“Revealing the Misuse and Loss of $400 Billion in COVID-19 Relief Funds”

Brazen Theft of Federal COVID-19 Relief Aid: Key Takeaways

The COVID-19 pandemic devastated the global economy, which led to significant emergency aid measures by governments worldwide, including the U.S. government. An analysis of the Associated Press indicates that fraudsters stole more than $280 billion out of the government’s COVID-19 relief funding. Additionally, another $123 billion was wasted or misspent. The total loss of $403 billion represents about 10% of the $4.2 trillion the U.S. government dispatched in COVID-relief aid. Investigators and outside experts criticized the government for conducting too little oversight during the pandemic’s early stages and entering too few restrictions on applicants.

The Sources of Fraud

The government injected $5.2 trillion in emergency aid measures into the U.S. economy to prevent its collapse due to the pandemic. Before leaving office, Donald Trump approved emergency aid measures amounting to $3.2 trillion. Additionally, President Joe Biden’s 2021 American Rescue Plan authorized the spending of $1.9 trillion. Twenty percent of the $5.2 trillion has yet to be fully paid out, according to the Pandemic Response Accountability Committee.

The Hardest-Hit Federal Agencies

The Small Business Administration (SBA) was among the hardest-hit federal agencies. The agency was tasked with managing two massive relief efforts, the COVID-19 Economic Injury Disaster Loan and the Paycheck Protection Program, which each amounted to over a trillion dollars. The agency’s focus was to get the money out fast to help struggling businesses and their employees. As a result, safeguards to protect federal money were dropped in haste. Prospective borrowers were allowed to “self-certify” that loan applications were true.

The Oversight Shortcomings

One of the reasons why fraudsters potentially took advantage of the federal COVID-19 relief aid was the government’s failure early on to use the “Do Not Pay” Treasury Department database. Created to keep government money from going to debarred contractors, fugitives, felons, or people convicted of tax fraud, the database could have quickly done reviews. Michael Horowitz, the U.S. Justice Department inspector general, criticized the government for failing to check the data before disbursing the emergency funds.

The Blame Game

Political bickering continues to surround the success of the relief spending and who’s to blame for the theft. Republicans attribute fraud, waste, and inflation to too much government money. Democrats argue that the administration’s financial aid saved jobs, businesses, and lives. There is common ground between both parties on bills to extend the statute of limitations from five to ten years on fraud crimes involving the two major programs managed by the SBA.