Fraudsters have stolen nearly $100 billion in pandemic relief funds, resulting in the arrests of more than 100 suspects, including individuals acting alone and members working for organized groups, the U.S. Secret Service said Tuesday.
The Secret Service recently appointed a new national pandemic fraud recovery coordinator to oversee the wave of fraud causes related to scammers diverting funds from the Small Business Administration’s Paycheck Protection Program, the Economic Injury Disaster Loan program and another program that issues unemployment assistant funds nationwide, according to CNBC. The agency has more than 900 active investigations related to pandemic fraud, the report says.
“I’ve been in law enforcement for over 29 years and worked some complex fraud investigations for 20 plus years, and I’ve never seen something at this scale,” said Assistant Special Agent in Charge Roy Dotson, who will serve as the national pandemic fraud recovery coordinator.
Just over $2.3 billion in stolen funds have been recovered so far.
“There’s no doubt that the programs were easily accessible online. And so, with that, comes the opportunity for bad actors to get into that mix,” Dotson told CNBC. “It was necessary to try to get these funds out to people that were truly hurting, and no fault of anybody.”
The Labor Department inspector general in March released a report faulting inadequate controls on the Paycheck Protection Program and the Economic Injury Disaster Loan program for helping facilitate billions of dollars in potential fraud. The report found that at least $89 billion of the estimated $896 billion in unemployment program funds “could be paid improperly, with a significant portion attributable to fraud.”
The “primary difficulty” in investigating the cases has been the “sheer scope” of the amount of fraudulent loans and unemployment insurance benefits distributed, Dotson explained.
Hundreds of millions of funds sent to Green Dot and PayPal were recovered through the agencies’ efforts, a Secret Service spokesperson told CNBC.
“After the Secret Service alerted the private sector early on about the emerging fraud, numerous financial institutions proactively identified, investigated, and safeguarded against suspected fraudulent pandemic relief funds,” the spokesperson said. “These private institutions then reached out to the Secret Service for further assistance. In coordination with companies like Green Dot Corporation and PayPal, the Secret Service was able to seize over $400 million in fraudulent funds.”
A Green Dot spokesperson told the outlet that it works to proactively bring fraud cases to the attention of the Secret Service and other government agencies and industry peers, with whom is partners to address, mitigate and resolve the cases.
“Fraud prevention is paramount and we work around the clock and invest heavily to identify, block and address fraudulent activity as part of our commitment to protecting our customers,” the spokesperson added.
A spokesperson for PayPal similarly said the company takes “every instance of potential fraud very seriously” and that it works proactively with law enforcement agencies and industry partners and employs its own “sophisticated systems” to detect fraud.