EDITORIAL: Make COVID fraud a priority

If you thought a pandemic might deter thieves and miscreants, think again. The federal government’s effort to ameliorate COVID-19 restrictions with cash payments has been a magnet for fraudsters and cheats.

Since March 2020, Washington has shelled out $3.5 trillion in COVID relief cash. Criminals have stolen nearly $100 billion of it. In response, the Secret Service — which hunts down financial fraudsters in addition to protecting the president — has added a pandemic fraud recovery coordinator to bolster its efforts to bust the bad actors.

Much of the missing money was fraudulently obtained via the forgivable Paycheck Protection Program and Economic Injury Disaster loans guaranteed by the Small Business Administration under the $2.2 trillion CARES Act passed near the onset of the pandemic. Other criminals took advantage by fraudulently claiming added unemployment benefits generously provided by Congress.

In one case, according to CNBC, 15 individuals across two states allegedly conspired to submit more than 80 false and fraudulent PPP loan applications by falsifying the number of employees and average monthly payroll expenses of their applicant businesses. According to the Department of Justice, the defendants initially sought over $35 million in PPP loans and ultimately obtained $18 million. Once the defendants received the money, one indictment alleges, they laundered a portion of the funds by writing more than 1,100 paychecks to fake employees — which included some of the defendants and their relatives.

All of those named in the indictment were charged with conspiracy to commit wire fraud and wire fraud. Others were also charged with money laundering, as well as aggravated identity theft for allegedly submitting loan applications featuring stolen identities of uninvolved parties.

According to the Secret Service, more than $2.3 billion of the nearly $100 billion in stolen funds has been recovered, resulting in the arrest of more than 100 suspects.

“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,” Ray Dotson, assistant special agent in charge, told CNBC. Mr. Dotson said that easy online access made it easy for criminals to take advantage of the loan programs. As a result, he said, the agency currently has more than 900 active investigations related to pandemic fraud.

That’s great, but a 2 percent recovery rate isn’t good enough. This debacle highlights the incompetence of the federal government when it comes to overseeing the massive spending programs favored by Washington politicians. At the very least, the Biden administration should make these prosecutions a high priority and insist that prosecutors throw the book at those who prey on American taxpayers during this unprecedented pandemic.