Much of the theft was brazen, even simple.
Fraudsters used the Social Security numbers of dead people and federal prisoners to get unemployment checks. Cheaters collected those benefits in multiple states. And federal loan applicants weren鈥檛 cross-checked against a Treasury Department database that would have raised red flags about sketchy borrowers.
Criminals and gangs grabbed the money. But so did a U.S. soldier in Georgia, the pastors of a defunct church in Texas, a former state lawmaker in Missouri and a roofing contractor in Montana.
All of it led to the greatest grift in U.S. history, with thieves plundering billions of dollars in federal COVID-19 relief aid intended to combat the worst pandemic in a century and to stabilize an economy in free fall.
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鈥檚 early stages and instituted too few restrictions on applicants. In short, they say, the grift was just way too easy.
鈥淗ere was this sort of endless pot of money that anyone could access,鈥� said Dan Fruchter, chief of the fraud and white-collar crime unit at the U.S. Attorney鈥檚 office in the Eastern District of Washington. 鈥淔olks kind of fooled themselves into thinking that it was a socially acceptable thing to do, even though it wasn鈥檛 legal.鈥�
The U.S. government has charged more than 2,230 defendants with pandemic-related fraud crimes and is conducting thousands of investigations.
Most of the looted money was swiped from three large pandemic-relief initiatives launched during the Trump administration and inherited by President Joe Biden. Those programs were designed to help small businesses and unemployed workers survive the economic upheaval caused by the pandemic.
The pilfering was wide but not always as deep as the eye-catching headlines about cases involving many millions of dollars. But all of the theft, big and small, illustrates an epidemic of scams and swindles at a time America was grappling with overrun hospitals, school closures and shuttered businesses. Since the pandemic began in early 2020, more than 1.13 million people in the U.S. have died from COVID-19, according to the Centers for Disease Control and Prevention.
Michael Horowitz, the U.S. Justice Department inspector general who chairs the federal Pandemic Response Accountability Committee, told Congress the fraud is 鈥渃learly in the tens of billions of dollars鈥� and may eventually exceed $100 billion.
Horowitz told the AP he was sticking with that estimate, but won鈥檛 be certain about the number until he gets more solid data.
鈥淚鈥檓 hesitant to get too far out on how much it is,鈥� he said. 鈥淏ut clearly it鈥檚 substantial and the final accounting is still at least a couple of years away.鈥�
Mike Galdo, the U.S. Justice Department鈥檚 acting director for COVID-19 Fraud Enforcement, said, 鈥淚t is an unprecedented amount of fraud.鈥�
Before leaving office, former President Donald Trump approved emergency aid measures totaling $3.2 trillion, according to figures from the Pandemic Response Accountability Committee. Biden鈥檚 2021 American Rescue Plan authorized the spending of another $1.9 trillion. About a fifth of the $5.2 trillion has yet to be paid out, according to the committee鈥檚 most recent accounting.
Never has so much federal emergency aid been injected into the U.S. economy so quickly. 鈥淭he largest rescue package in American history,鈥� U.S. Comptroller General Gene Dodaro told Congress.
The enormous scale of that package has obscured multi-billion dollar mistakes.
An $837 billion IRS program, for example, succeeded 99% of the time in getting economic stimulus checks to the proper taxpayers, according to the tax agency. Nevertheless, that 1% failure rate translated into nearly $8 billion going to 鈥渋neligible individuals,鈥� a Treasury Department inspector general told AP.
An IRS spokesman said the agency does not agree with all the figures cited by the watchdog and noted that, even if correct, the loss represented a tiny fraction of the program鈥檚 budget.
The health crisis thrust the Small Business Administration, an agency that typically gets little attention, into an unprecedented role. In the seven decades before the pandemic struck, for example, the SBA had doled out $67 billion in disaster loans.
