The Great Grift of Covid Pandemic Aid

“The Great Grift.” That’s the name investigative reporters Richard Lardner, Jennifer McDermott, and Aaron Kessler have given history’s largest, most widespread, and so far, successful fraud against U.S. taxpayers.

It’s the story, once again, of how billions of Covid relief funds were either stolen or wasted.

An Associated Press analysis found that fraudsters potentially stole more than $280 billion in COVID-19 relief funding; another $123 billion was wasted or misspent. Combined, the loss represents 10% of the $4.2 trillion the U.S. government has so far disbursed in COVID relief aid.

That number is certain to grow as investigators dig deeper into thousands of potential schemes.

How could so much be stolen? Investigators and outside experts say the government, in seeking to quickly spend trillions in relief aid, conducted too little oversight during the pandemic’s early stages and instituted too few restrictions on applicants. In short, they say, the grift was just way too easy.

“Here was this sort of endless pot of money that anyone could access,” said Dan Fruchter, chief of the fraud and white-collar crime unit at the U.S. Attorney’s office in the Eastern District of Washington. “Folks kind of fooled themselves into thinking that it was a socially acceptable thing to do, even though it wasn’t legal.”

Many of those criminal investigations might have come to an unresolved end. But bipartisan action extended the statute of limitations from 5 to 10 years last August. According to prosecutors, there are enough cases to keep them busy until 2030. Congress, however, needs to provide funding for the pandemic fraud prosecutions to see them through.

If you can call it good news, it’s not like they have to search for tips. The inspector general for the Small Business Administration has tens of thousands of cases for them to pursue from just two of its pandemic relief programs:

A Small Business Administration inspector general released the numbers Tuesday, finding that “fraudulent actors” stole more than $136 billion from the Economic Injury Disaster Loan Program and $64 billion from the Paycheck Protection Program, two government initiatives that worked to keep small businesses afloat during the pandemic. Those figures mark a whopping 17 percent of all funds issued under the two programs, with a third of all Economic Injury Disaster Loan Program funds being stolen, according to the report.

While fraud in federal spending programs is nothing new, the numbers mark a substantial increase in past projections of stolen funds under the two initiatives. The Small Business Administration inspector general previously estimated that roughly $106 billion was stolen from the Economic Injury Disaster Loan Program and Paycheck Protection Program, according to the Associated Press.

It’s not astonishing that so many fraudsters got away with so much. After all, they were enabled by government bureaucrats’ policies. It would be amazing if the government could recover what was unlawfully taken from it.

Craig Eyermann is a Research Fellow at the Independent Institute.
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