U.S. Department of Justice has seized $1.4B in pandemic relief funds
A federal campaign to combat COVID-19 fraud resulted in 718 enforcement actions, including criminal charges against 371 defendants, for crimes related to more than $836 million in alleged COVID-19 fraud. The U.S. Department of Justice announced the results of the campaign on Wednesday. “The Justice Department has now seized over $1.4 billion in COVID-19 relief funds that criminals had stolen and charged over 3,000 defendants with crimes in federal districts across the country,” Attorney General Merrick Garland said in a statement. Deputy Attorney General Lisa Monaco made the announcement at a roundtable meeting of senior Justice Department officials, law enforcement partners and Office of Inspector General executives. Monaco also announced the launch of two additional COVID-19 Fraud Enforcement Strike Forces: one at the U.S. Attorney’s Office for the District of Colorado, and one at the U.S. Attorney’s Office for the District of New Jersey. Those two strike forces are in addition to the three strike forces launched in September 2022 in the Eastern and Central Districts of California, the Southern District of Florida, and the District of Maryland. “The two new Strike Forces launched today will increase our reach as we continue to pursue fraudsters and recover taxpayer funds, no matter how long it takes,” Monaco said in a statement. The 718 law enforcement actions include criminal charges, civil charges, forfeitures, guilty pleas, and sentencings, with a combined total actual loss of more than $836 million, according to the Justice Department. Criminal charges were filed against 371 defendants, and 119 defendants have pleaded guilty or were convicted at trial during the sweep. More than $57 million in court-ordered restitution was imposed. Prosecutors worked with law enforcement to secure forfeiture of more than $231.4 million. Michael Horowitz, chairman of the Pandemic Response Accountability Committee, said early mistakes cost taxpayers. “Agency decisions in the early months of the pandemic that prioritized speed over accuracy in delivery of relief funds led to brazen fraud and outright theft of millions of dollars,” he said in a statement. Horowitz testified in February that federal agencies failed to use some of the tools at their disposal to prevent fraud, including the Do Not Pay list. The U.S. Department of the Treasury had set up the list of suspicious payees who should trigger additional screening. He said advance screening with the U.S. Department of the Treasury Do Not Pay list could have saved taxpayer money. Republished with the permission of The Center Square.
Prosecutors, watchdogs want more time to prosecute pandemic fraud
Criminals made off with billions of dollars that lawmakers made available for pandemic unemployment insurance. Government officials are now warning lawmakers that they are running out of time to prosecute those who stole it. Larry Turner, the inspector general for the U.S. Department of Labor, again asked lawmakers on the House Ways and Means Committee to pass legislation to extend the statute of limitations on unemployment fraud during the pandemic. The statute of limitations for unemployment fraud will begin to expire in early 2025 without action from Congress, Turner said. “Unemployment insurance crimes often include complex schemes that require significant resources and time to investigate,” he said. Turner said Congress should extend the statute of limitations from five years to 10 years. Congress previously extended the statute of limitations for other types of pandemic fraud, including the Paycheck Protection Program and Economic Injury Disaster Loan program. “Extending the statute of limitations for fraud associated with pandemic-related UI programs will help ensure investigators and prosecutors have time to effectively pursue and hold accountable those groups and individuals that targeted and defrauded the program, and that they do not escape justice,” said Michael Horowitz, chairman of the Pandemic Response Accountability Committee. The U.S. Department of Labor’s Office of Inspector General’s unemployment fraud investigations resulted in more than 1,200 indictments or initial charges from April 2020 through January 2023. Each week that office continues to open more than 100 new unemployment insurance fraud-related investigative matters, according to the U.S. Government Accountability Office. Turner on Wednesday told the committee that of the more than $888 billion in total federal and state unemployment insurance benefits distributed during the pandemic at least $191 billion could have been improper payments, “with a significant portion attributable to fraud.” Turner told members of the House Ways and Means Committee during a hearing. That’s up from a previous estimate of $163 billion. Republished with the permission of The Center Square.
