Hundreds Of Billions Were Stolen From The US Treasury While Trump Was In The White House-- By Design

No one with an ounce of sense could have imagined a program with hundreds of billions of dollars in it, passed during Trump’s term in office wasn’t going to become a GOP piggy bank designed for grift. The House passed the first phase— part of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES)— by voice vote on March 27, 2020 and signed by Señor Trumpanzee on the same day. Initially, the PPP provided $350 billion in forgivable loans to “small business,” an amount that subsequently grew to $669 billion + $500 billion for corporations and $339.8 billion to state and local governments, while Trump was still president. The completely bipartisan legislation was the largest economic stimulus package in U.S. history, amounting to 10% of total U.S. gross domestic product. The only opponent was Kentucky crackpot Thomas Massie, who John Kerry noted “has tested positive for being an asshole. He must be quarantined to prevent the spread of his massive stupidity.”

Within seconds of Trump signing the bill he was laying the groundwork for the great grift, including in his signing statement that he could (and would) gag the Special Inspector General for Pandemic Recovery (SIGPR) insofar as his constitutional powers as president enabled him to block the SIGPR's reports to Congress. I also want to make sure everyone is aware that even when the third multi-billion tranche passed in June of 2020 (the PPP Flexibility Act) some of the most extreme anti-spending Republicans in the House were co-sponsors— from Chip Roy (TX), Ralph Norman (SC) and Andy Harris (MD) to Doug LaMalfa (CA), Brad Wenstrup (OH) and Tim Burchett (TN), the Freedom Caucus lunatic who argued last month that a U.S. default would be a good thing and is currently demanding that the Department of Justice be defunded!

A piece from the Associated Press yesterday by Richard Lardner, Jennifer McDermott and Aaron Kessler, The Great Grift: How billions in COVID-19 relief aid was stolen or wasted, didn’t mention any of the crooked politicians who dipped into the PPP funds and then had their loans forgiven— even while they were screaming boy how unfair it would be to forgive student loans. Take this baker’s dozen of criminal types-- any names look familiar?

After all, cancelling student debt— said the selfish, greedy right-wingers— would be unfair to people who didn’t take on loan or who already paid theirs off. Markwayne Mullin (R-OK) said the relief shouldn’t be footed by farmers, ranchers and teachers. "If you take out a loan, you pay it back,” wrote the House Judiciary Committee Republicans. “Period."

AP was reporting on a different kind of grift, though— brazen and simple. “Fraudsters used the Social Security numbers of dead people and federal prisoners to get unemployment checks. Cheaters collected those benefits in multiple states. And federal loan applicants weren’t cross-checked against a Treasury Department database that would have raised red flags about sketchy borrowers. Criminals and gangs grabbed the money. But so did a U.S. soldier in Georgia, the pastors of a defunct church in Texas, a former state lawmaker in Missouri and a roofing contractor in Montana. All of it led to the greatest grift in U.S. history, with thieves plundering billions of dollars in federal COVID-19 relief aid intended to combat the worst pandemic in a century and to stabilize an economy in free fall.”

An Associated Press analysis found that fraudsters potentially stole more than $280 billion in COVID-19 relief funding; another $123 billion was wasted or misspent. Combined, the loss represents 10% of the $4.2 trillion the U.S. government has so far disbursed in COVID relief aid.

That number is certain to grow as investigators dig deeper into thousands of potential schemes.

How could so much be stolen? Investigators and outside experts say the government, in seeking to quickly spend trillions in relief aid, conducted too little oversight during the pandemic’s early stages and instituted too few restrictions on applicants. In short, they say, the grift was just way too easy. [Tailor-made for a career criminal like Trump.]

“Here was this sort of endless pot of money that anyone could access,” said Dan Fruchter, chief of the fraud and white-collar crime unit at the U.S. Attorney’s office in the Eastern District of Washington. “Folks kind of fooled themselves into thinking that it was a socially acceptable thing to do, even though it wasn’t legal.”

The U.S. government has charged more than 2,230 defendants with pandemic-related fraud crimes and is conducting thousands of investigations.

Most of the looted money was swiped from three large pandemic-relief initiatives launched during the Trump administration and inherited by President Joe Biden. Those programs were designed to help small businesses and unemployed workers survive the economic upheaval caused by the pandemic.

The pilfering was wide but not always as deep as the eye-catching headlines about cases involving many millions of dollars. But all of the theft, big and small, illustrates an epidemic of scams and swindles at a time America was grappling with overrun hospitals, school closures and shuttered businesses. Since the pandemic began in early 2020, more than 1.13 million people in the U.S. have died from COVID-19, according to the Centers for Disease Control and Prevention.

…Mike Galdo, the U.S. Justice Department’s acting director for COVID-19 Fraud Enforcement, said, “It is an unprecedented amount of fraud.”

Before leaving office, former President Donald Trump approved emergency aid measures totaling $3.2 trillion, according to figures from the Pandemic Response Accountability Committee. Biden’s 2021 American Rescue Plan authorized the spending of another $1.9 trillion. About a fifth of the $5.2 trillion has yet to be paid out, according to the committee’s most recent accounting.

Never has so much federal emergency aid been injected into the U.S. economy so quickly. “The largest rescue package in American history,” U.S. Comptroller General Gene Dodaro told Congress.

The enormous scale of that package has obscured multi-billion dollar mistakes.

