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Massive Federal Pandemic Spending A 'Ripe Target' For Criminals

A Connecticut resident pleaded guilty after putting a portion of $4 million in coronavirus aid toward the purchase of a Porsche, a Mercedes, and a BMW. A Somerset, N.J., woman allegedly invented employees, inflated wages and fabricated tax filings to collect $1 million in loans. In St. Petersburg, Fl., a federal judge sentenced to prison a man who obtained $800,000 on behalf of businesses that did not exist.

The cases are among hundreds involving a slew of programs enacted by Congress in the darkest days of the coronavirus pandemic

Two years after lawmakers approved the first tranche of rescue funds, the U.S. government is grappling with an unprecedented challenge: how to oversee its historic stimulus effort.

Totaling nearly $6 trillion, the loans, grants, direct checks and other emergency assistance summed to more than entire federal budget in the fiscal year before the coronavirus arrived, creating a strain on the nation’s policymakers to ensure the funds have been put to good use, reports the Washington Post.

The money remains hard to track. The aid continues to be a ripe target for criminals nationwide, the full extent of which is only beginning to come to light.

“There is no question that the immense fraud that took place at the crush of the pandemic in 2020, particularly in small business loans and unemployment insurance, is the largest oversight challenge the Biden administration inherited,” said Gene Sperling, the president’s chief coordinator for stimulus spending.

He said the administration is taking “significant steps to strengthen anti-fraud controls.”

The Small Business Administration moved at lightning speed to disburse roughly $1 trillion to cash-strapped firms. The agency did not put in place a wide array of policies that might have prevented significant waste, fraud and abuse.

Investigators have questioned nearly every aspect of SBA’s spending, flagging billions of dollars in suspect loans and grants, overpayments to those who should not have received them and in some cases outright fraud. One effort meant to help businesses in economic distress may be rife with identity theft. Watchdogs received more than 845,000 applications for aid that are now suspected of having come from individuals using stolen identities — some of which were funded anyway.

Calls to the SBA’s tip line for criminal activity spiked by more than 37,000 percent over an 18-month period earlier in the outbreak. The agency’s top watchdog issued numerous warnings about its management of more recent stimulus programs adopted under President Biden, including multibillion-dollar funding for restaurants and performance spaces.

Last month, a panel of pandemic watchdogs highlighted more than five dozen criminal cases that might have been prevented if the SBA had been more diligent earlier in the pandemic.