White House, Senate Democrats unveil bill to battle pandemic aid fraud

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Senate Democrats on Tuesday unveiled a sweeping, roughly $1.3 billion bill that would expand the federal government’s powers to find and prosecute pandemic fraud, as Washington scrambles to recover the federal aid stolen by scammers during the worst economic crisis in a generation.

The measure, which would deliver on an earlier budget request from President Biden, arrived as the Justice Department announced that its efforts to date had resulted in charges against more than 3,500 defendants and the seizure or forfeiture of more than $1.4 billion in illegally obtained coronavirus relief funds.

But the new spending package immediately faced the prospect of a tough slog on Capitol Hill: Even though lawmakers often complain about waste, fraud and abuse, they have failed for years to overhaul government benefits, upgrade computer systems or take other steps that would safeguard federal funds in a future emergency.

The newly proposed legislation would devote about $675 million toward guarding protecting programs from identity theft, aiming to ward off criminals who often use real Americans’ stolen information to collect government aid. With it, lawmakers would allocate roughly $550 million to the Justice Department and leading inspectors general to bolster their oversight of federal spending.

The bill is authored by Sen. Dick Durbin (D-Ill.), the majority whip; Sen. Gary Peters (D-Ill.), who leads the chamber’s Homeland Security and Government Affairs Committee; and Sen. Ron Wyden (D-Ore.), the chairman of the Finance Committee. The trio of lawmakers coupled their proposed new spending with additional powers for federal law enforcement officials, who would gain more time to investigate crimes targeting certain pandemic relief programs.

“Bad actors got their hands on money that was meant to help our communities get through what was an incredibly difficult time,” Peters told reporters, adding the proposal would help the government “get back stolen funds.”

The legislation follows four years after the U.S. government first marshaled its historic response to the coronavirus pandemic, adopting a series of aid packages that totaled more than $5 trillion in federal aid. The money ultimately rescued the economy, helping workers who were out of a job and preserving businesses from shuttering forever. But the funds also became a tempting target for criminals, who seized on Washington’s haste and generosity starting in the Trump administration and racked up billions of dollars in fraud.

At the height of the pandemic, scammers targeted the nation’s unemployment insurance program, stealing the identities of real people to obtain benefits they did not deserve, according to a year-long investigation by The Washington Post, the Covid Money Trail. Last year, federal officials estimated that fraudsters stole $135 billion from the program, amounting to $1 of every $7 spent on jobless benefits.

Others beginning in 2020 deceived the Small Business Administration using fake tax records, ineligible Social Security numbers and names of the dead, obtaining low-interest loans that were supposed to help companies maintain their payrolls during the economic crisis. Two relief funds — the Paycheck Protection Program, or PPP, and the Covid-19 Economic Injury Disaster Loan, or EIDL — together may have been responsible for over $200 billion in fraud-related losses, the agency’s inspector general has found.

Gene Sperling, a senior adviser to the president, attributed the rampant theft of taxpayer dollars to a lack of investment in federal technology, an overwhelming demand for federal aid and “the removal of several basic anti-fraud safeguards” at the start of the pandemic. That, he said, “led the Biden administration to inherit historic levels of fraud.”

In response, Biden in 2022 announced a new chief prosecutor for pandemic fraud at the Justice Department. The following year, he asked Congress to approve a $1.6 billion package that would toughen federal enforcement against coronavirus-related crimes, while bolstering U.S. aid programs to prevent future identity theft.

Under Biden’s watch, the Justice Department has also ramped up its enforcement efforts: Last August, for example, federal prosecutors announced they had brought 718 charges and other sanctions during a three-month sweep, totaling about $836 million in alleged fraud. On Tuesday, Attorney General Merrick B. Garland highlighted some of those prosecutions, stressing that the government’s work is still “far from over.”

But the activity has stood in stark contrast with the delays on Capitol Hill, where lawmakers for years have failed to deliver on Biden’s requests, leaving federal watchdogs underfunded. Often, House Republicans have blasted the president for misspending coronavirus relief money, even though federal investigators have found the worst abuses occurred during the Trump administration. No GOP lawmakers signed onto the new bill unveiled Tuesday, though party lawmakers have backed some of the proposed changes to unemployment insurance and other federal benefit programs.

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