Watchdogs say unemployment fraud likely topped $191 billion
Slightly more than $1 out of every $5 distributed in unemployment insurance payments during the pandemic could have been improper, mostly fraud. Larry Turner, the inspector general for the U.S. Department of Labor, said Wednesday that of the more than $888 billion in total federal and state unemployment insurance benefits distributed during the pandemic, at least $191 billion could have been improper payments, “with a significant portion attributable to fraud.” Turner told members of the House Ways and Means Committee during a hearing. That’s up from a previous estimate of $163 billion. “The reliance solely on claimant self-certifications without evidence of eligibility and wages during the program’s first nine months rendered the Pandemic Unemployment Assistance program extremely susceptible to fraud,” he said. The Pandemic Unemployment Assistance program provided unemployment insurance benefits to people who were traditionally not eligible for benefits, including gig workers, self-employed workers, and independent contractors. States administer unemployment insurance with oversight from the U.S. Department of Labor. In place for more than eight decades, the joint state-federal program serves as a safety net for people who lose their job through no fault of their own. When the pandemic hit, a combination of factors resulted in a spike in improper payments and fraud. A 2022 audit found that fraudulent claims were paid 60.5% of the time from March 28, 2020, to September 30, 2020. “This created multiple high-reward targets where an individual could make a fraudulent claim with relatively low risk of being caught,” Turner said. “For example, as time went on, one fraudster could have been issued several UI debit cards, with tens of thousands of dollars on each card.” As an example, Turner cited a person who filed a claim from a three-bedroom house that was the shared location for 90 other claims. The same person also shared a flagged email address with 145 other claims. In total, that person was connected to 235 other claims in three states and got benefits on 87 of those claims, all filed in California, for a total of $1,569,762. California stopped payment 164 days after the initial payment when officials were unable to verify the person’s identity, according to that 2022 audit. Part of the problem was the nature of the crisis. The pandemic and governments’ response to it put millions of people out of work in a matter of weeks. Unemployment levels rose to historic levels. On March 14, 2020, the Department of Labor reported 282,000 initial unemployment claims. Within weeks, initial claims rose to 10 times pre-pandemic levels, “far higher than state systems were designed to handle,” Turner said in written testimony. Within five months, the Department of Labor reported 57.4 million initial claims, the largest increase since the agency began tracking unemployment insurance data in 1967. Problems with the unemployment insurance program predated the pandemic. Turner said the program had among the highest improper payment rates in the federal government. It had been above 10% for 15 of the previous 19 years. In the last two years, the agency has estimated an improper payment rate of 18.71% and 21.52%, respectively. Comptroller General of the United States Gene Dodaro told the committee that some improvements have been made to prevent fraud, but more remains to be done. “I think we’re slightly better prepared, but not fully prepared for the next crisis,” he said. “A number of our recommendations at the Labor Department have been not fully implemented yet. I think states are trying to make improvements – there have been some improvements that have been made, but they’ve all been ad hoc. There hasn’t been a systematic approach to doing this.” He said while the government should work to recover as much fraud as it can, prevention would go further. “The only way to effectively deal with this is to prevent it up front,” Dodaro said. Michael Horowitz, chairman of the Pandemic Response Accountability Committee, told the House Ways and Means Committee that the fraud was not limited to U.S. residents. “One of the biggest challenges we have is following the fraud through overseas gang activity and fraudsters,” Horowitz said. “The Secret Service has reported that they’ve seen that occur through entities in Nigeria, China, Russia. That will be our biggest challenge.” U.S. Rep. Vern Buchanan, R-Florida, asked for an estimate of how much that type of fraud cost U.S. taxpayers. Horowitz said no such estimate was available. “That’s among the hardest fraud to find, track, and figure out,” he said. “Because it is through overseas networks … the process is very challenging.” Republished with the permission of The Center Square.
Donald Trump upends virus oversight, removing key official
The most recent act threatens to upend scrutiny of the $2.2 trillion coronavirus rescue effort now underway.
