SIGPR Quarterly Report to the United States Congress - March 31

Full text

Quarterly Report to the United States
Congress

January 1, 2021 - March 31, 2021

Office of the Special Inspector General for
Pandemic Recovery

MISSION
SIGPR strives to ensure that the American taxpayer gets the best return on
investment by promoting the economy, efficiency, effectiveness, and integrity of
CARES Act funds and programs.

VISION
To safeguard CARES Act funds and programs.

VALUES
Accountability
SIGPR will hold itself and others to the highest personal, professional, and ethical
standards.
Integrity
SIGPR will demonstrate the highest levels of professionalism, independence,
fairness, and quality in its work and operations.
Independence
SIGPR will maintain its independence by objectively following the facts and the
law.
Effectiveness
SIGPR will leverage strategic partnerships to protect funds and programs from
fraud and promote best practices in the management of program operations.
Fidelity to the Law
SIGPR will follow and apply the law fairly.

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

CONTENTS

INTRODUCTORY MESSAGE

Message from the Special Inspector General
2
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY

Special Update from the Special Inspector General
5
Statutory Authority
7
SIGPR in Action
7
SIGPR in Context: Jurisdictional Updates
8
SIGPR OFFICES AND ACTIVITIES

SIGPR Offices
14
Building Partnerships
18
SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

Direct Loans and Other Investments
21
Letters of Inquiry: Updates
35
CHALLENGES

Detection: Data Access and Verification
37
Enforcement: Reforming Wire Fraud Venue
39
Enforcement: Don’t Tip Off the Target
43
APPENDICES

Appendix A
48
Appendix B
49
Appendix C
51
Appendix D
54
Appendix E
59

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

1

INTRODUCTORY MESSAGE

INTRODUCTORY MESSAGE
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

2
Message from the Special Inspector General
Writing from Valley Forge 243 years ago today, George Washington asked Congress to confirm
Friedrich A. W. von Steuben to the brand-new “Office of Inspector General” for the Continental
Army.1 A Prussian immigrant and experienced soldier, von Steuben reduced waste of arms and
ammunition, imposed military discipline, and represented Washington before Congress.2
Congress later recognized von Steuben for promoting “a spirit of order and [e]conomy” in the
Army resulting in “immense savings” during the War of Independence.3
SIGPR hopes to emulate von Steuben’s dedication and tenacity. At SIGPR, that means we will
bring to justice anyone who has taken advantage of emergency relief and sought to wrongfully
profit from the pandemic.
Our mission is simple: make federal cases. All SIGPR investigative efforts are driving toward the
goal of proving violations of federal law that can be used to obtain convictions and civil
judgments. Our audits are aimed at improving the efficiency, effectiveness, and economy of
CARES Act programs. During this quarter, I am pleased to report that SIGPR has:
• Assisted the U.S. Attorney’s Office for the District of South Dakota in a recently
indicted case involving multiple fraud counts regarding pandemic relief programs;
• Uncovered and developed 35 new investigative leads relating to suspected fraud
under various CARES Act programs;
• Initiated new investigations in addition to continuing those previously reported;
• Compiled and developed a data set including more than 50 million rows of data,
covering more than $150 billion in CARES Act funding;
• Received and vetted 363 hotline complaints;
• Initiated new audit projects about the Direct Loan Program, the Main Street Lending
Program, and the CARES Act funds given to the U.S. Postal Service; and
• Continued work on our “multiple dipping” project, highlighted in previous reports.
None of this would have been achieved without the dedicated assistance of our partners in the
inspector general and law enforcement community. I am privileged and honored to work with
such professional and diligent partners, as well as the growing number of public servants at
SIGPR. Even as I am proud to report these achievements, I must also report that we will need to
discontinue many ongoing oversight efforts and transfer others, including criminal
investigations and leads. The jurisdictional issue raised in our reports since the very first report
has been resolved by the executive branch, limiting SIGPR’s oversight. We disagree that this is
what Congress intended when it created SIGPR just one year ago. To that end, this report

1 See Letter from George Washington, Commander in Chief of the Continental Army, to Henry Laurens, President of the
Continental Congress (Apr. 30, 1778) in 14 The Papers of George Washington, Revolutionary War Series, March 1778–30 April
1778 at 681–83 (David R. Hoth ed. 2004). Congress established the first “Office of Inspector General” the previous December.
See David A. Clary & Joseph W. A. Whitehorne, The Inspectors General of the United States Army 1777–1903 at 36 (“Army
Inspectors General”) (1987).
2 Clary & Whitehorne, Army Inspectors General, supra note 1, at 38–39, 47.
3 Continental Congress Report on the Claim of Baron von Steuben, 30 December 1782 in 3 The Papers of Alexander Hamilton,
1782–1786, at 231–33 (Harold C. Syrett ed. 1962).

INTRODUCTORY MESSAGE
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

3
includes a special update explaining what happened and calling upon Congress to give us more
oversight of the trillions of pandemic relief dollars.
In addition to seeking this congressional action, our report proposes legislation to make
inspector general criminal investigations more efficient and effective. We also suggest ways
Congress could enhance inspector general information access in any subsequent nationwide
relief programs. In main, Congress should:
• condition participation in any future emergency relief program on making records and
other information available to inspectors general;
• amend the federal wire fraud statute to permit venue in any district where the defendant
committed an act in furtherance of the fraud scheme; and
• align the confidentiality of criminal investigations into financial crime conducted by
inspectors general with grand jury investigations.
Congress established SIGPR during the height of our nation’s battle against the coronavirus
pandemic. We will continue to fight for the American people and to protect tax dollars from
fraud, wase, and abuse. This is a task of duty to our country, as well as of gratitude to those
inspectors general who faithfully served our nation during days of trial and turmoil. Whatever
challenges lay ahead, we will pursue our mission with resilience and honesty.

Respectfully,

Brian D. Miller
Special Inspector General
April 30, 2021

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

4

OFFICE OF THE SPECIAL
INSPECTOR GENERAL FOR
PANDEMIC RECOVERY

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

5
Special Update from the Special Inspector General
Last night, the Department of Justice’s Office of Legal Counsel (OLC) issued an opinion that
SIGPR’s jurisdiction is narrowly limited to programs established under title IV, subtitle A of the
CARES Act. According to the OLC opinion, Treasury’s direct loans and the Federal Reserve’s
lending programs fall within SIGPR’s compass, but the Coronavirus Relief Fund, Payroll Support
Program, and Paycheck Protection Program do not. The consequence is permanently reduced
oversight of these programs. Congress can pass legislation to clarify SIGPR’s mandate to provide
oversight of the Coronavirus Relief Fund, Payroll Support Program, and other pandemic-related
programs managed by the Secretary of the Treasury. We ask Congress to do so.
Over the last several months, SIGPR’s efforts to provide important oversight have been met
with resistance from the Department of the Treasury and the Treasury Inspector General (OIG)
due to their skepticism that SIGPR had jurisdiction to oversee the Coronavirus Relief Fund and
Payroll Support Program. Early on, SIGPR had worked cooperatively with Treasury to
understand Payroll Support Program functions and to obtain certain data relating to program
participants, even as the Treasury Office of General Counsel (OGC) maintained its position that
SIGPR lacked jurisdiction over that program. Later, SIGPR began discussing the possibility of
gaining direct access to Treasury’s Payroll Support database. In late January 2021, however,
Treasury OGC informed SIGPR that access to that database had not been approved by Treasury
OGC, despite Treasury OGC facilitating conversations as early as December 2020 between
SIGPR and the appropriate contacts about what that access would look like.
It is helpful to take a step back. Treasury OGC had asked SIGPR to channel all oversight requests
through their office and to seek data relating to the Coronavirus Relief Fund and Payroll
Support Program through Treasury OIG. SIGPR endeavored to accommodate those requests.
Unfortunately, Treasury OIG declined SIGPR’s overtures and refused to partner with SIGPR,
even in a task-force model. While Treasury was aware of this posture, it declined to give SIGPR
access to mission-critical data, repeatedly responding that SIGPR should pursue such requests
with Treasury OIG.
Matters came to a head in late December and early January, when SIGPR asked Treasury OIG to
join an evaluation of the Coronavirus Relief Fund. Treasury OIG declined and instead formally
requested Treasury OGC issue a legal opinion that Treasury OIG, not SIGPR, had jurisdiction
over that program as well as the Payroll Support Program.
All special inspectors general share concurrent jurisdiction with their counterparts and must
partner with agency inspectors general to achieve their respective statutory oversight missions.
There is nothing more frustrating to achieving these missions than turf battles. Hardworking
taxpayers are far better served when government resources are devoted to the public. Yet one
agency cannot force another to cooperate, and public servants must be faithful to the law.
SIGPR thus had no realistic option other than to move the matter to OLC’s review—rather than
Treasury’s—to preserve SIGPR’s independence and avoid the appearance of impropriety.
Treasury should not conclusively determine jurisdiction over programs in which it has a vested
interest, and, to its great credit, Treasury OGC did not endeavor to do so. In fact, it agreed to an

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

6
OLC review. If anything, Treasury OIG’s decision to ask Treasury OGC to determine SIGPR’s
jurisdiction compromised inspector general independence. If the dispute had to be resolved in
the executive branch, it had to be done so by a disinterested party with the authority to issue a
binding answer on all parties, all of whom would abide by OLC’s decision.
On March 17, as OLC was reviewing and finalizing its opinion, it invited additional comments on
a question that had not been addressed by the parties. The White House’s Office of
Management and Budget (OMB) then also formally weighed in against SIGPR’s jurisdiction. OLC
ultimately decided what it described as a “close” question against SIGPR,4  based in large part
on the submissions it received in response to its March 17 question, including from OMB. OLC’s
opinion limiting SIGPR’s jurisdiction comes despite the fact that, in OLC’s words, “prior opinions
of this Office and of the Comptroller General, relying upon section 3 of the CARES Act or
identical express-reference provisions in consolidated appropriations statutes, have described
certain references to ‘this Act’ as meaning the division within which the reference
appeared”5—that is, the interpretation SIGPR advocated.
Despite these challenges, I want to recognize the hard work and perseverance of my staff, who
have continued marching forward this the past quarter to identify and redress fraud despite an
array of distractions and roadblocks. None of the accomplishments highlighted in this report
would have been achieved without my staff and the dedicated assistance of other public
servants in the inspector general and law enforcement community willing to embrace the
possibilities of partnership. Unfortunately, many of these promising developments, including
criminal investigations and leads, will now need to be closed or transferred.
Five days from today will mark the first anniversary of my confirmation hearing before the U.S.
Senate, held on May 5, 2020. My hearing occurred on the first day of Senate business since the
Senate had shut down for COVID-19. It was a difficult time, and Congress had been working
fervently to provide the relief programs it believed the nation needed. Part of the expectation
was that SIGPR would play a crucial role in overseeing many of those programs, and that
expectation was at the forefront of my confirmation hearing. Senator Sherrod Brown noted, for
example, that the magnitude of the role is “why I fought for this Office of the Special Inspector
General for Pandemic Re[covery].” Senator Brown also asked directly if I would view my “job
expansively,” and I told him, “Absolutely.” I also explained to Senator Mike Rounds that the
CARES Act was “such an important program and it is so important that this money gets to the
right people that I think we should be willing to look at how we can improve it in real time.” I
promised to be thorough and truthful in alerting Congress “if we find out that things are not
working well in a particular area” and expressed my hope that, in such a situation, “the Senate
should be willing to change it so that it can work better.”
One year later, SIGPR’s jurisdiction has come to be viewed narrowly, not expansively, and my
only conclusion is that “things are not working well.” One of SIGPR’s core values is fidelity to
law, and SIGPR will faithfully execute its mission as it is now defined by OLC. The result,

4 See Memorandum for Laurie S. Schaffer, Acting General Counsel, Department of the Treasury, and Brian D. Miller, Special
Inspector General for Pandemic Recovery, from Daniel L. Koffsky, Deputy Assistant Attorney General, Office of Legal Counsel 3
(Apr. 29, 2021).
5 Id. at 7.

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

7
however, is reduced oversight over the Payroll Support Program and the Coronavirus Relief
Fund, which continue in expanded form under new legislation.
While OLC’s decision ensures the Executive Branch the greatest amount of flexibility, it does not
ensure the robust oversight that Congress intended. But that decision can be overturned by
legislation that ensures greater oversight rather than reduced oversight. Why did Congress fight
for SIGPR less than a year ago? Is it true, as noted by Public Citizen, that the “temperature has
cooled on oversight” just when we need it most?6
It is up to Congress to decide.
Statutory Authority
Section 4018 of The Coronavirus Aid, Relief, and Economic Security (CARES) Act established The
Office of the Special Inspector General for Pandemic Recovery (SIGPR).7 As with other
inspectors general, the CARES Act gives SIGPR the powers and duties contained in section 6 of
the Inspector General Act of 1978, including the power to obtain documents and other
materials relating to the programs and operations within its oversight jurisdiction.8 The CARES
Act vests SIGPR with authority to conduct audits and investigations into (1) “the making,
purchase, management, and sale of loans, loan guarantees, and other investments made by the
Secretary of the Treasury under any program established by the Secretary under this Act” and
(2) “the management by the Secretary of any program established under this Act.”9 The CARES
Act also requires SIGPR to summarize its activities in a report to Congress each calendar
quarter.10
SIGPR in Action
SIGPR continues to produce results through its audit and investigative work. Specifically, it has:
• Uncovered and developed 35 new investigative leads for referral to law enforcement
partners relating to suspected fraud under various CARES Act programs;
• Initiated three new investigations, while continuing to investigate three others,
including:
o Four investigations with U.S. Attorney’s Offices;
o One investigation with the Department of Justice Fraud Section;
• Received and vetted 363 hotline complaints during this quarter, referring 14 to
other agencies; and
• Initiated three new projects about the Direct Loan Program, the Main Street Lending
Program, and the CARES Act funds given to the U.S. Postal Service, while continuing

6 Yeganeh Torbati & Erica Werner, A year after passage of Cares Act, watchdogs struggle to oversee trillions in coronavirus
spending, Wash. Post (Apr. 4, 2021), https://www.washingtonpost.com/business/2021/04/04/cares-act-oversight-spending/.
7 Pub. L. No. 116-136, § 4018, 134 Stat. 281, 482 (2020), codified at 15 U.S.C. § 9053.
8 Inspector General Act of 1978, Pub. L. 95-452 § 1–13, 92 Stat. 1101, codified as amended at 5 U.S.C. app. 3.
9 CARES Act § 4018(c).
10 Id. § 4018(f).

