Anti-waste and fraud controls were so lax on trillions of tax dollars being spent by federal and state government agencies on COVID-19 pandemic relief benefits that as much as half of those funds actually went to entities in China, Russia, and other U.S. adversarial nations, a congressional panel was told on Thursday.
"The nearly $5 trillion in government relief spending during the COVID-19 pandemic-much of which was disbursed as direct payments to citizens-created the perfect storm for fraud. A combination of inadequate oversight and internal controls, large-scale organized fraud rings, and antiquated data and information systems contributed to the massive, widespread fraud we saw during the pandemic," Ms. Miller told the subcommittee during her prepared testimony.
"Agencies were unprepared for the fraud they encountered largely due to a lack of attention on fraud risks. GAO issued its Framework for Managing Fraud Risks in Federal Programs in 2015, but regrettably, little attention was paid to establishing the preventative controls GAO called for to manage fraud risks," Ms. Miller testified.
AD. Mr. Schweikert said the oversight subcommittee "Has been tracking some crazy stories of unemployment insurance fraud that was converted to gift cards that was moved into buying cars, and the cars were shipped over to Africa as a way to wash the money." He added that the subcommittee has found evidence that foreign entities have stolen funds from the U.S. pandemic relief programs and channeled them into support of violent overseas activities.
Rebecca Shea, GAO's Director of Audits, Forensic Audits, and Investigative Services, told the hearing that her office has examined DOJ prosecutions of pandemic fraud and "So we have some information about foreign actors exploiting the various pandemic relief programs."
AD. "Federal agencies did not strategically manage fraud risks and were not adequately prepared to prevent fraud when the pandemic began. We recognize that eliminating all fraud and fraud risk is not a realistic goal. However, a variety of resources and requirements for fraud risk management were in place well before the pandemic. Had agencies already been strategically managing their fraud risks, they would have been better positioned to identify and respond to the heightened risks that emerged during the pandemic," Ms. Shea testified.
In response to a question from Rep. Greg Steube, Ms. Simon said, "Pandemic fraud is effectively a vertical for many criminal organizations, and it is an income source. There was a recent DOJ indictment in Michigan of a sprawling scheme that was funded by multiple kinds of pandemic fraud that had murder-for-hire as one of its services. So these are not run-of-the-mill, someone down the street claimed a few extra weeks they shouldn't have. It is serious organized crime rings."
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