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Nearly $100 billion stolen from COVID-19 relief programs, Secret Service says

A minimum of nearly $100 billion has been stolen from government COVID-19 relief programs set up to help businesses and people who lost their jobs due to the pandemic, according to the U.S. Secret Service.

The estimate is based on Secret Service cases and data from the Labor Department and the Small Business Administration, said Roy Dotson, the agency's national pandemic fraud recovery coordinator, in an interview. The Secret Service didn't include COVID-19 fraud cases prosecuted by the Justice Department.

While roughly 3% of the $3.4 trillion in COVID-19 relief disbursed by the government, the amount stolen from pandemic benefits programs shows "the sheer size of the pot is enticing to the criminals," Dotson said.

Most of that figure comes from unemployment fraud. The Labor Department reported about $87 billion in unemployment benefits could have been paid improperly, with a significant portion attributable to fraud.

The Secret Service said it has seized more than $1.2 billion while investigating unemployment insurance and loan fraud and has returned more than $2.3 billion of fraudulently obtained funds by working with financial partners and states to reverse transactions. The Secret Service says it has more than 900 active criminal investigations into pandemic fraud, with cases in every state, and 100 people have been arrested so far.

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The Justice Department said last week that its fraud section had prosecuted over 150 defendants in more than 95 criminal cases and had seized over $75 million in cash proceeds derived from fraudulently obtained Paycheck Protection Program (PPP) funds, as well as numerous real estate properties and luxury items purchased with the proceeds.

PPP loans were offered until May as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to help small businesses financially manage the economic toll of the pandemic. Price, according to authorities, fraudulently submitted loan applications to two different lenders in an attempt to get more than $2.6 million. 

Rampant PPP fraud

Law enforcement early in the pandemic focused on fraud related to personal protective equipment, the Secret Service said. Authorities have now prioritized the exploitation of pandemic-related relief because the federal funding through the CARES Act attracted the attention of individuals and organized criminal networks worldwide.

A 30-year-old Texas man in November was sentenced to 9 years and 2 months in prison for fraudulently acquiring more than $1.6 million in funds through the government's PPP program, the Department of Justice said at the time. The government said Lee Price III had pleaded guilty in September to wire fraud and money laundering. 

Price was able to acquire more than $1.6 million by misrepresenting the number of employees and the payroll expenses for three different businesses. On one of the applications, according to the criminal complaint, Price said that one of the small businesses had 50 employees and an average monthly payroll of $375,000. 

Authorities said the business had no employees and no payroll, and that there was no indication the entity had ever hired anyone.

"Can we stop fraud? Will we? No, but I think we can definitely prosecute those that need to be prosecuted and we can do our best to recover as much fraudulent pandemic funds that we can," said Dotson, who is the Secret Service's assistant special agent in charge of the agency's field office in Jacksonville, Florida.

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