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

8
to develop “risk scores” for datasets and identify potential leads for further review
and referrals.
SIGPR in Context: Jurisdictional Updates
Executive Branch Jurisdictional Determination
“The most effective weapon against crime is cooperation.” These words, inscribed on the FBI
Headquarters courtyard façade, serve as a reminder that only criminals benefit from turf wars
within law enforcement. Driven by this ethos, SIGPR has consistently sought to avoid
jurisdictional standoffs by taking a task-force approach to pandemic oversight.
In its August 2020 Initial Report to Congress and September 2020 Quarterly Report to Congress,
SIGPR presented its best, good-faith legal analysis of its jurisdiction. That analysis was necessary
for several reasons. First, SIGPR was a new special inspector general’s office whose duties are
defined by the CARES Act. Second, SIGPR was not the only oversight entity Congress created
under the CARES Act, so an assessment of SIGPR’s jurisdiction was necessary for both
coordination and deconfliction—two sides of the same coin. SIGPR thus needed to consider
carefully its place in a complex oversight architecture to give notice of its views and ensure its
efforts would be maximally effective. Relatedly, SIGPR’s analysis highlighted potential
ambiguities in the CARES Act’s jurisdictional provisions and thus provided an opportunity for
Congress to legislate further on the structure of pandemic-recovery oversight. Notably,
Congress never legislatively corrected SIGPR’s interpretation of its own jurisdiction.
SIGPR qualified its analysis as “our best reading of the text,” allowing “that others may
disagree.”11 SIGPR received a great deal of feedback on that analysis—much of it positive, some
of it critical. In particular, the Department of the Treasury’s Office of Inspector General (OIG)
disagreed with SIGPR’s position that SIGPR has jurisdiction over all Treasury programs in
division A of the CARES Act. Instead, Treasury OIG opined that SIGPR was narrowly limited to
overseeing those programs in division A, title IV, subtitle A—Treasury’s direct loans and its
investments in Federal Reserve facilities. The Department of the Treasury’s Office of General
Counsel (OGC) shared Treasury OIG’s view, despite elsewhere interpreting section 3 of the
CARES Act in a manner not inconsistent with the approach undergirding SIGPR’s view of its
jurisdiction.12

11 SIGPR, Initial Report to Congress at 2 (Aug. 2020).
12 See Memorandum from Treasury OIG to the Dep’t of the Treasury (May 27, 2020), attach. 1 at 3–4 (letter from Dep’t of the
Treasury Office of Gen. Counsel to Treasury OIG (May 7, 2020)), oversight.gov/sites/default/files/oig-reports/OIG-20-036.pdf.
Treasury has elsewhere issued guidance equating the phrase “this Act” with the entire “CARES Act,” not just the nearest short
title. CARES Act section 4002, located in the “Coronavirus Economic Stabilization Act of 2020” subtitle, limits Treasury loans and
loan guarantees to businesses that have not “otherwise received adequate economic relief . . . under this Act,” which Treasury
interpreted to mean “under the CARES Act.” See Q&A: Loans to Air Carriers and Eligible Businesses and National Security
Businesses (April 10, 2020).

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

9
Treasury OIG, OGC, and SIGPR initially agreed to disagree,13 but ultimately Treasury OIG
decided that its view of SIGPR’s jurisdiction did not permit cooperation on matters related to
the Payroll Support Program or Coronavirus Relief Fund. Treasury OIG’s disagreement took on
practical significance in late December 2020, when SIGPR sought to open an evaluation into the
Coronavirus Relief Fund. SIGPR invited Treasury OIG’s Office of Audits to participate in the
evaluation under the direction of SIGPR’s Office of Audits. Treasury OIG declined the offer,
citing legal and coordination concerns. Then, on December 31, 2020, Treasury OIG submitted a
legal memorandum to Treasury OGC, asserting that SIGPR’s jurisdiction was confined to
programs under title IV, subtitle A of the CARES Act and asking Treasury OGC to opine on
SIGPR’s jurisdiction to oversee other Treasury programs. SIGPR sent Treasury OIG and Treasury
OGC a responsive memorandum on January 7, 2021, with this preface from Special Inspector
General Miller: “I felt obligated to present a memorandum justifying SIGPR’s jurisdiction, but I
really want to work together with Treasury OIG. . . . I am used to taking a ‘task force approach.’
I would prefer to take that approach here.” Special Inspector General Miller also stated that, if
formal resolution was unavoidable, the Department of Justice’s Office of Legal Counsel (OLC),
not Treasury OGC, was the appropriate forum.
SIGPR again reached out to Treasury OIG a few days later to discuss partnering on the
Coronavirus Relief Fund, but Treasury OIG did not respond to SIGPR’s request. Consequently,
and because Treasury OIG had raised appropriations concerns with SIGPR’s continued work,
SIGPR requested OLC’s opinion on January 14. The next day, Treasury OIG raised SIGPR’s efforts
to provide oversight with the Government Accountability Office (GAO), seeking an opinion on
whether SIGPR’s assertion of jurisdiction presented an Anti-Deficiency Act issue. Ten days later,
Treasury OIG raised SIGPR’s efforts to provide oversight with the Council of Inspectors General
on Integrity and Efficiency (CIGIE), asking for CIGIE mediation in the absence of a legislative
solution from Congress. But CIGIE’s authority under the Inspector General Act is limited to
mediating disputes between offices with concurrent jurisdiction; it has no authority to
determine jurisdiction in the first instance.14 On February 5, Treasury’s OGC stated that it had
no objection to OLC’s review.
SIGPR’s modus operandi since its inception has been to partner with all relevant agencies,
inspectors general, and law enforcement to facilitate meaningful oversight and to protect
taxpayer dollars. For that reason, every one of SIGPR’s reports to Congress to date has
highlighted SIGPR’s partnerships. Unfortunately, jurisdictional issues have caused difficulties in
SIGPR’s partnerships with Treasury OIG and Treasury itself.
Treasury OGC’s preference from the start has been that SIGPR channel all its oversight requests
through Treasury OGC first. But even after it knew that Treasury OIG had refused to cooperate
with SIGPR on the contested programs, Treasury OGC directed SIGPR to consult with and obtain

13 In one instance in the fall, with a disclaimer about jurisdiction, Treasury OGC did provide SIGPR data relating to the Payroll
Support Program in response to a narrow request. SIGPR had also been working cooperatively with Treasury to gain access to
Treasury’s Payroll Support database, but Treasury OGC later informed SIGPR that access to the database had not been
approved by Treasury OGC and was never approved thereafter.
14 See 5 U.S.C. app. 3 § 11(c)(1)(H) (authorizing CIGIE to “receive, review, and mediate any disputes submitted in writing to the
Council by an Office of Inspector General regarding an audit, investigation, inspection, evaluation, or project that involves the
jurisdiction of more than one Office of Inspector General”).

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

10
information from Treasury OIG on the Coronavirus Relief Fund and the Payroll Support
Program. And after SIGPR was forced to seek an opinion from OLC, Treasury OGC formally took
the position that, until the jurisdictional issue was resolved, Treasury would answer only
general questions about the Payroll Support Program and Coronavirus Relief Fund but would
not give SIGPR access to data. Of course, it is data, not general information, that is needed to
identify and redress fraud perpetrated in those programs.15 Treasury also declined SIGPR’s
invitation to begin an audit of the Coronavirus Relief Fund until the jurisdictional issue was
resolved.
In sum, as it relates to SIGPR’s efforts to protect the Coronavirus Relief Fund and the Payroll
Support Program, Treasury OGC directed SIGPR to Treasury OIG and Treasury OIG directed
SIGPR to stand down. As a result, despite allowing for the best of intentions, SIGPR faced both
an agency and an inspector general unwilling to partner on these programs.
Absent congressional action, resolution by OLC was the only way forward, for several reasons.
First, the questions posed to CIGIE and GAO were premature. As mentioned, CIGIE is statutorily
authorized to mediate disputes regarding overlapping jurisdiction between inspectors general
but not to determine jurisdiction in the first instance. Similarly, GAO would not be in a position
to address the appropriations question before OLC rendered the jurisdictional decision. And, as
a practical matter, all parties agreed to abide by OLC’s jurisdictional decision.
Second, SIGPR sought OLC’s review rather than Treasury OGC’s to preserve inspector general
independence. SIGPR works cooperatively, to the extent permitted, with Treasury and its Office
of General Counsel—but SIGPR and Treasury OIG are also both charged with identifying waste,
fraud, and abuse in Treasury’s programs. There are unavoidable tensions and incentives in that
relationship. Thus, it would have been suboptimal for Treasury to determine conclusively
SIGPR’s jurisdiction over programs Treasury itself administers. Thus, Treasury OIG’s decision to
ask Treasury OGC to determine SIGPR’s jurisdiction compromised inspector general
independence. If the dispute were to be resolved in the executive branch, it needed to be
adjudicated by a disinterested party with the institutional authority to provide a binding
answer.
Third, there is a centuries-long bipartisan tradition of the Department of Justice providing legal
advice for the executive branch, including on matters involving inspectors general.16 Congress
codified that practice in 1966,17 and President Carter in 1979 issued an executive order
encouraging agencies to submit their legal disputes, expressly including jurisdictional disputes,
to the Department of Justice.18 Since OLC’s establishment within the Department of Justice

15 In April, Special Inspector General Miller and Treasury’s Acting General Counsel Laurie Schaffer exchanged letters concerning
the status of information sharing, provided in Appendix D.
16 See Judiciary Act of 1789, § 35, 1 Stat. 73, 93; see, e.g., Case of Nelson H. Davis, 14 U.S. Op. Att’y Gen. 117 (1872)
(interpreting a federal statute to determine the War Department Inspector General’s rank).
17 See Pub. L. No. 89-554, § 4(c), 80 Stat. 378, 611–21 (1966) codified as amended at 28 U.S.C. §§ 501–530D, including 28 U.S.C.
§ 512.
18 Exec. Order 12146 § 1-401, 44 Fed. Reg. 42657 (July 18, 1979).

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

11
over four decades ago, and in presidential administrations since then, OLC has been relied upon
to resolve legal questions concerning agencies and their inspectors general.19
Fourth, SIGPR believed OLC’s advice would be helpful because the Justice Department would
ultimately have to defend SIGPR subpoenas if they were challenged on jurisdictional grounds.
Thus, it made sense to ascertain the Department of Justice’s views in advance of such an event.
Accordingly, SIGPR provided OLC with two detailed memoranda explaining its legal position.
The first memorandum, initially prepared for Treasury OGC, offered SIGPR’s longstanding
arguments for its jurisdictional conclusions. That memorandum was attached to the January 14
letter to OLC requesting an opinion.20 In March, at OLC’s request, all parties, including the
Office of Management and Budget within the Executive Office of the President, submitted their
views to OLC on the correct reading of section 3 of the CARES Act. SIGPR’s interpretation, laid
out in a second memorandum, provides its most fulsome justification for its jurisdiction over
the disputed programs.21 Both SIGPR memoranda are provided in Appendix E.
OLC issued a written opinion on April 29, advising that, “although the question is close, the
phrase ‘this Act’ in section 4018 refers to” the Coronavirus Economic Stabilization Act of 2020
(CESA), the short title for CARES Act title IV, subtitle A.22 They add, “Section 4018 accordingly
limits the SIGPR’s jurisdiction to oversight of programs established under the CESA.”23
Therefore, OLC’s opinion is that SIGPR does not have legal authority to conduct audits or
investigations into the Coronavirus Relief Fund, the Payroll Support Program, or the Paycheck
Protection Program. Under this view, SIGPR’s oversight is narrowly cabined to CARES Act title
IV, subtitle A.
Congress can clarify SIGPR’s jurisdiction through legislation to not only ensure SIGPR is able to
serve as an effective oversight partner with respect to the Coronavirus Relief Fund, the Payroll
Support Program, and the Paycheck Protection Program, but also to ensure SIGPR has access to
the data and information needed to conduct such oversight.

19 See, e.g., Access of Department of Justice Inspector General to Certain Information Protected from Disclosure by Statute, 39
Op. O.L.C. 12 (2015); Authority of the Former Inspector General for the Federal Housing Finance Board to Act as Inspector
General for the Federal Housing Finance Agency, 33 Op. O.L.C. 318 (2009); Application of the Appointments Clause to a
Statutory Provision Concerning the Inspector General Position at the Chemical Safety and Hazard Investigation Board, 30 Op.
O.L.C. 92 (2006); Legality of Fixed-Price Intergovernmental Agreements for Detention Services, 26 Op. O.L.C. 235 (2002);
Investigative Authority Vested in the Inspector General of the Department of Transportation, 13 Op. O.L.C. 377 (1989);
Department of Energy—Appointment of Interim Officers—Department of Energy Organization Act (42 U.S.C. § 7342), 2 Op.
O.L.C. 405 (1978).
20 See Memorandum for the General Counsel, Department of the Treasury, from Brian D. Miller, Special Inspector General for
Pandemic Recovery, Re: Response to the Treasury OIG’s Request for a Decision Establishing Exclusive Jurisdiction: If Intervention
is Needed to Resolve SIGPR’s Invitation to Jointly Work Programs with Concurrent Jurisdiction Under a Task Force Model, the
Office of Legal Counsel Should Decide Jurisdiction (Jan. 7, 2021), https://www.sigpr.gov/sites/sigpr/files/2021-04/sigpr-memo-
to-treasury-general-counsel-jan-7-2021.pdf.
21 See Memorandum from the Office of the Special Inspector General for Pandemic Recovery, Re: Response to OLC’s Inquiry
Regarding SIGPR’s Jurisdiction (Mar. 26, 2021), https://www.sigpr.gov/sites/sigpr/files/2021-04/sigpr-letter-to-doj-office-of-
legal-counsel-mar-26-2021.pdf.
22 See Memorandum for Laurie S. Schaffer, Acting General Counsel Department of the Treasury, and Brian D. Miller, Special
Inspector General for Pandemic Recovery, from Daniel L. Koffsky, Deputy Assistant Attorney General, Office of Legal Counsel 3
(Apr. 29, 2021).
23 Id.

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

12
SIGPR therefore respectfully asks that Congress consider legislation granting SIGPR jurisdiction
over all pandemic-related federal programs managed by the Treasury Department.
New Legislation
Congress has continued to provide pandemic relief through new programs and spending in the
Consolidated Appropriations Act, 2021 (CAA),24 and the American Rescue Plan Act of 2021
(ARP).25 The CAA rescinded the remaining funding for the loan, loan guarantee, and investment
programs established under division A, title IV, subtitle A of the CARES Act.26 Thus these
programs are no longer accepting new applicants.