An $837 billion IRS program, for example, succeeded 99% of the time in getting economic stimulus checks to the proper taxpayers, according to the tax agency. Nevertheless, that 1% failure rate translated into nearly $8 billion going to “ineligible individuals,” a Treasury Department inspector general told AP.

…The health crisis thrust the Small Business Administration, an agency that typically gets little attention, into an unprecedented role. In the seven decades before the pandemic struck, for example, the SBA had doled out $67 billion in disaster loans.

When the pandemic struck, the agency was assigned to manage two massive relief efforts— the COVID-19 Economic Injury Disaster Loan and Paycheck Protection programs, which would swell to more than a trillion dollars. SBA’s workforce had to get money out the door, fast, to help struggling businesses and their employees. COVID-19 pushed SBA’s pace from a walk to an Olympic sprint. Between March 2020 and the end of July 2020, the agency granted 3.2 million COVID-19 economic injury disaster loans totaling $169 billion, according to an SBA inspector general’s report, while at the same time implementing the huge new Paycheck Protection Program.

In the haste, guardrails to protect federal money were dropped. Prospective borrowers were allowed to “self-certify” that their loan applications were true. The CARES Act also barred SBA from looking at tax return transcripts that could have weeded out shady or undeserving applicants, a decision eventually reversed at the end of 2020.

“If you open up the bank window and say, give me your application and just promise me you really are who you say you are, you attract a lot of fraudsters and that’s what happened here,” Horowitz said.

The SBA inspector general’s office has estimated fraud in the COVID-19 economic injury disaster loan program at $86 billion and the Paycheck Protection program at $20 billion. The watchdog is expected in coming weeks to release revised loss figures that are likely to be much higher.

…The Biden administration put in place stricter rules to stem pandemic fraud, including use of the “Do Not Pay” database. Biden also recently proposed a $1.6 billion plan to boost law enforcement efforts to go after pandemic relief fraudsters.

“I think the bottom line is regardless of what the number is, it emanates overwhelmingly from three programs that were designed and originated in 2020 with too many large holes that opened the door to criminal fraud,” Gene Sperling, the White House American Rescue Plan coordinator, said in an interview.

“We came into office when the largest amounts of fraud were already out of the barn,” Sperling added.

"Political Efficacy" by Nancy Ohanian

In a statement, an SBA spokesperson declined to say whether the agency agrees with the figures issued by Ware’s office, saying the federal government has not developed an accepted system for assessing fraud in government programs. Previous analyses have pointed to “potential fraud” or “fraud indicators” in a manner that conveys those numbers as a true fraud estimate when they are not, according to the statement.

The coronavirus pandemic plunged the U.S. economy into a short but devastating recession. Jobless rates soared into double digits and Washington sent hundreds of billions of dollars to states to help the suddenly unemployed.

For crooks, it was like tossing chum into the sea to lure fish. Many of these state unemployment agencies used antiquated computer systems or had too few staff to stop bogus claims from being paid.

“Yes, the states were overwhelmed in terms of demand,” said Brent Parton, acting assistant secretary of the U.S. Labor Department’s Employment and Training Administration. “We had not seen a spike like this ever in a global event like a pandemic. The systems were underfunded. They were not resilient. And I would say, more importantly, were vulnerable to sophisticated attacks by fraudsters.”

Fraud in pandemic unemployment assistance programs stands at $76 billion, according to congressional testimony from Labor Department Inspector General Larry Turner. That’s a conservative estimate. Another $115 billion mistakenly went to people who should not have received the benefits, according to his testimony.

Turner declined AP’s request for an interview.

Turner’s task in identifying all of the pandemic unemployment insurance fraud has been complicated by a lack of cooperation from the federal Bureau of Prisons, according to a September “alert memo” issued by his office. Scam artists used Social Security numbers of federal prisoners to steal millions of dollars in benefits.

His office still doesn’t know exactly how much was swiped that way. The prison bureau has declined to provide current data about federal prisoners. The agency did not respond to a request for comment.

Ohio’s State Auditor Keith Faber saw trouble coming when safeguards to ensure the unemployment aid only went to people who legitimately qualified were lowered, making conditions ripe for fraud and waste. The state’s unemployment agency took controls down because on the one hand, they literally were drinking from a firehose,” Faber said. “They had a year’s worth of claims in a couple of weeks. The second part of the problem was the (federal government) directed them to get the money out the door as quickly as possible and worry less about security. They took that to heart. I think that was a mistake.”

Does it matter to Trumpists? Not even a little. They're cultists. Yesterday, Philip Bump wrote about the relationship— non-relationship— between objective Truth and Truth (and Trumpists). “Fervent enthusiasm for Trump,” he reminded his readers, “has never been about logic, however often Trump and his allies try to backstop his assertions with hastily constructed rhetoric. Trumpism is an emotional movement and that fireproofs it against things like William Barr telling Fox News’ Shannon Bream that the indictment ‘came about because of reckless conduct of the president’… In a CBS News-YouGov poll released over the weekend, three-quarters of likely Republican primary voters said the indictment was politically motivated. Three-quarters also said the indictment doesn’t change their view of Trump or improves their view (though that’s almost certainly just a way for respondents to emphasize how little they care). There is no voice who could convince Trump’s most energetic supporters of the idea that he willfully violated the law. There never has been. Anyone who tries to present the reality of the situation to his base, however close they were to Trump at the outset, is immediately exiled. The truth has no place in Trumpism.”