The United States Secret Service released some disconcerting information about the COVID-19 relief funds. At a minimum, nearly $100 billion “has been stolen from COVID-19 relief programs set up to help businesses and people who lost their jobs due to the pandemic” reports the Associated Press.
The information was revealed in an interview by the agency’s national pandemic fraud recovery coordinator, Roy Dotson. Dotson, who is the Secret Service’s assistant special agent in charge of the agency’s field office in Jacksonville, Florida, says the estimate is based on Secret Service cases and data from the Labor Department and the Small Business Administration. The cases from the Secret Service did not include the fraudulent COVID-19 cases prosecuted by the Justice Department.
ABC News reports “the Labor Department reported about $87 billion in unemployment benefits could have been paid improperly, with a significant portion attributable to fraud.” Additionally, “the Secret Service said it has seized more than $1.2 billion while investigating unemployment insurance and loan fraud and has returned more than $2.3 billion of fraudulently obtained funds by working with financial partners and states to reverse transactions.”
“One of the best-known programs created through the March 2020 CARES Act, PPP offered low-interest, forgivable loans to small businesses struggling to meet payroll and other expenses during pandemic-related shutdowns,” writes ABC News.
Former Secret Service agent Nino Perrotta says “while providing loans to small businesses, and if necessary forgiving these loans, may seem like a good idea, we forget one very important piece to that equation: the necessary checks and balances to the PPP loan idea.”
“It is believed that approximately 15 percent of all PPP loans are fraudulent – that is about 75-80 billion in fraud. If you take all the law enforcement agencies, local, state and federal, with the capability of investigating such fraud, they would be investigating the schemes for the next ten years and make only a minor dent!” added Perrotta.
Why did this happen? Perrotta answers, “It happened because proper vetting required by all the lenders on their clients was basically ignored and or seriously minimized.”
Perrotta saw this first-hand while working security and fraud at a local Washington, DC financial institution.
“At this point, we need to learn from this unfortunate mistake of lending money in such an irresponsible way.” Says Perrotta. “Now we have no choice but to continue to focus on the many more unsolved fraud cases and get those perpetrators behind bars while recovering those stolen funds.”
The Secret Service says it has more than nine hundred active criminal investigations into pandemic fraud, with cases in every state. One hundred people have been arrested so far.
Additionally, the Justice Department said last week that as a result of fraudulently obtained PPP funds, its fraud section had prosecuted over 150 defendants in more than 95 criminal cases and had seized over $75 million in cash, as well as multiple real estate properties and luxury items purchased with the proceeds.