When the pandemic struck, the agency was assigned to manage two massive relief efforts 鈥� the COVID-19 Economic Injury Disaster Loan and Paycheck Protection programs, which would swell to more than a trillion dollars. SBA鈥檚 workforce had to get money out the door, fast, to help struggling businesses and their employees. COVID-19 pushed SBA鈥檚 pace from a walk to an Olympic sprint. Between March 2020 and the end of July 2020, the agency granted 3.2 million COVID-19 economic injury disaster loans totaling $169 billion, according to an SBA inspector general鈥檚 report, while at the same time implementing the huge new Paycheck Protection Program.
In the haste, guardrails to protect federal money were dropped. Prospective borrowers were allowed to 鈥渟elf-certify鈥� that their loan applications were true. The CARES Act also barred SBA from looking at tax return transcripts that could have weeded out shady or undeserving applicants, a decision eventually reversed at the end of 2020.
鈥淚f you open up the bank window and say, give me your application and just promise me you really are who you say you are, you attract a lot of fraudsters and that鈥檚 what happened here,鈥� Horowitz said.
The SBA inspector general鈥檚 office has estimated fraud in the COVID-19 economic injury disaster loan program at $86 billion and the Paycheck Protection program at $20 billion. The watchdog is expected in coming weeks to release revised loss figures that are likely to be much higher.
In an interview, SBA Inspector General Hannibal 鈥淢ike鈥� Ware declined to say what the new fraud estimate for both programs will be.
鈥淚t will be a figure that is fair, that is 1,000% defensible by my office, fully backed by our significant criminal investigative activity that is taking place in this space,鈥� Ware said.
Ware and his staff are overwhelmed with pandemic-related audits and investigations. The office has a backlog of more than 80,000 actionable leads, close to a 100 years鈥� worth of work.
鈥淒eath by a thousand cuts might be death by 80,000 cuts for them,鈥� Horowitz said of Ware鈥檚 workload. 鈥淚t鈥檚 just the magnitude of it, the enormity of it.鈥�
A 2022 study from the University of Texas at Austin found almost five times as many suspicious Paycheck Protection loans as the $20 billion SBA鈥檚 inspector general has reported so far. The research, led by finance professor John Griffin, found as much as $117 billion in questionable and possibly fraudulent loans, citing indicators such as non-registered businesses and multiple loans to the same address.
Horowitz, the pandemic watchdog chairman, criticized the government鈥檚 failure early on to use the 鈥淒o Not Pay鈥� Treasury Department database, designed to keep government money from going to debarred contractors, fugitives, felons or people convicted of tax fraud. Those reviews, he said, could have been done quickly.
鈥淚t鈥檚 a false narrative that has been set out, that there are only two choices,鈥� Horowitz said. 鈥淥ne choice is, get the money out right away. And that the only other choice was to spend weeks and months trying to figure out who was entitled to it.鈥�
In less than a few days, a week at most, Horowitz said, SBA might have discovered thousands of ineligible applicants.
鈥�24 hours? 48 hours? Would that really have upended the program?鈥� Horowitz said. 鈥淚 don鈥檛 think it would have. And it was data sitting there. It didn鈥檛 get checked.鈥�
The Biden administration put in place stricter rules to stem pandemic fraud, including use of the 鈥淒o Not Pay鈥� database. Biden also recently proposed a $1.6 billion plan to boost law enforcement efforts to go after pandemic relief fraudsters.
鈥淚 think the bottom line is regardless of what the number is, it emanates overwhelmingly from three programs that were designed and originated in 2020 with too many large holes that opened the door to criminal fraud,鈥� Gene Sperling, the White House American Rescue Plan coordinator, said in an interview.
鈥淲e came into office when the largest amounts of fraud were already out of the barn,鈥� Sperling added.
In a statement, an SBA spokesperson declined to say whether the agency agrees with the figures issued by Ware鈥檚 office, saying the federal government has not developed an accepted system for assessing fraud in government programs. Previous analyses have pointed to 鈥減otential fraud鈥� or 鈥渇raud indicators鈥� in a manner that conveys those numbers as a true fraud estimate when they are not, according to the statement.
The coronavirus pandemic plunged the U.S. economy into a short but devastating recession. Jobless rates soared into double digits and Washington sent hundreds of billions of dollars to states to help the suddenly unemployed.