The CAA maintained SIGPR’s funding and instructed SIGPR to use that funding to continue its
duties under the CARES Act to monitor those programs.27 Neither the CAA nor the ARP added
any new programs to SIGPR’s oversight portfolio, although it amended the following programs:
• The CAA extended the Coronavirus Relief Fund’s spending dates, permitting
governments to cover costs through the end of 2021.28
• The CAA relieved the U.S. Postal Service of its obligation to repay any funds
borrowed under the CARES Act.29
• The CAA established a new program, the “Air Transportation Payroll Support
Program.”
• The ARP established a new program, “Coronavirus State and Local Fiscal Recovery
Funds,” which authorizes the Treasury Secretary to allocate about $350 billion to state,
territorial, Tribal, and local governments.30

24 Pub. L. No. 116-260 (2020).
25 Pub. L. No. 117-2 (2021).
26 See CAA, div. N § 1003.
27 See id. § 1003(a)(2)(C)(ii).
28 See id. § 1001.
29 See id. § 801.
30 See ARP § 9901.

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

13

SIGPR OFFICES AND ACTIVITIES

SIGPR OFFICES AND ACTIVITIES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

14
SIGPR Offices
SIGPR employs proactive efforts to prevent, detect, and investigate fraud, waste, and abuse
involving CARES Act funds and programs within SIGPR’s jurisdiction. Below is a summary of
SIGPR’s activities during the reporting period:
• The Office of Audits, started three new projects, sent a survey to all 35 Direct Loan
Program borrowers, and continued to analyze large volumes of data for audit and
evaluative work of CARES Act programs;
• The Office of Investigations received and vetted 363 hotline tips, and opened three
new investigations while continuing work on three others; and
• SIGPR developed 35 leads to be referred to agencies with jurisdiction.
Audits
The Office of Audits conducts audits and evaluations of loans, loan guarantees, and other
investments made by the U.S. Department of the Treasury under programs within SIGPR’s
jurisdiction under the CARES Act.31
Engagements
The Office of Audits has started work on the following projects:
Audit of the Direct Loan Program. Sections 4003(b)(1)–(3) of the CARES Act authorized
Treasury to provide loans, loan guarantees, and other investments to passenger air carriers and
related businesses, cargo air carriers, and businesses critical to maintaining national security. To
assess the program’s effectiveness, the Office of Audits sent a survey to all 35 Direct Loan
Program borrowers. Responses to the survey should provide information necessary to make
recommendations for any future programs of a similar nature. Furthermore, the office will
analyze the survey responses for any information that may warrant future oversight work.
Survey responses are due by the end of April.
Evaluation of the Main Street Lending Program (MSLP). The Office of Audits is also preparing
to issue surveys to MSLP lenders and borrowers. The Federal Reserve established the MSLP to
support lending to small and mid-sized businesses. With CARES Act funding, the Treasury
Department originally contributed $75 billion in equity to the MSLP, of which more than $17.4
billion was issued as loans to the program’s 1,830 borrowers. The results of the surveys will be
used to help determine (1) the overall ease and efficiency that lenders and borrowers
experienced with the administration of the MSLP and (2) compliance with the requirements set
forth in the CARES Act. The Office of Audits expects to receive feedback that will allow it to
reach sound conclusions and guide future audit work.
Audit of CARES Act Funding Appropriated to the U.S. Postal Service. The Office of Audits
notified Treasury about its evaluation of CARES Act funding for a Treasury loan to the U.S.
Postal Service. In April, the Office of Audits held entrance conferences with Treasury and the

31 CARES Act § 4018(c)(1).

SIGPR OFFICES AND ACTIVITIES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

15
Postal Service to discuss this evaluation. As part of the CARES Act, later amended by the
Consolidated Appropriations Act, 2021, the Postal Service can receive up to $10 billion in
funding from Treasury for operating expenses. The purpose of this evaluation was to determine
if the Postal Service has a system in place to identify COVID-19 related expenses and to track its
use of the additional funding in compliance with the CARES Act requirements. SIGPR’s
evaluation cannot continue absent legislation due to the jurisdictional challenge discussed
above.
Evaluation of State and Local Governments’ Use of Coronavirus Relief Fund. On December 28,
2020, the Office of Audits notified Treasury’s Office of General Counsel (OGC) and Treasury OIG
of its evaluation of state and local governments’ use of the Coronavirus Relief Fund. This
evaluation had been pending because of the jurisdictional challenges discussed above and
cannot continue without congressional action.
Data Analysis
The Office of Audits continues to identify and merge relevant datasets, populating a database
system with CARES Act funding and recipient information. These datasets were derived from
several programs, including the MSLP, the Coronavirus Relief Fund, section 4003 loans, and
other relevant federal data sources containing both sensitive and public information. The
supporting datasets, as compiled and developed by the Office of Audits, has expanded to more
than 50 million rows of data, covering billions of dollars in CARES Act funding.
The Office of Audits has developed “risk scores” to identify areas of potential vulnerabilities and
financial risk in CARES Act programs. Thus far, the Office of Audits had developed risk-score
metrics for the MSLP. It is working to complete a risk-score metric for section 4003 loans.
SIGPR will continue these efforts within its newly defined jurisdictional boundaries.
In addition, the Office of Audits has collaborated with other SIGPR offices to develop risk
metrics for their respective offices.
Ongoing Activities
The Office of Audits is developing an audit plan that will identify high priority projects. These
projects will assess relevant financial assistance programs under the CARES Act.
Currently, the Office of Audits is reviewing numerous alleged instances of abuse, as reported
both publicly and through confidential sources. In accordance with the OLC decision
constricting SIGPR’s jurisdiction, it will continue these efforts, but will also refer reported
allegations on which it had been working to appropriate entities.
The Office of Audits continues in close partnership with the Pandemic Response Accountability
Committee (PRAC), the Treasury’s Office of Fiscal Systems, the Treasury’s Office of the Chief
Information Officer, other inspectors general, and other federal government entities.

SIGPR OFFICES AND ACTIVITIES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

16
Policy and Procedure Development
The Office of Audits has issued policies and procedures to ensure its audits, evaluations, and
other services comply with Generally Accepted Government Auditing Standards (GAGAS) and
CIGIE Quality Standards for Inspection and Evaluation, as appropriate.
Additionally, the Office of Audits has developed a curriculum of mandatory continuing
professional education courses. The Office of Audits also issued its writing and style guide,
which establishes the standards to be followed by SIGPR audit teams when drafting and issuing
audit reports.
Staffing and Recruitment Efforts
The Office of Audits is continuing to recruit and build a diverse organization. As of this quarter,
it is staffed with ten professional staff members out of an authorized total of twenty. The Office
of Audits consists of an Assistant Inspector General for Auditing, a Deputy Assistant Inspector
General for Auditing, a Senior Audit Advisor, one Senior Quality Control Review & Assurance
Auditor, two Senior Auditors, two Auditors, a Program Analyst, and a Senior Advisor.
Investigations
The Office of Investigations conducts criminal and civil investigations regarding allegations of
fraud, abuse, or misconduct involving CARES Act funds and programs within SIGPR’s
jurisdiction. In addition, the office manages SIGPR’s hotline, which serves as a primary avenue
for reporting fraud, waste, abuse, or misconduct.
To effectively carry out its responsibilities, the Office of Investigations routinely collaborates
with the rest of the SIGPR team, including auditors, analysts, and attorneys, to vet complaints,
develop proactive initiatives, and pursue investigations.
Investigative Activities
During this reporting period, the office continued its investigative and proactive efforts to
uncover and vigorously pursue wrongdoing related to CARES Act funding under SIGPR’s
authority. The following table highlights SIGPR’s investigative activities for this reporting period.

SIGPR Investigative Activity—January 1, 2021 through March 31, 2021
Hotline Complaints Received
363
Referrals to Other Agencies
14

Preliminary Inquiries

Opened
4
Closed (or Converted to Full Investigation)
3
Ongoing
2
Investigations

Opened
3
Closed
0
Ongoing
6

SIGPR OFFICES AND ACTIVITIES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

17
As indicated in the table above, three preliminary inquiries were opened and then converted
into full investigations during this quarter. In furtherance of our investigations, the Office of
Investigations has partnered with U.S. Attorney’s Offices (USAOs), the Department of Justice
(DOJ), and other federal law enforcement partners. In addition, all ongoing investigations focus
on SIGPR’s oversight priorities under division A of the CARES Act.
Outreach Efforts
The Office of Investigations also continued its coalition building efforts. The office participates
in several working groups throughout the federal law enforcement and inspector general
communities, including the PRAC’s investigation subcommittees.
Policy and Procedures
The Office of Investigations worked to complete its policies and procedures related to carrying
out SIGPR’s investigative mission. The established policies and procedures ensure our
compliance with SIGPR’s authorities and responsibilities under section 4018 of the CARES Act
and the Inspector General Act of 1978 (as amended); CIGIE Quality Standards for Investigations;
Attorney General guidelines, including Attorney General Guidelines for Offices of Inspector
General with Statutory Law Enforcement Authority; and other applicable laws, rules, and
regulations.
Staffing and Recruitment Efforts

The Office of Investigations continues to proactively recruit staff. During this quarter, the office
added a new Assistant Inspector General for Investigations, a Deputy Assistant Inspector
General for Investigations, a senior special agent, and an investigative research specialist. These
four individuals bring to SIGPR more than 80 years of law enforcement experience, including
more than 40 years in the federal inspector general community.

The office plans to hire 10 additional investigative positions, primarily special agents, bringing
the Office of Investigations to a staff of 15. These positions are critical for SIGPR to aggressively
pursue complex investigations pertaining to CARES Act programs and funds.
Administration
The Office of Administration provides comprehensive administrative support to all components
within SIGPR.
Budget Update
Congress appropriated $25 million to SIGPR for the entirety of SIGPR’s five-year term, which
essentially gives SIGPR $5 million per year.32 SIGPR expects this funding to sustain operations
through Fiscal Year (FY) 2022. To fund ongoing operations beyond FY 2021, SIGPR has asked for
a $25 million annual appropriation. As of the date of this report, SIGPR is not in the annual
appropriations cycle.

32 See CARES Act § 4018(g)(1)–(2).

SIGPR OFFICES AND ACTIVITIES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

18
Facilities and Space Management
On March 1, 2021, SIGPR executed an occupancy agreement with the General Services
Administration (GSA) to assume the role of primary tenant at its office space in Alexandria, VA.
Prior to this, SIGPR subleased space from the U.S. Patent and Trademark Office. Acquisition of
this space has allowed SIGPR to continue its mission without invoking a costly and disruptive
office move and will provide the space necessary for SIGPR to accommodate its projected full-
time equivalent employees (FTEs).
Recruitment and Staffing
SIGPR remains committed to recruiting highly qualified and talented staff with the knowledge,
skills, and abilities to support its critical oversight mission. As of this quarter, SIGPR increased
the number of FTEs to 40. By September 30, 2021, SIGPR projects to have 66 FTEs.

Building Partnerships
SIGPR continues to build partnerships to strategically leverage resources and capabilities in
support of lead-development, audits, investigations, and case referrals.
Leads, Audits, Investigations, and Prosecutions
SIGPR established new relationships and strengthened existing ones with USAOs, DOJ, and law
enforcement agencies for lead-development, audits, investigations, and prosecutions. SIGPR
continued building upon its formal partnerships with the Financial Crimes Enforcement
Network (FinCEN) and the Securities and Exchange Commission (SEC).

SIGPR is especially grateful to the DOJ Fraud Section, led by Daniel Kahn, for its leadership in
working with SIGPR to ferret out large-scale fraud, including fraudulent double dippers of
CARES Act programs, such as the MSLP, Paycheck Protection Program (PPP) and Economic
Injury Disaster Loans (EIDL), despite a particularly challenging environment. Through our
combined efforts, we plan to find fraud before fraudsters default on taxpayer-funded CARES
Act loans.
As noted in past reports, FinCEN and the Federal Reserve OIG have been and continue to be
critical partners to SIGPR. In addition, the U.S. Secret Service, Federal Deposit Insurance
Corporation (FDIC) OIG, Federal Bureau of Investigation, and the Department of Transportation
(DOT) OIG also deserve commendation. These dedicated public officials have moved lead-
development and investigations forward, and even if the details of their efforts cannot yet be
made public, they should be noted.
Additionally, during this quarter, SIGPR joined forces with the DOJ National Unemployment
Insurance Fraud Task Force and the Department of Labor OIG to combine law enforcement
efforts and ferret out fraudulent double-dipping in CARES Act programs.

SIGPR OFFICES AND ACTIVITIES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

19
SIGPR also worked with the new Coronavirus Fraud/White Collar Crime Coordinator from the
Executive Office of U.S. Attorneys (EOUSA) and its members to assist with CARES Act
prosecutions. SIGPR is grateful to EOUSA for providing an opportunity for it to offer a webinar
in May 2021 to the Assistant U.S. Attorneys (AUSAs) in these working groups on how SIGPR
might augment their already tremendous efforts through SIGPR’s expertise on CARES Act
programs and other resources.
SIGPR’s agreement with the Federal Trade Commission to access its Consumer Sentinel
Network and its relationship with the Fusion Center have also yielded critical investigative
leads.
SIGPR is thankful for all these relationships. And they continue to produce results:
• SIGPR is working with four USAOs on investigations and prosecutions and one
investigation with the DOJ Fraud Section. Most of these were generated by SIGPR’s
proactive efforts.
• SIGPR is also providing assistance to the U.S. Attorney’s Office for the District of South
Dakota in a recently indicted case involving multiple fraud counts regarding pandemic
relief programs, including the MSLP. SIGPR offers a special thanks to the extremely
dedicated AUSA and agents there for their graciousness and diligence in pursuing
justice.
• At least four of SIGPR’s internally developed leads for referral are now under
investigation by other agencies, including one involving almost $28 million dollars and
98 subjects.
• SIGPR developed 35 leads this quarter for referral.
• SIGPR’s Office of Audits is working with the U.S. Postal Service OIG on an evaluation of a
Treasury-U.S. Postal Service CARES Act program and began developing a partnership
with the Department of Defense OIG to assess loans that were considered critical to
national security interests.
Formative and Enduring Partnerships
Regarding SIGPR’s continued formative efforts during its first year, particular recognition and
appreciation belong to Treasury’s Office of the Deputy Assistant Secretary for Privacy,
Transparency, and Records; as well as Treasury’s Deputy Assistant Secretary for Management
and Budget. Their persistent, tireless efforts have helped SIGPR in crucial ways.
Finally, SIGPR continues to participate in numerous working groups with Treasury, CIGIE, and
the PRAC. Each of these groups have worked hard to improve transparency and protect
taxpayer dollars by preventing and detecting waste, fraud, and abuse. They too deserve
acknowledgement and appreciation.

