Tallying losses from pandemic fraud

Nearly $100 billion or more has been stolen from COVID-19 relief programs set up to help businesses and people who lost their jobs because of the pandemic, the U.S. Secret Service said.

The estimate is based on Secret Service cases and data from the Labor Department and the Small Business Administration, said Roy Dotson, the agency’s national pandemic fraud recovery coordinator, in an interview Tuesday. The Secret Service didn’t include cases prosecuted by the Justice Department.

The amount stolen is roughly 3% of the $3.4 trillion dispersed, Dotson said, and shows that “the sheer size of the pot is enticing to the criminals.”

Most of that amount comes from unemployment fraud. The Labor Department reported that about $87 billion in unemployment benefits might have been paid improperly, with a significant portion attributable to fraud.

The Secret Service said it has seized more than $1.2 billion while investigating unemployment insurance and loan fraud and has returned more than $2.3 billion of fraudulently obtained funds by working with financial partners and states to reverse transactions. The Secret Service says it has more than 900 active criminal investigations into pandemic fraud, with cases in every state, and 100 people have been arrested so far.

The Justice Department said last week that its fraud section had prosecuted more than 150 defendants in over 95 criminal cases and had seized in excess of $75 million in cash proceeds derived from fraudulently obtained Paycheck Protection Program funds, as well as many real estate properties and luxury items purchased with the proceeds.

One of the best-known programs created through the March 2020 CARES Act, PPP offered low-interest, forgivable loans to small businesses struggling to meet payroll and other expenses during shutdowns.

Law enforcement early in the pandemic focused on fraud related to personal protective equipment, the Secret Service said. Authorities have now prioritized the exploitation of pandemic-related relief because the federal funding through the CARES Act attracted the attention of individuals and organized criminal networks worldwide.

“Can we stop fraud? Will we? No, but I think we can definitely prosecute those that need to be prosecuted, and we can do our best to recover as much fraudulent pandemic funds that we can,” Dotson said.