Forensic accounting expert Linda Miller dropped this bombshell when she testified before members of Congress on Oct. 19. She read in a prepared testimony during the House Ways and Means Committee's Oversight Subcommittee hearing that up to half of pandemic relief fund money was stolen by U.S. adversaries.
"Data on this is still being evaluated, but there are some estimates that half of the pandemic unemployment assistance [money obtained through] fraud went to adversarial nations," she stated. "Agencies were unprepared for the fraud they encountered largely due to a lack of attention to fraud risks."
"The nearly $5 trillion in government relief spending during the COVID-19 pandemic – much of which was disbursed as direct payments to citizens – created the perfect storm for fraud. A combination of inadequate oversight and internal controls, large-scale organized fraud rings and antiquated data and information systems contributed to the massive, widespread fraud we saw during the pandemic." (Related: Government watchdog: Over $60B lost to pandemic unemployment benefits fraud.)
Miller's comments came in reply to the question of Rep. Brian Fitzpatrick (R-PA) regarding a group of hackers with links to the Chinese government that were prosecuted for stealing an estimated $20 million in relief funds. The whistleblower is no stranger to fraud investigations, having served as the former deputy executive director of the Department of Justice's (DOJ) Pandemic Response Accountability Committee and the former assistant director of the Government Accountability Office's (GAO) Forensic Audits and Investigative Service (FAIS).
Rep. David Schweikert (R-AZ), chairman of the Oversight Subcommittee, said his team "has been tracking some crazy stories of [pandemic relief] unemployment insurance fraud that was converted to gift cards that were moved into buying cars." The vehicles "were shipped over to Africa as a way to wash the money." Schweikert also disclosed that his subcommittee found evidence of foreign entities using U.S. pandemic relief money to support violent activities overseas.
Other witnesses attest to misuse of money for pandemic benefits
Rebecca Shea, GAO director of audits for FAIS, also testified during the Oct. 19 hearing. She said her office has found "some information about foreign actors exploiting the various pandemic relief programs."
According to Shea, federal program managers who are directly responsible for identifying and stopping fraud were concentrated almost completely on getting benefits processed and in the hands of beneficiaries. This occurred despite numerous federal laws and regulations requiring federal workers to take measures to stop tax dollars from going to ineligible recipients.
"Federal agencies did not strategically manage fraud risks and were not adequately prepared to prevent fraud when the pandemic began. We recognize that eliminating all fraud and fraud risk is not a realistic goal," she told members of Congress.
"However, a variety of resources and requirements for fraud risk management were in place well before the pandemic. Had agencies already been strategically managing their fraud risks, they would have been better positioned to identify and respond to the heightened risks that emerged during the pandemic."
Amy Simon of the Department of Labor's Employment and Training Administration also testified, telling lawmakers that officials still do not know the full extent of pandemic benefit fraud. "The scale of improper spending and outright fraud is only now coming into clearer focus," she said.
Simon also told Rep. Greg Steube (R-FL) that pandemic fraud serves two purposes – a vertical for several criminal organizations, as well as an income source. The Labor Department official mentioned a recent DOJ indictment in Michigan of a sprawling scheme funded by various kinds of pandemic fraud. The scheme, run by serious organized crime rings, even had murder-for-hire as one of its services.
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Watch the video below about how COVID unemployment money was misspent due to fraud.
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More related stories:
Former CT Dem state rep pleads guilty to STEALING pandemic relief funds.
Government watchdog flags potentially fraudulent pandemic loans amounting to $5.4B.
New report reveals how $200B in COVID-19 relief aid was STOLEN.
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