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

20

SIGPR FINDINGS AND
REPORTABLE DEVELOPMENTS

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

21
The CARES Act requires SIGPR to include in its regular reports to Congress “a detailed statement
of all loans, loan guarantees, other transactions, obligations, expenditures, and revenues
associated with any program established by the Secretary under section 4003, as well as the
information collected under subsection (c)(1).”33 Accordingly, below are the categories of loans
and other investments made by the Secretary under CARES Act § 4003,34 including, where
applicable and known, a list of the loans and investments made under each category and the
eligible businesses to which loans were made. In addition, a short section below provides
updates regarding three letters SIGPR sent to Treasury as part of its oversight activities.
Direct Loans and Other Investments
Introduction
CARES Act section 4003(a) authorized the Secretary “to make loans, loan guarantees, and other
investments in support of eligible businesses, States, and municipalities that do not, in the
aggregate, exceed $500,000,000,000.” The CARES Act further divided these loans and
investments into four categories. The first three, described in sections 4003(b)(1)–(3), cover
loans and loan guarantees to passenger air carriers and related businesses ($25 billion), cargo
air carriers ($4 billion), and businesses critical to maintaining national security ($17 billion).35
The fourth category, described in section 4003(b)(4), authorized the Secretary to invest in
various liquidity programs established by the Federal Reserve under section 13(3) of the Federal
Reserve Act ($454 billion). The Consolidated Appropriations Act, 2021 (CAA), amended the
CARES Act to rescind unobligated balances of funds ($429 billion) in these programs.36 It also
specified that after December 31, 2020, the Federal Reserve “shall not make any loan, purchase
any obligation, asset, security, or other interest, or make any extension of credit” through the
liquidity programs or facilities in which Treasury had invested CARES Act funds, except for
facilities in the Main Street Lending Program, discussed further below, that were authorized to
purchase loans until January 8, 2021 for applications submitted by December 14, 2020.37
An overview of the relevant categories and amounts of Treasury’s obligations remaining under
CARES Act § 4003(b)(1)–(4) through March 31 is reflected in the following table:

33 CARES Act § 4018(f)(1)(B).
34 Treasury did not establish a program for “loan guarantees” under CARES Act § 4003.
35 Treasury has posted on its website the contracts it has entered in connection with the administration of loans under section
4003(b)(1), (2), and (3). See U.S. Dep’t Treasury, Other Programs, https://home.treasury.gov/data/other-programs.
36 See Consolidated Appropriations Act, 2021, Pub. L. 116-260, div. N §§ 1003, 1005.
37 Id. § 1005.

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

22
Funding Program
Obligation Amount as of March 31, 2021
Direct Loans to Passenger Air Carriers and
Related Businesses
$21,152,937,504
Direct Loans to Cargo Air Carriers
$2,111,656
Direct Loans to Businesses Critical to
Maintaining National Security
$735,934,400
Main Street Lending Program (MS Facilities,
LLC)
$16,587,000,601
Term Asset-Backed Securities Facility (TALF II,
LLC)
$3,500,000,000 (plus interest)
Primary and Secondary Market Corporate
Credit Facility (Corporate Credit Facilities, LLC)
$13,897,154,074
Municipal Liquidity Facility (Municipal
Liquidity Facility, LLC)
$6,300,000,000 (plus interest)
Direct Loans
On March 30, 2020, Treasury first announced guidelines for businesses interested in applying
for loans under CARES Act § 4003(b)(1)–(3).38 Those guidelines incorporated several mandatory
loan terms and conditions, with many designed to protect American taxpayers. Before making
each loan, Treasury was required to determine, or the borrower must have agreed to, the
following:
• Unavailable Credit Elsewhere. Credit is not otherwise “reasonably available” for the
borrower at the time of the loan, § 4003(c)(2)(A);
• Prudent Borrowing. The loan is “prudently incurred” by the borrower,
§ 4003(c)(2)(B);
• Sufficient Security or Rate. The loan is “sufficiently secured” or “made at a rate” that
both “reflects the risk of the loan” and, “to the extent practicable, not less than an
interest rate based on market conditions for comparable obligations prevalent prior
to the outbreak” of COVID-19, § 4003(c)(2)(C);
• Term. The term of the loan must be “as short as practicable and in any case not
longer than five years,” § 4003(c)(2)(D);
• No Purchases of Borrower’s Stock. Until a date 12 months after the loan has been
repaid, neither the borrower nor any affiliate may purchase the borrower’s (or any
parent company’s) stock that is listed on a national securities exchange, unless
required by a preexisting contractual obligation, § 4003(c)(2)(E);

38 U.S. Dep’t Treasury, Procedures and Minimum Requirements for Loans to Air Carriers and Eligible Businesses and National
Security Businesses under Division A, Title IV, Subtitle A of the Coronavirus Aid, Relief, and Economic Security Act (Mar. 30,
2020), https://home.treasury.gov/system/files/136/Procedures%20and%20Minimum%20Requirements%20for%20Loans.pdf.

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

23
• No Dividends. Until a date 12 months after the loan has been repaid, the borrower
may not pay a dividend or other capital distribution on its common stock,
§ 4003(c)(2)(F);
• Maintain Employment Levels. The borrower, until September 30, 2020, “shall
maintain its employment levels as of March 24, 2020, to the extent practicable, and
in any case shall not reduce its employment levels by more than 10 percent of the
levels on such date,” § 4003(c)(2)(G);
• U.S. Business. The borrower certifies “that it is created or organized in the United
States or under the laws of the United States and has significant operations in and a
majority of its employees based in the United States,” § 4003(c)(2)(H);
• Covered Losses. The borrower must have “incurred or is expected to incur covered
losses such that the continued operations of the business are jeopardized, as
determined by the Secretary,” § 4003(c)(2)(I);
• Equity Interest or Senior Debt Provided to the Government. Treasury must receive “a
warrant or equity interest” in the borrower if the borrower “has issued securities
that are traded on a national securities exchange,” otherwise, Treasury must receive
“a warrant or equity interest” in the borrower or “a senior debt instrument” from
the borrower. Issuance of the warrant, equity, or debt “shall be designed to provide
for a reasonable participation by the Secretary, for the benefit of taxpayers, in
equity appreciation in the case of a warrant or other equity interest, or a reasonable
interest rate premium, in the case of a debt instrument,” § 4003(d)(1)–(2);
• No Loan Forgiveness. The principal amount of any loan cannot be reduced through
loan forgiveness, § 4003(d)(3);
• Limitation on Employee Compensation. CARES Act § 4004 requires a borrower to
limit compensation for certain employees during the period beginning on the date
the loan agreement is executed and ending one year after the loan is repaid, as
follows:
o No officer or employee of the borrower “whose total compensation exceeded
$425,000 in calendar year 2019,” may receive annual “total compensation which
exceeds” the amount the officer or employee received in calendar year 2019,
and such officer or employee shall not receive “severance pay or other benefits
upon termination of employment” with the borrower “which exceeds twice the
maximum total compensation received by the officer or employee from the
eligible business in calendar year 2019;”
o No officer or employee of the borrower “whose total compensation exceeded
$3,000,000 in calendar year 2019,” may receive “total compensation in excess of
the sum of . . . $3,000,000” and “50 percent of the excess over $3,000,000 of the
total compensation received by the officer or employee from the eligible
business in calendar year 2019.”

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

24
• Continuation of Air Service. If the borrower is an air carrier, it must maintain
scheduled air services deemed necessary by the Secretary of Transportation to
ensure service to any location served by the borrower before March 1, 2020, § 4005;
and
• Conflicts of Interest. Direct loans, like all transactions described in CARES Act § 4003,
may not be made to “covered entities” under the CARES Act’s conflict of interest
provision in section 4019. The provision defines a “covered entity” as one where the
President, Vice President, head of an Executive Department, member of Congress, or
certain family members hold 20% or more of any class of equity interest in the entity
receiving the loan or involved in the section 4003 transaction.
On April 14, 2020, Treasury entered into an agreement with The Bank of New York Mellon
(BNYM) to perform custodian and infrastructure services, and to act as a financial agent, in
connection with Treasury’s loans under section 4003(b)(1)–(3).39 Under the agreement, BNYM
does not provide credit analysis nor is it responsible for certain matters related to borrower
performance.
Treasury has managed risk and exercised oversight of these loans through the following
means:40
• Adherence to an underwriting guide that defines a credit review process, involving
key elements of the underwriting, credit analysis, and approval process, including
legal and financial due diligence. More specifically, in accordance with the advice of
financial and legal advisors, Treasury followed a process to consider loan
applications that included the following: (a) designing and applying credit standards
that were uniformly applied to all loan applicants; (b) conducting due diligence on
loan applications; and (c) forming credit committees that consisted of senior
Treasury officials to consider each potential loan.
• Treasury also exercised oversight of loans made under section 4003(b)(1)–(3) by
monitoring submissions and communications from the debtor, including between
the debtor and BNYM; monitoring public borrowers’ filings with the Securities and
Exchange Commission; engaging directly with borrowers as appropriate; and
monitoring other relevant public sources of information.
• Treasury’s CARES Act Operations has created an Asset Management group, responsible
for monitoring Treasury’s investments, including the debt, equity, and warrants issued
to Treasury.
• Treasury has created a portal through which all 4003 borrowers are required to submit
information on a quarterly basis, including financial statements, financial forecasts,

39 U.S. Dep’t Treasury, Financial Agency Agreement for Custodian and Infrastructure Services for Programs Under the
Coronavirus Aid, Relief, and Economic Security Act https://home.treasury.gov/system/files/136/BNY-Mellon-Custodian-FAA-
for-CARES-Act-Custodian-EXECUTED-04-14-2020.pdf.
40 At SIGPR’s request, Treasury provided SIGPR access to nonpublic information on applicants to Treasury’s loan programs under
section 4003. SIGPR’s review of this nonpublic information revealed several application rejections and withdrawals that SIGPR
may review further to identify any patterns of conduct that may indicate fraudulent or other illicit activity on the part of
program applicants and participants.

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

25
certificates evidencing compliance with financial ratios (such as debt service ratios and
collateral coverage ratios), and information regarding major events. Asset Management
reviews this financial information and regularly communicates and receives updates
from borrowers.
Air Carrier Loan Program
CARES Act section 4003(b)(1)–(2) allocated $25 billion for loans and loan guarantees to
passenger air carriers, aviation-maintenance facilities certified under 14 C.F.R. Part 145, and air-
transportation ticket agents, as well as $4 billion for cargo air carriers.
The following table summarizes the section 4003(b)(1) –(2) loans current through this quarter.41
Of note, American Airlines Inc., Hawaiian Airlines Inc., Ovation Travel Group Inc., and Sun
Country Inc. paid in full all outstanding principal and interest.
Recipient
Loan Date
Maturity
Date
Total
Anticipated
Loan Amount
Disbursements
42
Total
Outstanding
Loan Amount43
Cash
Interest
Receipts
Aero Hydraulics,
Inc.
10/26/2020
10/24/2025
$450,000
$450,000
$465,686
$0
Alaska Airlines,
Inc..
9/28/2020
(amended
10/30/2020 and
1/15/2021)
9/26/2025
$1,928,000,000
$135,000,000
$135,000,000
$0
Allflight
Corporation
11/5/2020
11/5/2025
$4,721,260
$4,721,260
$4,721,260
$102,265
American
Airlines, Inc.
9/26/2020
(amended
10/21/2020 and
1/15/2021)
6/30/2025
$7,500,000,000
$550,000,000
$0
$10,257,50
0
American Jet
International
Corp
11/5/2020
11/5/2025
$1,162,124
$1,162,124
$1,181,648
$6,300
Aviation
Management &
Repairs, Inc.
11/5/2020
11/5/2025
$4,026,705
$4,026,705
$4,116,551
$0
Bristin Travel,
LLC
10/26/2020
10/24/2025
$549,651
$549,651
$554,773
$9,320
Caribbean Sun
Airlines, Inc.
11/5/2020
(amended
12/7/2020)
11/5/2025
$6,768,749
$6,768,749
$6,892,757
$0
Eastern Airlines,
LLC
10/28/2020
10/28/2025
$15,000,000
$15,000,000
$15,388,658
$0
Elite Airways,
LLC
11/9/2020
(amended
12/1/2020)
11/7/2025
$2,630,274
$2,630,274
$2,681,462
$0
Frontier Airlines,
Inc.
9/28/2020
(amended
1/15/2021)
9/26/2025
$574,000,000
$150,000,000
$150,000,000
$0

41 U.S. Dep’t Treasury, Loans to Air Carriers, Eligible Businesses, and National Security Businesses
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/loans-to-air-carriers-eligible-businesses-
and-national-security-businesses.
42 “Disbursements” includes all loan disbursements.
43 “Total Outstanding Loan Amount” includes all loan disbursements and increases of loan principal amount arising from
payment-in-kind (PIK) interest, less any repayments of principal.

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

26
Recipient
Loan Date
Maturity
Date
Total
Anticipated
Loan Amount
Disbursements
42
Total
Outstanding
Loan Amount43
Cash
Interest
Receipts
Hawaiian
Airlines, Inc.
9/25/2020
(amended
10/23/2020 and
1/15/2021)
6/28/2024
$622,000,000
$45,000,000
$0
$450,450
Island Wings,
Inc.
11/5/2020
11/5/2025
$294,350
$294,350
$300,750
$0
Jetblue Airways
Corporation
9/29/2020
(amended
11/3/2020 and
1/15/2021)
11/29/2025
$1,948,000,000
$115,000,000
$115,000,000
$0
Legacy Airways,
LLC
10/20/2020
10/25/2025
$1,817,306
$1,817,306
$1,881,996
$0
Mesa Airlines,
Inc.
10/30/2020
10/30/2025
$195,000,000
$195,000,000
$197,525,164
$0
Ovation Travel
Group, Inc.
10/15/2020
10/15/2025
$20,000,000
$20,000,000
$0
$181,881
Republic
Airways, Inc.
11/6/2020
11/6/2025
$58,000,000
$58,000,000
$58,000,000
$569,447
Skywest
Airlines, Inc.
9/29/2020
(amended
10/28/2020 and
1/15/2021)
9/29/2025
$725,000,000
$60,000,000
$60,000,000
$0
Southern
Airways Express,
LLC
10/28/2020
10/28/2025
$1,838,501
$1,838,501
$1,838,501
$47,360
Sun Country,
Inc.
10/26/2020
10/24/2025
$45,000,000
$45,000,000
$0
$77,125
Thomas Global
Systems, LLC
11/9/2020
11/7/2025
$1,400,000
$1,400,000
$1,431,237
$0
Timco Engine
Center, Inc.
11/5/2020
11/5/2025
$8,390,240
$8,390,240
$8,577,447
$0
United Airlines,
Inc.
9/28/2020
(amended
11/6/2020,
12/8/2020, and
1/15/2021)
9/26/2025
$7,491,000,000
$520,000,000
$520,000,000
$0

Businesses Critical to National Security
CARES Act section 4003(b)(3) allocated $17 billion for loans and loan guarantees to “businesses
critical to maintaining national security.” The CARES Act does not define the term “businesses
critical to maintaining national security,” but Treasury established criteria for making this
determination in its Frequently Asked Questions guidance issued in April 2020:
A business critical to maintaining national security is one that, unless otherwise
approved as set forth below, is at the time of the business’s application:
(1) performing under a “DX”-priority rated contract or order under the Defense
Priorities and Allocations System regulations; or
(2) operating under a valid top secret facility security clearance under the National
Industrial Security Program regulations.