For crooks, it was like tossing chum into the sea to lure fish. Many of these state unemployment agencies used antiquated computer systems or had too few staff to stop bogus claims from being paid.
鈥淵es, the states were overwhelmed in terms of demand,鈥� said Brent Parton, acting assistant secretary of the U.S. Labor Department鈥檚 Employment and Training Administration. 鈥淲e had not seen a spike like this ever in a global event like a pandemic. The systems were underfunded. They were not resilient. And I would say, more importantly, were vulnerable to sophisticated attacks by fraudsters.鈥�
Fraud in pandemic unemployment assistance programs stands at $76 billion, according to congressional testimony from Labor Department Inspector General Larry Turner. That鈥檚 a conservative estimate. Another $115 billion mistakenly went to people who should not have received the benefits, according to his testimony.
Turner declined AP鈥檚 request for an interview.
Turner鈥檚 task in identifying all of the pandemic unemployment insurance fraud has been complicated by a lack of cooperation from the federal Bureau of Prisons, according to a September 鈥渁lert memo鈥� issued by his office. Scam artists used Social Security numbers of federal prisoners to steal millions of dollars in benefits.
His office still doesn鈥檛 know exactly how much was swiped that way. The prison bureau has declined to provide current data about federal prisoners. The agency did not respond to a request for comment.
Ohio鈥檚 State Auditor Keith Faber saw trouble coming when safeguards to ensure the unemployment aid only went to people who legitimately qualified were lowered, making conditions ripe for fraud and waste.
"The state鈥檚 unemployment agency took controls down because on the one hand, they literally were drinking from a firehose,鈥� Faber said. 鈥淭hey had a year鈥檚 worth of claims in a couple of weeks. The second part of the problem was the (federal government) directed them to get the money out the door as quickly as possible and worry less about security. They took that to heart. I think that was a mistake.鈥�
Ohio鈥檚 Department of Job and Family Services reported in February $1 billion in fraudulent pandemic unemployment claims and another $4.8 billion in overpayments.
The ubiquitous masks that became a symbol of the COVID-19 pandemic are seen on fewer and fewer faces. Hospitalizations for the virus have steadily declined, according to CDC data, and Biden in April ended the national emergency to respond to the pandemic.
But on politically divided Capitol Hill, lawmakers have not put the pandemic behind them and are engaged in a fierce debate over the success of the relief spending and who鈥檚 to blame for the theft.
Too much government money, Republicans argue, breeds fraud, waste and inflation. Democrats have countered that all the financial muscle from Washington saved lives, businesses and jobs.
Republicans and Democrats did, however, find common ground last year on bills to give the federal government more time to catch fraudsters. Biden in August signed legislation to increase the statute of limitations from five to 10 years on crimes involving the two major programs managed by the SBA.
The extra time will help federal prosecutors untangle pandemic fraud cases, which often involve identity theft and crooks overseas. But there鈥檚 no guarantee they鈥檒l catch everyone who jumped at the chance for an easy payday. They鈥檙e busy, too, with crimes unrelated to pandemic relief funds.
鈥淒o we have enough cases and leads that we could be doing them in 2030? We absolutely could,鈥� said Fruchter, the federal prosecutor in the Eastern District of Washington. 鈥淏ut my experience tells me that likely there will be other priorities that will come up and will need to be addressed. And unfortunately, in our office, we don鈥檛 have a dedicated pandemic fraud unit.鈥�
Congress has not yet passed a measure that would give prosecutors the additional five years to go after unemployment fraudsters. That worries Turner, the Labor Department watchdog. Without the extension, he told Congress in a late May report, people who stole the benefits may escape justice.
Sperling, the White House official, said any future crisis that requires government intervention doesn鈥檛 have to be a choice between helping people in need and stopping fraudsters.
鈥淭he prevention strategy going forward is that in a crisis, you can focus on fast delivery to people in desperate situations without feeling that you can only get that speed by taking down common sense anti-fraud guardrails,鈥� he said.
