White House $1.6B COVID fraud plan gives federal watchdogs increased staffing

The Biden administration is asking Congress to give federal watchdogs and prosecutors more funding — and more time — to go after billions of dollars in COVI...

The Biden administration is asking Congress to give federal watchdogs and prosecutors more funding — and more time — to go after billions of dollars in COVID-19 spending lost to fraudsters.

The White House is seeking $1.6 billion to help federal law enforcement and agency inspectors general handle a growing caseload of pandemic-related fraud claims.

The spending request issued Thursday previews some of what the Biden administration will include in its fiscal 2024 budget proposal, which it expects to release next week. It also includes many of the recommendations that pandemic watchdogs have made to lawmakers.

The spending plan also follows up on President Joe Biden’s commitment, in his latest State of the Union address, to triple the number of strike forces tackling COVID-19 fraud at the Justice Department.

“The data shows that for every dollar we put into fighting fraud, the taxpayers get back at least 10 times as much,” Biden said last month.

The White House, in a fact sheet released Thursday, said pandemic relief spending bills totaling $5 trillion “were essential to mitigating the health and economic impact of this unprecedented pandemic,” but called on Congress to give the federal government more tools to recover money from fraudsters and prevent fraud from happening in the first place.

“There must be a bipartisan response to punish those who engaged in major and systemic fraud against the American people during a time of national emergency,” the White House wrote.

The administration is especially focused on programs that have been most susceptible to fraud, including the federal-state unemployment insurance program, Small Business Administration’s Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) programs.

The White House is looking calling on Congress to double the statute of limitations from five years to 10 years for unemployment insurance fraud cases. Biden signed legislation in September 2022 that gave IGs and prosecutors 10 years to go after fraud stemming from SBA’s PPP and EIDL programs.

The White House said the oversight and law enforcement communities need “both the time to prosecute the most serious and sophisticated cases and the resources to hire law enforcement and investigators for multi-year assignments.”

“Absent additional resources, the oversight community would be unable to investigate and prosecute the known caseload before the statute of limitations expires and to pursue sophisticated cases that will require more time and resources,” the White House wrote in its fact sheet.

PRAC Chairman Michael Horowitz recently recommended extending the statute of limitations for UI fraud to the House Oversight and Accountability Committee.

While much of the spending plan responds to ongoing fraud cases, the White House is also putting some proposed funds into preventing fraud from happening in the first place.

The White House proposal would give $400 million to the General Services Administration to develop an “Early Warning System,” to notify individuals and entities when their identity is being used to obtain a benefit and “stop potentially fraudulent transactions before they occur.”

Additional funds would help the Federal Trade Commission overhaul its website IdentityTheft.gov to become a “one-stop shop” for individuals to report identity crimes and receive personalized identity theft recovery assistance.

The Biden administration, in its FY 2024 budget request, is also giving states additional resources to modernize their unemployment insurance systems.

Former PRAC Deputy Executive Director Linda Miller, however, said the White House spending plan focuses mostly on addressing current incidents of fraud, but not as much on program weaknesses that lead to improper payments in the first place.

“That isn’t the job of the PRAC and the IGs. They’re not prevention entities, they’re recovery and prosecution entities,” Miller said in an interview.

While IGs and the PRAC can provide guidance to agencies on past fraud cases and help them understand where their risks might be, Miller said the work of preventing fraud is the responsibility of agency management.

“There’s very little money or direction given to the agencies that are actually needing to do the work of preventing fraud. It’s a lot of focus on the PRAC and the IGs, and I think that’s a missed opportunity,” she said.

The White House, at the request of PRAC leadership, is looking to expand on its data analytics platform, the Pandemic Analytics Center of Excellence (PACE).

The administration proposes creating a “permanent anti-fraud data and analytics capability analogous to the PACE for the Inspector General community to be positioned to oversee future disaster relief and emergencies.”

PACE under law is currently expected to sunset on Sept. 30, 2025.

While the White House is trying to preserve the oversight tools in PACE, Miller said those analytics capabilities would be better suited within the Treasury Department, which already has data sets like Do Not Pay that are meant to stop fraudulent payments before they go out the door.

“In my opinion, PACE needs to be created over in the management side. PACE can’t be used for prevention, it can only be used for recovery and for building cases for prosecution. And the important thing to do, going forward, is prevent fraud. We know it’s more effective, more cost-effective, it’s more efficient, to prevent, than to pay-and-chase,” Miller said.

The White House proposes giving $300 million to help IG offices and the PRAC staff up. The SBA and Labor Department IG offices would each get at least $100 million of these funds for the long-term hiring of investigators to work alongside the Justice Department.

“At current Small Business Administration (SBA) and DOL IG staff funding levels, it would take decades to prosecute the known caseload. This funding would ensure they can bring on the resources needed to recover billions of dollars in fraudulent payments,” the White House wrote.

The White House also proposed $300 million to more than triple the number of COVID-19 fraud “strike force” teams led by the Justice Department.

These teams are focused on criminal syndicates and major fraudulent actors. DOJ at the direction of its Chief Pandemic Fraud Prosecutor created three strike force teams in 2022. The Biden administration proposed expanding the number of strike force teams from three to 10.

The White House highlighted one recent case where a strike force team seized and recovered $286 million in stolen pandemic relief funds. The White House says investigators have already identified “several equally important cases.”

The White House is also calling on DOJ to hire 30-45 additional prosecutors to help staff up a forfeiture task force.

The administration is already laying the groundwork for the Labor Department’s IG office to detect when fraudsters use the same identity to improperly apply for unemployment insurance benefits in multiple states

States, as a condition of receiving funds in the American Rescue Plan to modernize their unemployment insurance systems, have agreed to give the Labor Department OIG access to data since the start of the pandemic.

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