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

27
Applicants that did not satisfy either of these two criteria could be considered for loans
if, based on a recommendation and certification by the Secretary of Defense or the
Director of National Intelligence that the applicant business is critical to maintaining
national security, the Secretary of the Treasury determined that the applicant business
was critical to maintaining national security.44
The following table summarizes the section 4003(b)(3) loans current through this quarter.45

Recipient
Loan
Date
Maturity
Date
Total
Anticipated
Loan Amount
Disbursements46
Total
Outstanding
Loan Amount47
Cash
Interest
Receipts
Channel Logistics,
LLC
11/12/2020
11/12/2025
$2,500,000
$2,500,000
$2,500,000
$57,400
Core Avionics &
Industrial, Inc.
11/5/2020
11/5/2025
$6,000,000
$6,000,000
$6,130,800
$58,133
Map Large, Inc.
11/2/2020
10/31/2025
$10,000,000
$10,000,000
$10,324,304
$0
Meridian Rapid
Defense Group, LLC
10/30/2020
10/30/2025
$7,100,000
$7,100,000
$7,254,780
$79,019
Ovio Technologies,
Inc.
11/2/2020
10/31/2025
$1,186,900
$1,186,900
$1,225,392
$0
Semahtronix, LLC
11/13/2020
11/13/2025
$1,999,100
$1,999,100
$2,042,930
$0
Semantic AI, Inc.
11/13/2020
11/13/2025
$506,300
$506,300
$517,881
$0
SpinLaunch, Inc.
11/13/2020
11/13/2025
$2,519,200
$2,519,200
$2,519,200
$55,019
Visual Semantics,
Inc.
10/30/2020
10/30/2025
$1,053,200
$1,053,200
$1,076,160
$11,722
Wiser Imagery
Services, LLC
10/30/2020
10/30/2025
$3,069,700
$3,069,700
$3,171,528
$0
Yellow Corporation
7/8/2020
9/30/2024
$700,000,000
$551,300,000
$555,701,619
$4,053,497
Other Investments
CARES Act section 4003(b)(4) allocated at least $454 billion for “loans and loan guarantees to,
and other investments in, programs or facilities established by the Board of Governors of the
Federal Reserve System for the purpose of providing liquidity to the financial system that
supports lending to eligible businesses, States, or municipalities” by “purchasing obligations or
other interests” directly from the issuer or through secondary markets, and “making loans,
including loans or other advances secured by collateral.”
The Federal Reserve established several liquidity programs (Federal Reserve facilities) using its
emergency lending powers under section 13(3) of the Federal Reserve Act.48 That provision,
used extensively during the 2008 financial crisis and amended by the Dodd-Frank Wall Street

44 U.S. Dep’t Treasury, Q&A: Loans to Air Carriers and Eligible Businesses and National Security Businesses 1 (Apr. 10, 2020)
(citations omitted), https://home.treasury.gov/system/files/136/CARES-Airline-Loan-Support-Q-and-A-national-security.pdf.
45 YRC Worldwide changed their name to Yellow Corporation.
46 “Disbursements” includes all loan disbursements.
47 “Total Outstanding Loan Amount” includes all loan disbursements and increases of loan principal amount arising from
payment-in-kind (PIK) interest, less any repayments of principal.
48 See 12 U.S.C. § 343(3).

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

28
Reform and Consumer Protection Act,49 allows the Federal Reserve to lend money in “unusual
and exigent circumstances” to participants in “any program or facility with broad-based
eligibility” who are “unable to secure adequate credit accommodations from other banking
institutions.”50 The Federal Reserve, however, may not lend to insolvent entities, and its
programs must be approved by the Secretary of the Treasury.
In November 2020, Federal Reserve Chair Jerome H. Powell agreed to return Treasury's
unobligated CARES Act funds in the Federal Reserve facilities after receiving a request from
then-Secretary of the Treasury Steven Mnuchin.51 According to a letter sent from Treasury to
SIGPR on January 19, 2021, any concerns that the CARES Act did not require the discontinuation
of these Federal Reserve facilities was rendered moot following enactment of the CAA,52 which
rescinded unobligated CARES Act funds for the Federal Reserve facilities and terminated the
Federal Reserve’s authority to make new loans, asset purchases, or modifications through
facilities in which Treasury had invested using funds under section 4003. The letter was
transmitted to SIGPR by the prior administration on its final full day, January 19, 2021.
According to Treasury, the letter does not necessarily reflect the views of the current
administration, and the enactment of the CAA rendered this issue moot.
Before the CAA, Treasury had invested $102.5 billion of CARES Act funds to support the Federal
Reserve facilities. These included the Main Street Lending Program (MSLP), the Primary and
Secondary Corporate Credit Facilities, the Municipal Liquidity Facility, and the Term Asset-
Backed Securities Loan Facility. For each program, Treasury invested in a limited liability
company, known as a special purpose vehicle (SPV), which purchased specified assets or made
loans to borrowers and is managed by one of the individual Federal Reserve Banks.
Treasury contributed nearly all the equity in the Federal Reserve SPVs to protect the Federal
Reserve from losses.
The Federal Reserve Bank responsible for a given facility lent funds to each SPV to finance
specific transactions. When structuring a given facility, the Secretary and the Federal Reserve
had decided on a “gearing ratio” of Federal Reserve lending to Treasury loss-absorbing capital.
For each facility, application of the gearing ratio to the amount invested by the Secretary thus
reflected the agencies’ calculation of the amount of lending the facility could support without a
likelihood of capital losses beyond the amount invested by the Secretary. The basic functioning
of this “gearing ratio” is explained in the agencies’ responses to questions from the

49 Pub. L. 111-203, 124 Stat. 1375.
50 See 12 U.S.C. § 343(3); 12 C.F.R. § 201.4(d).
51 Letter from Chair Jerome H. Powell, Chair of the Federal Reserve, to  Steven Mnuchin, Secretary of the Department of the
Treasury (Nov. 20, 2020), https://www.federalreserve.gov/foia/files/mnuchin-letter-20201120.pdf; Letter from Steven
Mnuchin, Secretary of the Department of the Treasury, to Jerome H. Powell, Chair of the Federal Reserve (Nov. 19, 2020),
https://home.treasury.gov/system/files/136/letter11192020.pdf.
52 Letter from James Stern, Deputy General Counsel, Department of the Treasury, to Brian Miller, Special Inspector General for
Pandemic Recovery (Jan. 19. 2021).

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

29
Congressional Oversight Commission, which are disclosed in that commission’s July 20, 2020
report.53
On its website, the Federal Reserve Board provides information about its SPVs and facilities,
including terms and conditions for loans and other transactions. The Federal Reserve Board also
provides information about each transaction in spreadsheet form so that one can evaluate the
individual loans made by a section 13(3) facility’s SPV.54 The Federal Reserve regularly updates
this information, posting it under the “Policy Tools” section of its website.55
The following table summarizes the total amount of remaining CARES Act funds that Treasury
invested in each SPV as of March 31, 2021.56
Recipient
Treasury Investment Remaining as of
March 31, 2021
Corporate Credit Facilities, LLC
$13,897,154,074
Municipal Liquidity Facility, LLC
$6,300,000,000 (plus interest)
TALF II, LLC
$3,500,000,000 (plus interest)
MS Facilities, LLC
$16,587,000,601

The following table summarizes the portfolio holdings of the facilities as of the April 1, 2021
release of the Federal Reserve’s balance sheet.57
Facility
Outstanding Amount
of Purchased Loan
Participations, Notes,
and Other Securities
Treasury Contributions
and Other Assets
Total
Corporate Credit Facilities, LLC
$13,788,000,000
$12,246,000,000
$26,034,000,000
Municipal Liquidity Facility, LLC
$6,058,000,000
$5,498,000,000
$11,556,000,000
TALF II, LLC
$2,135,000,000
$3,147,000,000
$5,282,000,000
MS Facilities, LLC
$14,107,000,000
$16,846,000,000
$30,953,000,000

The following paragraphs describe the functioning of these facilities, which have terminated.

53 The Third Report of the Congressional Oversight Commission, Treasury and Federal Reserve Answers to Tier 2 Questions, at 3
(July 20, 2020), https://coc.senate.gov/sites/default/files/2020-
08/20200720_Congressional_Oversight_Commission_3rd_Report.pdf.
54 See, e.g., Board of Governors of the Federal Reserve System, TALF Transaction-specific Disclosures (Dec. 11, 2020),
https://www.federalreserve.gov/monetarypolicy/talf.htm; Board of Governors of the Federal Reserve System, Main Street
Lending Program, https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm (providing tables for MSLP
transaction-specific disclosures) (last updated Apr. 12, 2021); Board of Governors of the Federal Reserve System, Secondary
Market Corporate Credit Facility (Dec. 11, 2020), https://www.federalreserve.gov/monetarypolicy/smccf.htm; Board of
Governors of the Federal Reserve System, MLF Transaction-specific Disclosures (Dec. 11, 2020),
https://www.federalreserve.gov/monetarypolicy/muni.htm.
55 Board of Governors of the Federal Reserve System, Policy Tools,
https://www.federalreserve.gov/monetarypolicy/policytools.htm.
56 See Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board under Section 13(3) of the Federal
Reserve Act (“April Periodic Report”) (Apr. 9, 2021), https://www.federalreserve.gov/publications/files/pdcf-mmlf-cpff-pmccf-
smccf-talf-mlf-ppplf-msnlf-mself-msplf-nonlf-noelf-04-12-21.pdf.
57 See Board of Governors of the Federal Reserve System, Factors Affecting Reserve Balances - H.4.1,
https://www.federalreserve.gov/releases/H41/.

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

30
Corporate Credit Facilities, LLC
Corporate Credit Facilities, LLC, was formed by the Federal Reserve Bank of New York on April
31, 2020, to operate the Primary Market Corporate Credit Facility (PMCCF) and the Secondary
Market Corporate Credit Facility (SMCCF). The facilities were structured to purchase up to $750
billion in debt securities under these programs. Treasury originally indicated it would invest up
to $50 billion to support the PMCCF and $25 billion to support the SMCCF;58 Treasury’s
remaining investment in the facilities is $13.9 billion.59
The PMCCF was intended to purchase corporate bonds as the sole investor in a bond issuance.
The facility was also able to purchase syndicated loans or bonds at issuance. The bonds and
loans must have had a maturity of four years or less, and the facility was limited to purchasing
25 percent of any syndicated loan or bond. To be eligible for the program, an issuer must have
had an investment-grade credit rating as of March 22, 2020. The facility ceased purchasing
securities on December 31, 2020. As of December 31, 2020, the PMCCF did not close any
transactions.60
The SMCCF was authorized to purchase the following debt securities on the secondary market:
• Individual corporate bonds having a remaining maturity of five years or less that
were issued by businesses with investment-grade credit ratings as of March 22,
2020;
• Corporate bond exchange-traded funds (ETFs) whose objective is to provide broad
exposure to the U.S. corporate bond market, including exposure to both
investment-grade and high-yield bonds; and
• Individual corporate bonds with a remaining maturity of five years or less that would
create a bond portfolio reflecting a broad market index of the U.S. corporate bond
market.
The facility ceased purchasing securities on December 31, 2020. Detailed transaction
information for the SMCCF’s purchases is available on the Federal Reserve’s website.61
Municipal Liquidity Facility, LLC
Municipal Liquidity Facility, LLC, was formed by the Federal Reserve Bank of New York on May
1, 2020, to operate the Municipal Liquidity Facility (MLF). The facility was structured to offer up
to $500 billion to support state and local governments and related entities. Treasury originally
indicated it would invest up to $35 billion to support the Municipal Liquidity Facility;62
Treasury’s remaining investment in the facility is $6.3 billion and interest earned thereon.63

58 Term Sheet, Primary Market Corporate Credit Facility (July 28, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a9.pdf.
59 April Periodic Report, supra note 56, at 4 n.3.
60 Id.
61 Board of Governors of the Federal Reserve System, Secondary Market Corporate Credit Facility,
https://www.federalreserve.gov/monetarypolicy/smccf.htm.
62 Board of Governors of the Federal Reserve System, Term Sheet, Municipal Liquidity Facility 1 (“Municipal Liquidity”) (Aug. 11,
2020), https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200811a1.pdf.
63 April Periodic Report, supra note 56, at 6 n.9.

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

31
The facility was able to purchase various revenue, tax, and bond anticipation notes issued by
states, the District of Columbia, large cities and counties, multi-state entities, and revenue bond
issuers. The notes must have matured within three years of issuance, and the issuing entity
generally must have had an investment-grade credit rating at the time of issuance. Issuers were
required to use the proceeds of the notes to alleviate cash flow problems resulting from
reduced tax revenue, increased expenses, or similar financial problems related to the COVID-19
pandemic. The facility ceased purchasing notes on December 31, 2020.64 Transaction-specific
details for the MLF are available on the Federal Reserve’s website.65
As of March 31, 2021, the Federal Reserve reported four transactions for the MLF. They are
described in the following table.
Issuer Name
     Closing Date
Value of note
[$ value]
Current
outstanding
amount of note
Maturity date
of note
Interest
rate
State of Illinois
6/5/2020
$1,200,000,000
$700,000,000.
6/5/2021
3.36%
State of Illinois
12/17/2020
$2,000,000,000
$2,000,000,000
12/15/2023
3.42%
Metropolitan Transportation
Authority (NY)
8/26/2020
$450,720,000
$450,720,000
8/1/2023
1.93%
Metropolitan Transportation
Authority (NY)
12/17/2020
$2,907,280,000
$2,907,280,000
12/15/2023
1.33%

TALF II, LLC
TALF II, LLC, was formed by the Federal Reserve Bank of New York on April 13, 2020, to operate
the Term Asset-Backed Securities Loan Facility, or TALF. (The original TALF, LLC, was established
during the 2008 financial crisis.) Treasury’s remaining investment in the facility is $3.5 billion
and interest earned thereon.66 The facility was structured to offer up to $100 billion in TALF
lending.
TALF II, LLC, made three-year, nonrecourse loans to borrowers who issued asset-backed
securities to serve as collateral for the loans. An asset-backed security is one composed of a
pool of debt obligations. The security’s value and performance depend on the value and
performance of the underlying pool of debt. Asset-backed securities that were eligible to serve
as collateral for a TALF loan included asset-backed securities based on auto loans and leases,
student loans, credit card receivables, floorplan loans, commercial mortgages, collateralized
loan obligations, and other common credit arrangements. TALF accepted as collateral only
those asset-backed securities with the highest investment-grade rating.67

64 See Municipal Liquidity, supra note 62, at 3.
65 Board of Governors of the Federal Reserve System, Policy Tools, Municipal Liquidity Facility (Aug. 11, 2020),
https://www.federalreserve.gov/monetarypolicy/muni.htm.
66 April Periodic Report, supra note 56, at 5 n.5.
67 See Board of Governors of the Federal Reserve System, Term Sheet, Term Asset-Backed Securities Loan Facility (July 28,
2020), https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a6.pdf.

