House Oversight and Accountability Panel Told Pandemic Fraud Is Biggest Scam in US History

Rep. James Comer (R-Ky.) speaks during a House Committee on Oversight and Reform hearing on gun violence in Washington on June 8, 2022. (Andrew Harnik-Pool/Getty Images)

When Rep. Lauren Boebert (R-Colo.) asked if any of the three expert witnesses testifying before a congressional panel on Feb. 1 could name a single government director or supervisor who has been fired or demoted as a result of the estimated $500 billion lost to waste, fraud, and abuse in pandemic relief spending, none of them could do so.

Boebert was followed by freshman Rep. Dan Goldman (D-N.Y.), who told the witnesses he was “shocked to learn when preparing for this hearing that many of the COVID benefits, or at least some of them, were available on a self-certifying basis.“ Goldman, who prosecuted multiple cases of mortgage fraud during and following the 2008 economic crisis, called the government allowing benefit applicants to self-certify their eligibility ”a recipe for fraud.”

These weren’t just any witnesses being questioned by Boebert, Goldman, and the other 47 members of the House Committee on Oversight and Accountability (HCOA) about the hundreds of billions of tax dollars already known to have been stolen by bad actors in government, the private sector, and even overseas.

Committee members and witnesses agreed there’s likely vastly more in losses that have yet to be discovered.

The trio of experts included Michael Horowitz, chairman of the Pandemic Response Accountability Committee (PRAC) and the Department of Justice’s inspector general (IG); Comptroller General Gene Dodaro, who oversees the Government Accountability Office (GAO), the investigative arm of Congress; and David Smith, assistant director for the Office of Investigations for the U.S. Secret Service.

Among them, they have nearly a century of experience battling waste, fraud, and abuse in the federal government and elsewhere.

Committee Chairman James Comer (R-Ky.) opened the lengthy hearing, which was the panel’s first of the 118th Congress, by calling the lost billions “the greatest theft of American taxpayer dollars in history.” He also accused Democrats, who controlled the committee in the prior Congress, of conducting no oversight of the more than $5 trillion spent by Congress, former President Donald Trump, and his successor in the Oval Office, Joe Biden, to combat the COVID pandemic.

The pandemic, which originated in China, began in March 2020 and has killed more than 1 million Americans and 6 million people worldwide. The United States imposed unprecedented measures that all but brought the economy to a halt, costing millions of jobs, leaving legions of Americans struggling to pay for food and gas, and restricting normal outdoor life for months on end. The nation remains on official alert under a federally proclaimed Public Health Emergency (PHE).

Comer said the Democrats’ failure to conduct oversight of the pandemic trillions during the 117th Congress led directly to unprecedented levels of waste, fraud, and abuse.

“We have seen reports that between $163 [billion] to $400 billion in Unemployment Insurance (UI) benefits were paid out improperly. We have seen reports that between $76 [billion] to more than $100 billion in Paycheck Protection Program (PPP) and Economic Injury and Disaster Loans (EIDL) were lost to improper payments. We have seen reports that $266 billion in improper payments were made by Medicaid during the pandemic,” Comer told the hearing.

“That is why we are having our first hearing of the new Congress on waste, fraud, and abuse in pandemic spending programs. We will hold many more hearings on this important issue. We owe it to the American people to get to the bottom of the greatest theft of American taxpayer dollars in history.

“We must identify where this money went, how much ended up in the hands of fraudsters or ineligible participants, and what should be done to ensure it never happens again.”

Lead House impeachment manager Rep. Jamie Raskin (D-Md.) speaks on the fifth day of former President Donald Trump's second impeachment trial at the U.S. Capitol in Washington on Feb. 13, 2021. (congress.gov via Getty Images)

Rep. Jamie Raskin (D-Md.), the ranking Democratic member on the Oversight panel, agreed that the pandemic spending programs “have recently been proven shockingly vulnerable to impostors, hustlers, con men, big liars, outright fraudsters, and fakes,” and that “some of the programs developed to respond to the COVID-19 pandemic have proven vulnerable to the relentless, deceitful and fraudulent designs of criminal predators when they decide to rip off the generosity of the American people.”

He insisted that “the shopworn bureaucratic language of ‘waste, fraud, and abuse’ doesn’t begin to capture the actual confidence games and organized criminal artifices and schemes that have targeted and exploited social programs built on the solidarity of the American people.”

But Raskin pointed to a different villain as being responsible for the horrendous spending abuses.

“Organized criminals and fraudsters took advantage of these circumstances and the solidarity of the American people by exploiting weaknesses in our IT systems,” Raskin said. “This problem was compounded by critical decisions made by the Trump administration that hamstrung pandemic relief anti-corruption oversight from the outset, crippling the government’s ability to detect and combat fraud. Despite specific legislative instruction from Congress in pandemic relief bills, the Trump administration told agencies to ignore data reporting requirements.”

He noted as well that the Oversight panel’s Subcommittee on the Coronavirus Crisis held seven hearings focused on waste, fraud, and abuse in the pandemic programs.

“The [subcommittee] recovered an improper $10 million Paycheck Protection Program (PPP) loan. Less than three months later, the committee helped secure the return of $109 million from a nursing home chain that was not using the loan as Congress intended,“ Raskin said. ”In March 2021, we exposed how the Trump administration’s mismanagement of small business relief programs and refusal to implement basic anti-fraud controls led to nearly $84 billion in potentially fraudulent loans.”

Justice Department Inspector General Michael Horowitz testifies at a hearing in Washington, on Dec. 11, 2019. (Saul Loeb/AFP/Getty Images)

Dodaro offered four reasons he believes account for the problem.

“First, agencies should have been much better prepared in order to prevent fraud in the first place.” He pointed to the passage in 2016 by Congress of the Fraud Reduction and Data Analytics Act that directed agencies to adopt dozens of reforms recommended by GAO. Agencies have been too slow to comply with the act, he said.

“Secondly, the urgency in providing relief funds led to tradeoffs that limited the ability to achieve the accountability and transparency goals” of the 2016 law. “These tradeoffs included allowing self-certifications in applications, limiting the amount of supporting documentation that applicants had to apply ... along with internal control weaknesses within the agencies made these programs much more susceptible to fraud.”

Dodaro said the third cause in his judgment was the failure to make permanent the Center for Excellence in Analytics in the IG community created in 2008 during the Great Recession. The center is designed to enable the 72 congressionally chartered IGs to learn and apply extremely sophisticated data analytics to identify corruption. That center was terminated by the administration of President Barack Obama in 2015.

The fourth cause, according to Dodaro, is the fact “the federal government has an underlying improper payment problem, payments that shouldn’t have been made or that were made in the wrong amounts.”

Dodaro said the improper payments problem is “widespread in the government; it’s pervasive across the government.”

Horowitz agreed that a major obstacle to PRAC and IGs finding problematic spending abuses is the lack of good data from agencies. He encouraged Congress to heed Dodaro’s advice and reinstitute the data analytics center.

“Second, Congress should consider raising the jurisdictional amount in federal law from the current $150,000 to $1 million, so IGs can more effectively pursue smaller dollar frauds,” Horowitz said.

“Finally, Congress should consider extending from five to 10 years the statute of limitations for pandemic unemployment insurance fraud.” He noted that Congress enacted such an extension last year for the PPP program.

Dodaro told the committee that the Department of Labor IG is opening 100 new UI corruption cases every week, but “this problem is going to be here for a very long time.”