PRAC Attacks Pandemic Relief Fraud Head-On

WASHINGTON — When Sholanda Thomas, 38, an inmate at the Central California Women’s Facility in Chowchilla, sent her own and other inmates’ personal identifying information to a friend on parole, she had the intention of committing pandemic fraud.

Thomas falsely represented that she and other inmates had been working as carpet cleaners, hair stylists, mechanics and other jobs; impossible as they were incarcerated. 

Despite the red flags, Thomas managed to collect over $250,000 in unemployment benefits from the state of California. 

“Fraud prevented many vulnerable Americans from receiving the much-needed aid they justly deserved,” said Rep. Carolyn Maloney, D-N.Y., during a hearing held by the Select Subcommittee on the Coronavirus Crisis on Tuesday.

“Programs, such as the Paycheck Protection Act, and the [COVID-19 Economic Injury Disaster Loan] program, ran out of funds so quickly… individuals in small businesses and communities of color were disproportionately unable to receive any relief, or the relief that they needed,” continued Maloney.

While pandemic relief aid has helped curb the economic suffering caused by the COVID-19 pandemic for many Americans, a new report from the subcommittee shows a high volume of criminals took advantage of the pandemic by stealing million dollars in aid.

In the nearly 40-page report titled, “How the Trump Administration Wasted Taxpayer Dollars by Leaving the COVID-19 EIDL Program Vulnerable to Fraud,” the subcommittee examined the Small Business Administration Economic Injury Disaster Loan program’s operations during the pandemic.

The findings indicate that $86 billion dollars in EIDL funds were disbursed to applicants with fraud alerts on their applications, and at least $163 billion in pandemic unemployment benefits could have been paid improperly, with a significant portion attributable to fraud. 

“Individuals who had challenges applying through the internet…were not able to get benefits intended for them,” said Michael Horowitz, inspector general of the U.S. Department of Justice and chair of the Pandemic Response Accountability Committee, during the hearing.

Horowitz said many of the individuals were from rural communities which did not have strong internet service, or elderly applicants.

“So many agencies, we found, were unprepared to deal with these challenges,” said Horowitz. 

“The work of the PRAC and our partner IGs, have already led to more than 1,200 indictments and complaints, about 950 arrests, and over 450 convictions,” continued Horowitz.

PRAC is an independent oversight committee within the Council of the Inspector General on Integrity and Efficiency, created by the Coronavirus Aid, Relief and Economic Security Act, or CARES Act of 2020 to ensure that the pandemic-related pieces of legislation totaling over $5 trillion in government funds were not misspent. 

“The only way to effectively oversee $5 trillion in relief spending is with data,” said Horowitz.

PRAC created the Pandemic Analysis Center of Excellence, or PACE, to deliver analytic audits and investigative support. 

“In the CARES Act, Congress gave us various hiring authority, and we’ve used that successfully to bring on board a number of data scientists,” said Horowitz.

The Biden administration appropriated $40 million in additional funds to PRAC, as part of the American Rescue Plan.

Horowitz said so far 20 data scientists are helping IG offices look into the data and find anomalies and issues to examine the entire scope of the pandemic fraud wrongdoing.

“Thousands of applicants use the same social security number to get unemployment benefits or PPP benefits, or EIDL benefits. The same telephone numbers are used in thousands of applications, the same… mailing addresses,” said Horowitz.

Horowitz said PRAC has identified over one million suspiciously used social security numbers for multiple applications, and the team is identifying whether the names on the applications match up with that of the Social Security Administration. 

The subcommittee report reveals that under the Trump administration, even when EIDL applications were reviewed by SBA employees, reviewers were directed to approve applications containing indications of identity theft without taking action to ensure the applications were legitimate. 

SBA changed this guidance to direct loan reviewers to both obtain government identification and ask for personal identifying information by the phone where there were indications of identity theft under the Biden administration. 

Two bills passed the House earlier this month, and a third is currently pending on the Senate floor, which would assist PRAC’s efforts to fight pandemic-related fraud. 

“The statute of limitations that the House passed would be extended for PPP and EIDL fraud to 10 years… hopefully the Senate will pass it and I appreciate the House doing so already,” said Horowitz.

Alexa can be reached at [email protected]