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

32
TALF stopped making loans on December 31, 2020. Transaction-specific details for the TALF are
available on the Federal Reserve’s website.68
MS Facilities, LLC
MS Facilities, LLC, was formed by the Federal Reserve Bank of Boston on May 18, 2020, to
operate the Federal Reserve’s various facilities under the MSLP. MSLP was structured to offer
up to $600 billion in lending. Treasury originally indicated it would invest up to $75 billion to
support the MSLP;69 Treasury’s remaining investment in the facility is $16.6 billion and interest
earned thereon.70
The MSLP supported private lending to medium-sized and small businesses, as well as non-
profit organizations, by purchasing 95 percent participations in loans that conformed to the
terms of an MSLP program. The private lender retains a five percent participation in the loan.
Loans may be secured or unsecured. The Federal Reserve Bank of Boston has published the
following graphic showing the operation of the MSLP.71

Transaction-specific details for the MSLP are available on the Federal Reserve’s website and
updated regularly.72

68 Board of Governors of the Federal Reserve System, Policy Tools, Term Asset-Backed Loan Facility,
https://www.federalreserve.gov/monetarypolicy/talf.htm (last updated Apr. 12, 2021).
69 Board of Governors of the Federal Reserve System Term Sheet, Main Street New Loan Facility (July 28, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a3.pdf.
70 April Periodic Report, supra note 56, at 8 n.11.
71 The Federal Reserve’s Main Street Lending Program, Federal Reserve Bank of Boston,
https://www.bostonfed.org/supervision-and-regulation/credit/special-facilities/main-street-lending-program/main-street-
lending-program-overview.aspx.
72 Board of Governors of the Federal Reserve System, Policy Tools, Main Street Lending Program,
https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm (last updated April 12, 2021).

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

33
The CAA clarified that the Federal Reserve facilities in which Treasury had made investments of
CARES Act funds could make no loans or purchase obligations after December 31, 2020, and
rescinded unobligated funds. However, Congress permitted the five Main Street facilities to
purchase loan participations until January 8, 2021 for applications submitted by December 14,
2020.73 Authority for the MSLP then terminated. Additional terms for each program applied as
follows.
Loans to for-profit businesses
The MSLP offered three loan programs to for-profit business: the Main Street New Loan Facility
(MSNLF), Main Street Priority Loan Facility (MSPLF), and Main Street Expanded Loan Facility
(MSELF). Each program had the following basic terms:

The MSNLF and MSPLF differed in the size of loans available and in additional terms to
compensate for the greater exposure to loss in the larger MSPLF loans. Both programs offered
new loans, as opposed to expanding existing ones such as the third facility did, discussed below.
From October 30, 2020 on, the MSNLF and the MSPLF had a minimum loan amount of
$100,000.74
The maximum MSNLF loan was the lesser of $35 million or an amount that would not cause the
borrower’s total outstanding and undrawn debt to exceed four times the borrower’s 2019
earnings before adjusted interest, taxes, depreciation, and amortization (EBITDA). The new loan
needed not be senior to the borrower’s other debt, but it could not be contractually
subordinated to the borrower’s other debt.75
The maximum MSPLF loan was the lesser of either $50 million or an amount that would not
cause the borrower’s total outstanding and undrawn debt to exceed six times the borrower’s
2019 adjusted EBITDA. The MSPLF compensated for the higher loan amount by requiring the
loan to be either pari-passu (on equal footing) or senior in priority to the borrower’s other
debts, except for mortgage debt. Unlike MSNLF loans, MSPLF loans had some level of

73 Consolidated Appropriations Act, 2021, §§ 1003, 1005.
74 The minimum loan amount for MSNLF and the MSPLF was decreased from $250,000 to $100,000 on October 30, 2020. See
Press Release, Federal Reserve Board, Federal Reserve Board adjusts terms of Main Street Lending Program (Oct. 30, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/monetary20201030a.htm; see also Periodic Report: Update on
Outstanding Lending Facilities Authorized by the Board under Section 13(3) of the Federal Reserve Act (Nov. 6, 2020),
https://www.federalreserve.gov/publications/files/pdcf-mmlf-cpff-pmccf-smccf-talf-mlf-ppplf-msnlf-mself-msplf-nonlf-noelf-
11-9-20.pdf#page=7.
75 See Board of Governors of the Federal Reserve System, Term Sheet, Main Street New Loan Facility (Dec. 29, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20201229a1.pdf.
Loan Term
Five years
Employees and Revenue
Either 15,000 or fewer employees, or 2019 revenue of $5 billion or less
Rate
Adjustable Rate of LIBOR (one month or three months) plus 3%
Interest Deferral
Deferred for one year
Principal Deferral
Deferred for years 1 and 2, 15% due in each of years 3 and 4, 70% due in
year 5

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

34
repayment preference among the borrower’s various debts in the event the borrower became
insolvent.76
While MSNLF and MSPLF supported new loans, MSELF loans allowed businesses to expand
existing loans or revolving credit facilities. The MSELF portion of the refinancing must have
been a term loan and senior or pari-passu in priority to the borrower’s other debt, except for
mortgage debt. The minimum MSELF loan was $10 million. The maximum was the lesser of
$300 million or an amount that would not cause the borrower’s total outstanding and undrawn
debt to exceed six times the borrower’s 2019 adjusted EBITDA.77
Loans to nonprofit organizations
MSLP offered two loan programs to nonprofit organizations: the Nonprofit Organization New
Loan Facility (NONLF) and the Nonprofit Organization Expanded Loan Facility (NOELF). Like the
MSLP programs available to for-profit businesses, the MSLP programs available to nonprofit
organizations offered support for both new loans (NONLF) and the expansion of existing loans
(NOELF). Also, like the MSLP loans to for-profit business, MSLP loans to nonprofit organizations
had some common terms:
Loan Term
Five years
Minimum Employees
At least 10 employees
Employees and Revenue
Either 15,000 or fewer employees, or 2019 revenue of $5 billion or less
Financial Conditions
•
Total non-donation revenues of at least 60% of expenses for 2017 through 2019
•
At least a 2% operating margin for 2019
•
At least 60 days current cash on hand
•
Ratio of cash, investments, and other repayment resources to outstanding debt and
certain other liabilities of greater than 55%
Endowment Cap
Less than $3 billion
Rate
Adjustable Rate of LIBOR (one month or three months) plus 3%
Interest Deferral
Deferred for one year
Principal Deferral
Deferred for years 1 and 2, 15% due in each of years 3 and 4, 70% due in year 5

From October 30, 2020 on, the NONLF minimum loan amount was $100,000.78 The maximum
loan amount was the lesser of $35 million or the borrower’s average quarterly revenue in 2019.
The new loan did not need to be senior to the borrower’s existing debt but could not be
contractually subordinated to that debt.79

76 See Board of Governors of the Federal Reserve System, Term Sheet, Main Street Priority Loan Facility (Dec. 29, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20201229a2.pdf.
77 See Board of Governors of the Federal Reserve System, Term Sheet, Main Street Expanded Loan Facility (Dec. 29, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20201229a3.pdf.
78 The minimum loan amount for the NONLF was decreased from $250,000 to $100,000 on October 30, 2020. See Press Release,
supra note 74.
79 See Board of Governors of the Federal Reserve System, Term Sheet, Nonprofit Organization New Loan Facility (Dec. 29, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20201229a4.pdf.

SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

35
NOELF loans, like MSELF loans, allowed borrowers to refinance existing loans or revolving credit
facilities. The NOELF portion of the refinancing must have been a term loan and senior or
pari-passu in priority to the borrower’s other debt, except for mortgage debt. The minimum
NOELF loan was $10 million. The maximum was the lesser of $300 million or the borrower’s
average quarterly revenue in 2019.80

Letters of Inquiry: Updates
In SIGPR’s previous quarterly report, SIGPR described three formal requests for information
that SIGPR transmitted to Treasury officials in the prior administration.81 As described below,
SIGPR received updates from Treasury pertaining to these inquiries.

In December, SIGPR had requested a briefing and asked specific questions relating to the then-
Secretary’s request that the Federal Reserve return unused Treasury funds appropriated by the
CARES Act for the Federal Reserve facilities. SIGPR followed up on that request with a second
letter in December, requesting that Treasury identify the specific CARES Act provisions and any
related legal analysis underlying the then-Secretary’s requested return of the unused funds. On
January 19, 2021, Treasury responded to one of SIGPR’s letters. As discussed in the previous
quarterly report, however, Treasury later noted that this response was sent to SIGPR on the last
full day of the previous administration and did not necessarily represent the views of the new
administration, and that in any event, the CAA rendered these issues moot. During this quarter,
Treasury confirmed that it did not intend to provide any additional response to SIGPR’s
December letters as they pertained to moot issues.

In January, SIGPR had also transmitted a letter to Treasury requesting information about
changes to the rules governing the MSLP, which had been discussed in news reports. In
response to SIGPR’s inquiry concerning the Secretary’s role in adopting the changes, Treasury
noted that the Secretary was involved in decision-making generally. Treasury confirmed it had
no additional information with respect to the remaining questions, except that, as noted on the
Secretary’s publicly released calendars, the then-Secretary had a telephone call scheduled with
Senator Ted Cruz on April 18, 2020.

80 See Board of Governors of the Federal Reserve System, Term Sheet, Nonprofit Organization Expanded Loan Facility (Dec. 29,
2020), https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20201229a5.pdf.
81 See Special Inspector General for Pandemic Recovery, Quarterly Report to the United States Congress 37 & App. C (Dec. 31,
2020).

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

36

CHALLENGES

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

37
As with all inspectors general, SIGPR has the responsibility to recommend improvements that
promote “prevention and detection of fraud” in programs under its oversight.82 There are
several challenges unique to smoking out and prosecuting crime in CARES Act programs.
Detecting fraud requires access to voluminous amounts of complex data for analysis. In the
status quo, obtaining this information while not undermining the criminal investigation is
unnecessarily difficult. Moreover, technological changes in the past two decades have made
establishing proper venue law to prosecute federal wire fraud needlessly complicated and time-
consuming. Specifically, SIGPR recommends that Congress:
• require participants in any future emergency relief program to agree to provide the
appropriate inspectors general with information to aid audits and investigations;
• amend the federal wire fraud statute so that judicial venue will lie in any district where
the defendant committed an act in furtherance of the fraud scheme, not just those
districts in which the transmission was issued or terminated; and
• amend financial privacy laws to prohibit financial institutions from notifying customers
that they are subjects of an inspector general criminal investigation, just as they are
barred from tipping off the subjects of grand jury investigations.
Detection: Data Access and Verification
CARES Act oversight agencies face challenges gathering and vetting relevant information. To get
relief under the CARES Act programs, individuals, businesses, and governments applied for
loans or aid. These applications often asked for extensive financial disclosures concerning
profitability, assets and liabilities, ownership, and payroll. Recipients, moreover, must often
make certain covenants and periodic reports about the use of money or other matters during
the life of the loan. The decision to disburse millions of dollars to a single recipient can turn on
the accuracy the information supplied. Yet because the pandemic created an urgent need to
disburse money, many programs accepted certifications at little more than face value, while
deferring payments of interest and principle. Fraudulent information on an application can
cause significant loss to taxpayers through the disbursement of funds that the recipient is not
entitled to and would not have received but for the submission of fraudulent information.
Access to Applications in Multiple Public Entities and Private Entities
Congress should condition participation in federally funded programs on providing inspectors
general with access to information. By law, SIGPR may only request the cooperation of other
governmental offices or subpoena non-Federal entities for predicated records.83 As a result,
SIGPR audits and investigations rely on other entities to provide information in the first
instance. Though this is not unusual for inspectors general, the information needed to evaluate
an application for CARES Act relief resides in multiple governmental, quasi-governmental, and
private organizations. For example, a loan under the Main Street Lending Program (MSLP)
involves multiple entities—the borrower, the lender, the Federal Reserve Board, and the

82 5 U.S.C. app. 3 § 4(a)(4).
83 5 U.S.C. app. 3 § 6.

