In his State of the Union address on Tuesday President Joe Biden announced that he will appoint a special prosecutor as part of a series of measures to combat fraud and identity theft in pandemic relief programs.
Special Prosecutor on PPP Fraud
The COVID pandemic relief programs disbursed more than $800 billion over two years by the government to help small businesses keep afloat. The loans require small businesses to spend the money on payroll and other eligible expenses within a designated time frame.
The move comes as the U.S. Department of Justice (DOJ) is going after individuals and businesses across the nation who have falsified paperwork to obtain forgivable loans meant to give small businesses a leg up. As such the Department of Justice’s (DOJ) COVID-19 Fraud Enforcement Task Force will expand its efforts by appointing a chief prosecutor. The prosecutor will lead teams of specialized prosecutors and agents to combat pandemic fraud, such as those committing large-scale identity theft, including foreign-based actors.
What is Included in the Measures?
The new measures will indict more individuals and businesses to the more than 1,000 criminal cases and over 200 civil investigations across 1800 individuals and entities involving billions of dollars in suspected fraud since May 2021.
The President will call on Congress to provide the resources needed for the DOJ Task Force to expand prosecutions of egregious pandemic fraud, including in support of the strike force teams.
Additionally, the President will issue an executive order with broad government-wide directives, to prevent and detect identity theft involving public benefits, while protecting the privacy and civil liberties and preventing bias that results in disparate outcomes. The executive order will also direct new actions to support the victims of identity fraud.
The Amount of Fraud from COVID Relief so Far
Besides mistakes in filling PPP forgiveness applications, rampant fraud has been observed with COVID-related relief for businesses. In December of last year the Secret Service investigations into unemployment insurance and Paycheck Protection Program (PPP) loan fraud have resulted in the seizure of more than $1.2 billion, the return of more than $2.3 billion of fraudulently obtained funds, and Unemployment Insurance program.
The crackdown comes at the heels of President Biden’s implementation of new rules to the PPP loan program to ease access to COVID loans to small businesses last month. In late February, the President announced the creation of a 14-day window exclusively for businesses and non-profit organizations with less than 20 employees to apply for PPP loans.