House Republicans turn up the heat in standoff with DOJ
House Republicans escalated their monthslong standoff with the Justice Department, saying the FBI hasn’t adequately addressed bias within the agency and threatening to hold top department officials in contempt — or even impeach them. The stepped-up criticism followed the department’s internal watchdog report, released last week, criticizing the FBI’s handling of the 2016 probe into Democrat Hillary Clinton’s emails. It said political bias didn’t affect the outcome of the investigation that eventually cleared her. Bolstered by President Donald Trump, some Republicans say there’s no way that bias against then-candidate Trump found among some employees didn’t taint the Clinton probe — and, by extension, special counsel Robert Mueller’s investigation into Trump’s Republican campaign and Russia. At a House hearing Tuesday, Republicans angrily asked Justice Department inspector general Michael Horowitz how anti-Trump texts found between some employees who worked on the Clinton probe didn’t influence the outcome. They also complained that they have not yet received some of the documents they have demanded from the department. “We can’t survive with a justice system we don’t trust,” said Republican Rep. Trey Gowdy of South Carolina, the chairman of the House Oversight and Government Reform Committee. Horowitz said in the report and repeated at the hearing that he had concluded the outcome of the investigation was determined by prosecutors’ assessment of the facts, not by bias. Democrats accused the Republicans of trying to distract from or undermine the Mueller investigation by focusing on a few employees who were biased. Several Democrats talked about children separated from their parents at the border, asking why the committee’s focus was still on the candidate who lost the presidency in 2016 instead of on current crises. Democratic Rep. Jamie Raskin of Maryland said Republicans were stuck in a “time warp.” Democratic Rep. Eric Swalwell of California noted that the Judiciary Committee oversees immigration issues and should be focused on that. Trump, who falsely claimed last week that the report exonerated him in the Russia probe, took the opposite view. In a speech to the National Federation of Independent Business on Tuesday, Trump said Democrats “want to focus on immigration because they want to keep the cameras away from the hearings.” The inspector general report did not touch on the Russia investigation. The outrage in the wake of the inspector general’s report is the latest in a series of complaints from Republicans about the FBI. Multiple committees are investigating the agency’s actions in 2016 related to the Clinton email probe and the beginning of the investigation into Russian election meddling and whether Trump’s campaign was involved. Mueller took over the Russia investigation last year and is also investigating whether Trump obstructed justice. As part of their investigations, Republicans have requested more than a million documents. The Justice Department has provided some of them, but GOP lawmakers say they haven’t provided enough — leading to the threats of contempt or impeachment. House Speaker Paul Ryan has backed the document requests, and he led a meeting last week with three committee chairmen and Deputy Attorney General Rod Rosenstein to try to resolve the issue. A person familiar with the speaker’s meeting said Ryan and the other Republicans made clear to the Justice Department that they need to comply with the requests or “face consequences from the whole House.” The person spoke on condition of anonymity because the meeting was not public. Rep. Devin Nunes, the chairman of the House Intelligence Committee, said in an interview Sunday with Maria Bartiromo of the Fox Business Network that the deadline is “this week” and that if they don’t get the documents in time, “there’s going to be hell to pay.” The relationship between the Justice Department and Nunes has been particularly tense. Nunes has demanded multiple sensitive documents as he has investigated, among other things, whether the FBI abused the Foreign Intelligence Surveillance Act when prosecutors and agents in 2016 applied for and received a secret warrant to monitor the communications of a Trump campaign associate. Recently Nunes requested documents related to an informant who spoke to members of the Trump campaign during the election as the FBI’s Russia investigation began. Rosenstein has now held three classified briefings with congressional leaders on that topic, and the department says it has provided those members with documents during those briefings. But Nunes is still unsatisfied, telling The Associated Press after the third briefing last week that he wants the entire intelligence committee to see the documents and “my patience is out.” The documents he is requesting are classified, so Nunes has not described them publicly. Republished with the permission of the Associated Press.