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

38
Federal Reserve Bank of Boston. Information, truthful or otherwise, originates with the
borrower and passes through various recipients, who in turn rely on it to make lending
decisions. Without ready access to the facts at each stage of this process, it will be nearly
impossible for SIGPR to form a complete factual picture concerning any given loan or the
lending program as a whole, a task critical to completing sound audits and investigations.
Subpoenas are not an effective means to obtain the bulk information necessary to audit and
investigate fraud in CARES Act programs like MSLP. Subpoenas are an ad hoc and time-
consuming tool. For instance, the Department of Labor subpoenaed all fifty states for
unemployment insurance information in support of a proactive effort to detect fraud in the
distribution of enhanced unemployment benefits under the CARES Act.84 Though critical to
Labor’s anti-fraud efforts, those subpoenas burdened state agencies at a time when they were
consumed by the task of distributing much-needed unemployment aid. Had the states been
aware of the eventual need for this large-scale data project, they could have established their
systems and planned accordingly, instead of reacting to a subpoena—with its accompanying
deadline—at a time many state agencies were overburdened.
Congress should statutorily impose affirmative reporting obligations on private entities
participating in subsequent taxpayer-funded programs. In order to receive loans or benefits,
recipients should agree to submit relevant information not only to the agencies that make the
loans or grant the benefits but also to the offices of any inspector general with oversight
jurisdiction. That way, an inspector general would have immediate access to the information it
needs to detect waste, fraud, and abuse. Suggested statutory language is provided in Appendix
A.
Statutory covenants are not new. The CARES Act imposed several covenants on borrowers,
elevating what would otherwise be routine contract terms to statutory commands.85 Adding an
additional covenant—specifying that participating borrowers and lenders must provide relevant
inspectors general with access to information possessed by the lenders and borrowers
concerning their receipt of federal funds—is a small burden to further the crucial interest of
detecting fraud, waste, and abuse. Indeed, SIGPR requested this disclosure covenant be
included in the CARES Act Direct Loan Program, and Treasury agreed.86 All but one CARES Act
direct loan thus requires recipients to provide SIGPR access to information, alleviating the need
for a subpoena.87

84 Ben Penn, “Labor Department Watchdog Subpoenas Jobless-Aid Data From States,” Bloomberg Law (July 10, 2020),
https://news.bloomberglaw.com/daily-labor-report/labor-department-watchdog-subpoenas-jobless-aid-data-from-states.
85 See CARES Act § 4003(c).
86 Special Inspector General for Pandemic Recovery, Initial Report to Congress 49 (Aug. 3, 2020),
https://www.sigpr.gov/sites/sigpr/files/2020-09/SIGPR-Initial-Report-to-Congress-August-3-2020_0.pdf.
87 See, e.g., Loan and Guarantee Agreement Among Alaska Airline, Inc., United States Department of the Treasury, and The
Bank of New York Mellon, Section 5.11, “Inspection Rights” (requiring the borrower to “permit . . . the Special Inspector General
for Pandemic Recovery to visit and inspect any of its properties (including all Collateral), to examine its corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants . . . at such reasonable times during normal business hours and as often
as may be reasonably requested . . . .”), https://home.treasury.gov/system/files/136/Alaska--Airlines--Transaction-
Documentation.pdf.

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

39
Enforcement: Reforming Wire Fraud Venue
Beyond the difficulty with gathering sufficient data to detect CARES Act fraud, obtaining
indictments and prosecuting cases face their own unique challenges. One of the most common
forms of interstate fraud is fraud transmitted by electronic communication or “wire,” such as an
email, text message, or electronic funds transfer.88 Wire fraud cases have already emerged
from federal oversight of the PPP. Prosecutors will undoubtedly prosecute those who commit
fraud when they obtained loans from the MSLP for wire fraud.
One challenge unique to prosecuting wire fraud is establishing proper judicial venue. Generally
speaking, the Constitution requires the government to prosecute crimes where they “shall have
been committed.”89 Federal law implements the Constitution’s standard by requiring that
prosecutions shall “be in the district and division” where the offense was committed.90 By
default, multidistrict offenses may be “prosecuted in any district in which such offense was
begun, continued, or completed.”91 Some federal criminal statutes supplement (or supplant)
default venue rules with offense-specific provisions about proper venue. For example, Congress
has given special instructions for how to establish proper venue in money laundering cases, and
the courts have inferred venue limitations in mail fraud cases.92
The wire fraud statute does not define the venue of the offense. The default venue rules
therefore restrict venue to districts in which the fraudulent interstate transmission was “begun,
continued, or completed”—that is, in any district “in which an interstate or foreign transmission
was issued or terminated.”93
It can be difficult to determine the geographic location of an interstate wire communication,
especially if investigators do not become aware of fraud scheme until years later. These
difficulties could seriously hamper prosecutions of MSLP borrowers who committed fraud when
obtaining loans if the fraud is not identified before the deferred interest and principal payments
come due.
A more efficient and effective approach would be to supplement the default venue rules by
permitting prosecution of wire fraud in any district where the defendant committed an overt
act for the purpose of furthering the fraud scheme.

88 18 U.S.C. § 1343.
89 See U.S. Const. art. III, § 2, cl. 3 (trials “shall be held in the State where the said Crimes shall have been Committed”; amend.
VI (guaranteeing trial “in the State and district wherein the crime shall have been committed”).
90 18 U.S.C. § 3232; Fed. R. Crim. P. 18 (same).
91 18 U.S.C. § 3237.
92 See 18 U.S.C. § 1956(i) (money laundering); Travis v. United States, 364 U.S. 631, 636–37 (1961) (“[V]enue should not be
made to depend upon the chance use of the mails, when Congress has so carefully indicated the locus of the crimes.”); 18
U.S.C. § 1341 (mail fraud).
93 U.S. Dep’t of Justice, The Justice Manual § 967 (venue in wire fraud) (last updated January 21, 2020). See United States v.
Jefferson, 674 F.3d 332, 367–68 (4th Cir. 2012) (holding that the Eastern District of Virginia is improper venue for a wire fraud
prosecution predicated on a telephone call that took place outside the district); United States v. Pace, 314 F.3d 344, 349–50.
(9th Cir. 2002). The Seventh Circuit has held that wire fraud venue is proper so long as conduct that “provided critical evidence
of the ‘intent to defraud,’” occurred in the venue district, even if the wire transmission itself was outside the district. See United
States v. Pearson, 340 F.3d 459 (7th Cir. 2003), vacated on other grounds, Hawkins v. United States, 543 U.S. 1097 (2005).

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

40
Wire Fraud Statute and the Main Street Lending Program
Because of the repayment terms, the wire fraud statute will be particularly important in
prosecutions of MSLP borrowers who committed fraud. As background, between July 15, 2020,
and January 1, 2021, the MSLP purchased 95 percent of the value of approximately 1,830 loans
made by private financial institutions to for-profit businesses under the terms of the program.
During that period, the Federal Reserve Bank of Boston provided a $16.5 billion Special Purpose
Vehicle to make the purchases. Under the terms of the loans, borrowers do not have to repay
any of the principal until the end of the third year of the loan when they must repay 15 percent.
Borrowers must repay another 15 percent at the end of the fourth year but have until the end
of the fifth year to repay the remaining 70 percent.
The fraud committed when a lender approved a loan may not become apparent until the loan
goes into default. The default, however, may not happen for four or five years—potentially
concealing the fraud that was committed past the usual five-year statute of limitations.94 After
five years, the statute may bar prosecutions for false statements made by the borrowers,95
money laundering offenses committed soon after the loan originations,96 and conspiracy to
defraud the United States.97
True, the offense of wire fraud affecting a financial institution, like the bank fraud statute, has a
ten-year statute of limitations. But the wire fraud statute is a more important tool for the
government to prosecute MSLP borrowers who committed fraud when they obtained their
loans. The wire fraud statute allows prosecutors to allege multiple victims as the victims of a
single fraud scheme: the government can allege in one count of an indictment not only the
lending bank as the victim, but also the Federal Reserve Bank of Boston and the United States
Treasury. Moreover, MSLP authorizes subsidiaries of financial institutions to make loans, but
the federal bank fraud statutes do not apply to fraud against such subsidiaries. The wire fraud
statute, therefore, will be critical in such cases. In addition, if a defendant who commits fraud
to obtain his loan uses the money to develop a Ponzi scheme to fleece investors, prosecutors
may want to charge that fraud scheme under the wire fraud statute in the same indictment
that charges the Main Street loan fraud.
Reforming Wire Fraud Venue
The wire fraud statute provides, in pertinent part:
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for
obtaining money or property by means of false or fraudulent pretenses, representations,
or promises, transmits or causes to be transmitted by means of wire, radio, or television
communication in interstate or foreign commerce, any writings, signs, signals, pictures,

94 18 U.S.C. § 3282.
95 18 U.S.C. § 1001.
96 18 U.S.C. §§ 1956–57.
97 18 U.S.C. § 371.

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

41
or sounds for the purpose of executing such scheme or artifice, shall be fined under this
title or imprisoned not more than 20 years . . . .”98
Prosecuting wire fraud requires the government to prove that the defendant knowingly either
designed or participated in a scheme to defraud a victim and used an interstate or foreign wire
transmission in furtherance of the scheme. Finally, the government must prove that the offense
occurred in the federal district where a grand jury returns an indictment.
It is increasingly difficult to show the district where an interstate wire transmission occurred.
Wire fraud charges 25 years ago were often based on telephone calls and later transmissions
from facsimile (fax) machines. The location of the person sending or receiving either a call or a
fax usually was shown by the area code. The locations of electronic financial transactions were
easier to prove because they usually began or ended at the physical site where one of the
parties banked.
But today, most fraud schemes arise out of communications by mobile phone, email, text
message, or some other electronic means. Money transfers can be initiated by mobile phone.
Most documents are transferred electronically, rather than FedEx or UPS.99 Proving the
transmissions began or ended in a particular location is often difficult. For example, a victim
may recall sending an email to initiate a wire transfer, but the person years later does not recall
whether it was from work, home, or while on the road. Cell tower location data is usually
unavailable by the time that the fraud is uncovered and law enforcement can obtain a search
warrant. If a victim used a computer, the person may not recall exactly where she was, and
their internet service provider may no longer have that information.
It can also be difficult to identify where financial institutions received requests to make
transfers, initiated the transfers, received the transfers, and credited customers’ accounts.
These processes occur on bank computer servers. These servers are usually not located at the
branch where a customer has an account. Sometimes banks use different servers for different
stages of the transfer process, and sometimes banks have more than one server handling one
stage of the process for multiple branches. When a fraud scheme does not become apparent
for a few years, it can be difficult, if not impossible, for a financial institution to be able to state
with certainty where the server was located that processed a particular transaction.
If it is discovered in five years that a Main Street borrower committed fraud when obtaining a
loan, the Federal Reserve Bank of Boston likely will have evidence that would prove venue for
some wire transmissions that were part of the fraud scheme. The government, however, should
not have to prosecute all such defendants in Boston. There may be good reasons in a case to
want to bring the charges where the lending institution is located or where the borrower lived
at the time. For instance, the witnesses who helped assemble the information needed for a
Main Street loan application are likely to recall where they were when they worked on that

98 18 U.S.C. § 1343.
99 Until recent years, documents were generally transferred by the United States Postal Service or an interstate commercial
carrier. When those transfers were in furtherance of a scheme to defraud, defendants were charged under the mail fraud
statute, 18 U.S.C. § 1341. Again, the important evidence about the locations of the parties sending or receiving the documents
was often clear from the documents themselves and corroborated by carrier records.

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

42
task. An employee from a large bank may recall the branch in which he or she reviewed the
borrower’s electronic application, even if no one is sure where the server was located that
contained the application at the time. Under current venue law, however, proof of the locations
of these two acts would not establish venue in either of the respective judicial districts, unless
there was also proof that an interstate wire transmission occurred in the district.
To address these concerns, SIGPR recommends adding to the wire fraud statute a new
subsection (b) authorizing prosecution in any district where a participant in the scheme
committed an act for the purpose of executing the scheme to defraud, as follows:
Ҥ 1343. Fraud by wire, radio, or television
     “(b) Venue. A prosecution for an offense under this section may be brought in—
“(1) any district in which a prosecution could be brought under sections 3232 and 3237; or
“(2) any district in which a participant in the wire fraud scheme committed, or caused to
be committed, an act for the purpose of executing the alleged scheme or artifice.
The draft venue rule supplements the general venue provisions (18 U.S.C. §§ 3232, 3237) by
clarifying that wire fraud is committed not only where a wire transmission was sent or received,
but also where any act in furtherance of the fraud scheme occurred. Devising a scheme to
defraud is a critical element of this offense and legislation permitting venue in a district where
the defendant committed an act to further the scheme is consistent with the Constitution’s
venue provisions.
Expanding venue for wire fraud offenses involving schemes to defraud is consistent with the
venue provisions for the related offense of criminal conspiracy.100 The Supreme Court “has long
held that venue is proper in any district in which an overt act in furtherance of the conspiracy
was committed, even where an overt act is not a required element of the conspiracy
offense.”101
Moreover, Congress has broadened venue provisions for a criminal offense before. Take, for
example, the venue amendments to the federal money laundering offense enacted after the
Supreme Court’s decision in United States v. Cabrales.102 In Cabrales, the Court interpreted
default venue rule under section 3237 and held that a state (where tainted money was
generated through drug trafficking) was not the proper venue to prosecute money laundering
offenses that took place “wholly within” a different state.103 Because Cabrales was only charged

100 See United States v. Lothian, 976 F.2d 1257, 1262 (9th Cir.1992) (“Because an essential element of these offenses is a
fraudulent scheme, mail and wire fraud are treated like conspiracy in several respects”); United States v. Wormick, 709 F.2d
454, 461 (7th Cir. 1983) (“[C]onspiracy doctrines apply to a multi-member mail fraud scheme even if the indictment does not
formally charge conspiracy.”).
101 Whitfield v. United States, 543 U.S. 209, 218 (2005); see, e.g., United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 251
(1940); see also Hyde v. United States, 225 U.S. 347, 354 (1912).
102 524 U.S. 1 (1998).
103 Id. at 7–10.

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

43
with money laundering, not conspiracy or the anterior narcotics activity, the offense had begun,
continued, and been completed outside the district that brought the charges.104
Congress subsequently added subsection (i) to 18 U.S.C. § 1956(i).105 Under the special venue
provision, the government can bring money laundering cases in the district where the tainted
money was generated if the government can show that the defendant participated in the
transfer of the money to the district where the money laundering offense occurred.106
Wire fraud venue rules should be similarly amended. It would be more effective and efficient to
permit wire fraud charges in any district where the government can show that the defendant
committed an overt act in execution of the fraud scheme.107 The proposed amendment would
enhance the government’s ability to effectively prosecute persons who fraudulently obtained
loans in the MSLP and defendants who victimized people in other wire fraud schemes. Whether
a defendant scams the MSLP or steals money from a church or daycare center, prosecutors and
investigators could focus on identifying and prosecuting fraud schemes, not on developing
evidence to prove appropriate venue. Moreover, the proposed statute could be applied as soon
as it becomes law.108
Enforcement: Don’t Tip Off the Target
In United States v. Miller, the Supreme Court held that a bank customer has no protected
Fourth Amendment interest in the bank’s records of his transactions and finances.109 Congress
aimed to restore financial privacy in the Right to Financial Privacy Act (RFPA) of 1978.110
Enacted one month after the Inspector General Act, the RFPA requires federal authorities to
notify the customers of banks and other financial institutions when seeking their records. The
statute also provides a means for the customer to oppose disclosure and challenge the
government’s authority to request their records.111

104 Id. (“In the counts at issue, the Government indicted Cabrales for transactions which began, continued, and were completed
only in Florida. Under these circumstances, venue in Missouri is improper.”).
105 See USA PATRIOT Act of 2001, Pub. L. No. 107-56, Title X, § 1004, 115 Stat. 392 (Oct. 26, 2001).
106 18 U.S.C. § 1956(i)(1)(B).
107 The proposed statute would not eliminate the government’s requirement that it prove the federal jurisdictional element of a
wire fraud offense: the interstate wire transmission. That element can be easier to prove, however, than the exact location of
the beginning or end of a wire transmission. For instance, there may be evidence that proves that a defendant was in California
when he sent an email, but the evidence is not clear enough to show which district he was in. Similarly, there may be evidence
that a bank received the email on its servers, but the bank may only know a server in Florida or Virginia received it but is unsure
which one. Nevertheless, that evidence would be sufficient to show an interstate wire communication, but insufficient to prove
venue in a particular district.
108 Venue is not an element of a crime, so the Constitution’s Ex Post Facto Clause permits changes in venue law to apply
retroactively. See Gut v. State of Minnesota, 76 U.S. 35, 36 (1869). New procedural law can be applied can be applied
retroactively unless a “manifest injustice” results. Bradley v. Richmond School Bd., 416 U.S. 696, 711 (1974). Changes in venue
law are “wholly procedural.” Denver & R. G. W. R. Co. v. Bhd. of R. R. Trainmen, 387 U.S. 556, 563 (1967) (venue “amendment
does not change the substantive law applicable to this lawsuit. It is wholly procedural.”); Moore v. Agency for Int'l Development,
994 F.2d 874 (D.C. Cir. 1993) (same).
109 425 U.S. 435 (1976); accord Smith v. Maryland, 442 U.S. 735, 745 (1979) (telephone company’s records of customer calls).
110 Pub. L. 95-630, Stat. (1978), codified as amended at 12 U.S.C. §§ 3401–23. The House Report accompanying RFPA chastised
the Miller Court for failing to “acknowledge the sensitive nature of these records . . . .” See H.R. Rep. No. 1383, 95th Cong, 2d
Sess., 34.
111 12 U.S.C. § 3410.

