice president, back in 2014. Now commander in chief, Joe Biden must confront a corruption problem unfolding on his watch: the spiraling costs of misspent Covid funds.
In recent court filings, the Federal Bureau of Investigation has described a “massive fraud scheme” in which nonprofit organizations in Minnesota illegally diverted aid money intended to feed needy kids and used the proceeds “to purchase real estate, cars and other items.” All told, the groups received some $65 million from federal food programs during the pandemic.
While shocking, the incident is by no means anomalous. As Congress has doled out almost $6 trillion in relief funds, crooks and con men have lined up to get their share. They’ve created fake companies, stolen identities, invented employees, misstated their earnings, and otherwise conspired to siphon off taxpayer money.
The Secret Service, which has opened more than 900 Covid-related criminal cases, estimates that $100 billion may have been misappropriated.
Even that may be understating the problem. As little as 23% of the $800 billion doled out by the Paycheck Protection Program actually found its way into workers’ pockets. A Department of Labor study estimated that more than $87 billion in emergency unemployment benefits were improperly paid.
The Small Business Administration has (among other blunders) disbursed more than $6.2 billion to loan applicants it now suspects of identity theft. Somehow, the Internal Revenue Service managed to issue 2.2 million stimulus checks — worth about $3.5 billion — to dead people.
Only in government could such calamitous neglect be considered business as usual.
Of course, some level of fraud is inevitable with huge federal outlays, and Covid provided an especially tempting target. As businesses shut and the national economy ground to a halt, the government’s understandable priority was simply to get checks out the door.
That often meant officials relaxed safeguards, waived vetting procedures, and generally proceeded heedlessly. From the start, experts warned of a looming disaster.
Yet the problem wasn’t simply a lack of oversight. As the relief effort geared up, task forces, watchdogs and oversight panels were empowered across the government to prevent malfeasance.