Next Monday, Eric Michael Jaklitsch is scheduled to be sentenced in two cases after defrauding California and the federal government over $1.67 million in pandemic relief funds. Of at least $1,280,680 he sought in loans from the Small Business Administration, Jaklitsch was approved for all but $140. California failed to notice that the same man had filed at least 78 different claims, authorizing Bank of America to mail out dozens of debit cards loaded with unemployment benefits to addresses under his control. With estimates indicating that as much as $560 billion, or nearly 20%, was stolen out of more than $3 trillion distributed through the three main pandemic aid programs, Jaklitsch’s case illustrates the twin challenges now facing states and the federal government as they grapple with what is likely the biggest fraud in U.S. history, reports the Christian Science Monitor. First, they are racing to catch those who committed fraud, particularly sophisticated criminals and syndicates who saw an outsize opportunity in the rapid, massive flows of pandemic relief funds. Second, they are seeking to address long-standing vulnerabilities in government benefits systems that such cases have brought into stark relief.
Jaklitsch has been apprehended by one of three “strike force teams” set up by the Department of Justice. The teams, based in California, Florida, and Maryland, combine the firepower of multiple agencies to investigate and prosecute large-scale relief fraud, including multistate and transnational schemes. The White House has recommended to Congress tripling the number of strike teams as part of its $1.6 billion pandemic anti-fraud proposal. The proposal would allow inspectors general to seek civil remedies in cases of up to $1 million, up from the current cap of $150,000 under the Fraud Civil Remedies Act, while boosting DOJ’s ability to tackle more sophisticated cases. “We owe it to the American people to get to the bottom of the greatest theft of American taxpayer dollars in history,” said House Oversight Committee Chair James Comer (R-Ky.) as he opened the first of many hearings on pandemic fraud on Feb. 1. “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.” The White House suggested allocating $600 million to fraud prevention, including tools that would prevent identity theft. It would also put $400 million toward helping victims of identity theft, and $600 million toward investigating and prosecuting major or systemic pandemic fraud.