Massive Pandemic Fraud Identified in Federal Programs

Nearly $80 billion in federal pandemic relief funds were improperly disbursed due to a failure in vetting applications with stolen or invalid Social Security numbers, a new watchdog report by the Pandemic Response Accountability Committee (PRAC) revealed. The three major programs under scrutiny included two aimed at aiding small businesses and one for enhanced unemployment benefits. All told, between 1.4 million and 1.5 million applications with these bogus numbers were approved, suggesting a significant oversight in fraud prevention measures.

Lapses in Basic Security Measures

The errors could have been mitigated by implementing elementary verification steps such as matching applicants’ birth dates with their Social Security numbers in official databases. “When program guardrails were removed during the pandemic, a substantial amount of funds were rapidly disbursed without proper identity verification,” the PRAC stated in its report. It highlighted that “Implementing pre-award verification helps streamline the vetting process before disbursal, preventing fraudulent payments from going out and ensuring that funds are disbursed with additional program integrity controls.”

Context of the Pandemic Response

The reports come in the wake of the United States grappling with unprecedented economic and health crises triggered by the coronavirus pandemic five years ago. During this tumultuous period, Congress launched the largest bailout effort in history, injecting $5 trillion—all through borrowed money—to mitigate the dire effects on both the economy and public health. Yet, the urgency to distribute these funds led to compromised checks on applicant legitimacy, leaving the distribution systems vulnerable to exploitation.

Scope of the Fraud

According to the PRAC, out of a total of 67.5 million funded applications across the three scrutinized programs, a sampled analysis uncovered inconsistencies among 24,000 cases where Social Security numbers did not match the applicants’ names. Extrapolating these findings suggests that erroneous payments might total over $79 billion. Broken down by program, the Economic Injury Disaster Loans might have accounted for about $55.8 billion, the Paycheck Protection Program $13.8 billion, and unemployment benefits around $9.8 billion. The true extent of fraud might even surpass these figures, particularly as some applications lacked complete birth date data, integral for verification.

Recommendations for Future Crisis Management

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The PRAC emphasized the critical need for implementing a robust Social Security number verification system prior to the next significant national emergency. This would entail an improved framework ensuring that such a substantial amount of taxpayer money does not end up in the wrong hands due to a lack of basic administrative controls. The report serves as a stark reminder of the need for strict measures to safeguard public resources, particularly in times of crisis where opportunistic fraud can significantly undermine relief efforts.