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

44
RFPA customer notice rule contains numerous exceptions, including for grand jury
subpoenas.112 Inspectors general, however, are not exempt. If SIGPR ever issues a subpoena to
a financial institution to obtain personal finance records, SIGPR must first notify the person
whose records are sought by the subpoena. That person can then challenge the subpoena in
court, consent to disclosure of the records, or ignore the notice, which works as a waiver with
the passage of time. Once this notice process is complete, SIGPR can then notify the financial
institution that the RFPA’s notice provisions have been complied with, and the financial
institution can respond to the subpoena.113
If SIGPR must notify the target of an investigation in order to seek his records, the implications
to a successful investigation are obvious. The subject is provided an opportunity to destroy or
tamper with evidence, flee, or intimidate witnesses. Premature disclosure can also prevent
legitimate undercover work and inhibit recovery of misspent funds. These financial transactions
can be complicated to trace and unravel. And advance notice can impede the government’s
forfeiture and other civil remedies that are designed to ensure the minimization of unlawful
losses of federal dollars.
Notification is particularly burdensome on inspectors general. The RFPA requires notification to
the target within 14 days when records obtained under the RFPA are transferred to another
agency, which happens when inspectors general transfer records to DOJ in furtherance of a
criminal investigation.
These issues are addressed in the following draft language:
     Ҥ 3413. Exceptions
     ***
     “(i) Disclosure pursuant to issuance of subpoena or court order respecting grand jury
proceeding or law enforcement investigation.
Nothing in this chapter (except sections 3415 and 3420 of this title) shall apply to any subpoena
or court order issued in connection with (1) proceedings before a grand jury, or (2) a law
enforcement investigation by an Inspector General under the Inspector General Act of 1978, as
amended; except that a court shall have authority to order a financial institution, on which a grand
jury or Inspector General subpoena for customer records has been served, not to notify the
customer of the existence of the subpoena or information that has been furnished to the grand
jury or in response to the Inspector General subpoena, under the circumstances and for the period
specified and pursuant to the procedures established in section 3409 of this title.
Indeed, financial institutions should be affirmatively barred from notifying targets of SIGPR
criminal investigations, just as they are barred from tipping off the subjects of grand jury
investigations in some circumstances under the RFPA.114 Inspectors general often work cases at
a nascent stage and build evidence against a particular suspect before transferring material to

112 12 U.S.C. § 3413(i).
113 12 U.S.C. § 3404(b)
114 See 12 U.S.C. § 3420(b)(1) (prohibiting financial institutions from notifying a person named in a grand jury subpoena about
the existence of the subpoena if the subpoena relates to certain financial or controlled substance offenses).

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

45
the appropriate United States Attorney’s Office (USAO). The USAO, in turn, will resume the
investigation through a grand jury. But because the evidence was first uncovered by an
inspector general, the RFPA mandates that SIGPR tip off the target. Inspector general
subpoenas should be protected from disclosure in the same way grand jury subpoenas are
protected.
A better approach is to treat grand jury investigations and criminal investigations initiated by
inspectors general alike. Inspectors general are rightly subject to the RFPA when it comes to
routine audits and inspections. Criminal investigations, however, are of a different dye and
deserve greater protection against tipping off the target.
The following draft language addresses this concern:

Ҥ 3420 Grand jury information; notification of certain persons prohibited
“(a) Financial records about a customer obtained from a financial institution pursuant to a
subpoena issued under the authority of a Federal grand jury or by an Inspector General as part of
a law enforcement investigation—
(1) in the case of a grand jury subpoena, shall be returned and actually presented to the grand
jury unless the volume of such records makes such return and actual presentation impractical
in which case the grand jury shall be provided with a description of the contents of the
records;
(2) in the case of a grand jury subpoena, shall be used only for the purpose of considering
whether to issue an indictment or presentment by that grand jury, or of prosecuting a crime
for which that indictment or presentment is issued, or for a purpose authorized by rule 6(e)
of the Federal Rules of Criminal Procedure, or for a purpose authorized by section 3412(a) of
this title;
(3) in the case of an Inspector General subpoena, shall be used only for a legitimate law
enforcement purpose, and any subsequent disclosure or transfer or records obtained
pursuant to that subpoena to the Department of Justice shall be exempt from the provisions
of sections 3412(a) and (b) of this title;
(4) shall be destroyed or returned to the financial institution if not used for one of the
purposes specified in paragraph (2); and
(5) shall not be maintained, or a description of the contents of such records shall not be
maintained by any Government authority other than in the sealed records of the grand jury,
unless such record has been used in the prosecution of a crime for which the grand jury issued
an indictment or presentment or for a purpose authorized by rule 6(e) of the Federal Rules of
Criminal Procedure.
(b)(1) No officer, director, partner, employee, or shareholder of, or agent or attorney for, a
financial institution shall, directly or indirectly, notify any person named in a grand jury or
Inspector General subpoena served on such institution in connection with an investigation
relating to a possible—

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

46
(A) crime against any financial institution or supervisory agency or crime involving a
violation of the Controlled Substance Act2, the Controlled Substances Import and Export
Act, section 1956, 1957, or 1960 of Title 18, sections 5313, 5316, 5322, 5324, 5331, and
5332 of Title 31, or section 6050I of Title 26; or
(B) conspiracy to commit such a crime, about the existence or contents of such subpoena,
or information that has been furnished to the grand jury or Inspector General in response
to such subpoena.
(2) Section 1818 of this title and section 1786(k)(2) of this title shall apply to any violation of
this subsection.

These statutory revisions are presented in Appendix C.

CHALLENGES

SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

47

APPENDICES

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

48
Appendix A
Statutory Covenant for Information Access
While the programs under SIGPR’s oversight have concluded disbursing funds and making
loans, we propose amendments to the CARES Act to provide a model in case of future
emergency relief legislation. To ensure inspectors general have access to needed information,
CARES Act section 4003 could have been written to include a subsection (i), as follows:
“(i) INFORMATION ACCESS.—Any borrower receiving funds described in this section must
permit the Office of Inspector General for the Department of the Treasury and the Special
Inspector General for Pandemic Recovery to visit and inspect any of its properties
(including property pledged as collateral), to examine its corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its directors, officers, and independent public
accountants at such reasonable times during normal business hours and as often as may
be reasonably requested. Any lending institution participating in a loan or loan guarantee
program under this section must permit the Office of Inspector General for the
Department of the Treasury and the Special Inspector General for Pandemic Recovery to
examine its corporate, financial and operating records relating to any loan or loan
guarantee made under this section, and make copies thereof or abstracts therefrom, and
to discuss its related affairs, finances and accounts with its directors and officers at such
reasonable times during normal business hours and as often as may be reasonably
requested.

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

49
Appendix B
Venue
Congress could remedy the identified challenges in wire fraud prosecutions by amending the
wire fraud statute with the underlined language as follows:
Existing Text:
Revised Text:

Ҥ 1343. Fraud by wire, radio, or
television

“Whoever, having devised or intending
to devise any scheme or artifice to
defraud, or for obtaining money or
property by means of false or fraudulent
pretenses, representations, or promises,
transmits or causes to be transmitted by
means of wire, radio, or television
communication in interstate or foreign
commerce, any writings, signs, signals,
pictures, or sounds for the purpose of
executing such scheme or artifice, shall
be fined under this title or imprisoned
not more than 20 years, or both. If the
violation occurs in relation to, or
involving
any
benefit
authorized,
transported, transmitted, transferred,
disbursed, or paid in connection with, a
presidentially declared major disaster or
emergency (as those terms are defined
in section 102 of the Robert T. Stafford
Disaster
Relief
and
Emergency
Assistance Act (42 U.S.C. 5122)), or
affects a financial institution, such
person shall be fined not more than
$1,000,000 or imprisoned not more than
30 years, or both.

Ҥ 1343. Fraud by wire, radio, or
television

“(a) Whoever, having devised or
intending to devise any scheme or
artifice to defraud, or for obtaining
money or property by means of false or
fraudulent pretenses, representations,
or promises, transmits or causes to be
transmitted by means of wire, radio, or
television communication in interstate
or foreign commerce, any writings,
signs, signals, pictures, or sounds for the
purpose of executing such scheme or
artifice, shall be fined under this title or
imprisoned not more than 20 years, or
both. If the violation occurs in relation
to, or involving any benefit authorized,
transported, transmitted, transferred,
disbursed, or paid in connection with, a
presidentially declared major disaster
or emergency (as those terms are
defined in section 102 of the Robert T.
Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5122)), or
affects a financial institution, such
person shall be fined not more than
$1,000,000 or imprisoned not more
than 30 years, or both.
(b) Venue. A prosecution for an offense
under this section may be brought in—

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

50

(1) any district in which a prosecution
could be brought under sections 3232
and 3237; or
(2) any district in which a participant in
the wire fraud scheme committed, or
caused to be committed, an act for the
purpose of executing the alleged
scheme or artifice.

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

51
Appendix C
Proposed amendments to 12 U.S.C. §§ 3413, 3420
Redlined Comparison
Existing Text:
Revised Text:

Ҥ 3413. Exceptions
     ***
     “(i) Disclosure pursuant to issuance of
subpoena or court order respecting grand
jury proceeding
Nothing in this chapter (except sections
3415 and 3420 of this title) shall apply to
any subpoena or court order issued in
connection with proceedings before a
grand jury, except that a court shall have
authority to order a financial institution,
on which a grand jury subpoena for
customer records has been served, not to
notify the customer of the existence of the
subpoena or information that has been
furnished to the grand jury, under the
circumstances and for the period specified
and
pursuant
to
the
procedures
established in section 3409 of this title.

§ 3420 Grand jury information;
notification of certain persons prohibited
“(a) Financial records about a customer
obtained from a financial institution pursuant
to a subpoena issued under the authority of a
Federal grand jury—
Ҥ 3413. Exceptions
     ***
     “(i) Disclosure pursuant to issuance of
subpoena or court order respecting grand
jury proceeding or law enforcement
investigation.
Nothing in this chapter (except sections
3415 and 3420 of this title) shall apply to
any subpoena or court order issued in
connection with (1) proceedings before a
grand jury, or (2) a law enforcement
investigation by an Inspector General
under the Inspector General Act of 1978,
as amended; except that a court shall have
authority to order a financial institution,
on which a grand jury or Inspector General
subpoena for customer records has been
served, not to notify the customer of the
existence of the subpoena or information
that has been furnished to the grand jury
or in response to the Inspector General
subpoena, under the circumstances and
for the period specified and pursuant to
the procedures established in section 3409
of this title.

§ 3420 Grand jury information;
notification of certain persons prohibited
“(a) Financial records about a customer
obtained from a financial institution pursuant
to a subpoena issued under the authority of a
Federal grand jury or by an Inspector General
as part of a law enforcement investigation—

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

52
(1) shall be returned and actually presented
to the grand jury unless the volume of such
records makes such return and actual
presentation impractical in which case the
grand jury shall be provided with a
description of the contents of the records;
(2) shall be used only for the purpose of
considering whether to issue an indictment
or presentment by that grand jury, or of
prosecuting a crime for which that
indictment or presentment is issued, or for a
purpose authorized by rule 6(e) of the
Federal Rules of Criminal Procedure, or for a
purpose authorized by section 3412(a) of this
title;
(3) shall be destroyed or returned to the
financial institution if not used for one of the
purposes specified in paragraph (2); and
(4) shall not be maintained, or a description
of the contents of such records shall not be
maintained by any Government authority
other than in the sealed records of the grand
jury, unless such record has been used in the
prosecution of a crime for which the grand
jury issued an indictment or presentment or
for a purpose authorized by rule 6(e) of the
Federal Rules of Criminal Procedure.

(b)(1) No officer, director, partner, employee,
or shareholder of, or agent or attorney for, a
financial institution shall, directly or
indirectly, notify any person named in a
grand jury subpoena served on such
institution in connection with an
investigation relating to a possible—
      (A) crime against any financial institution
or supervisory agency or crime involving a
violation of the Controlled Substance Act2,
the Controlled Substances Import and Export
Act, section 1956, 1957, or 1960 of Title 18,
(1) in the case of a grand jury subpoena, shall
be returned and actually presented to the
grand jury unless the volume of such records
makes such return and actual presentation
impractical in which case the grand jury shall
be provided with a description of the
contents of the records;
(2) in the case of a grand jury subpoena, shall
be used only for the purpose of considering
whether to issue an indictment or
presentment by that grand jury, or of
prosecuting a crime for which that
indictment or presentment is issued, or for a
purpose authorized by rule 6(e) of the
Federal Rules of Criminal Procedure, or for a
purpose authorized by section 3412(a) of this
title;
(3) in the case of an Inspector General
subpoena, shall be used only for a legitimate
law enforcement purpose, and any
subsequent disclosure or transfer or records
obtained pursuant to that subpoena to the
Department of Justice shall be exempt from
the provisions of sections 3412(a) and (b) of
this title;
(4) shall be destroyed or returned to the
financial institution if not used for one of the
purposes specified in paragraph (2); and
(5) shall not be maintained, or a description
of the contents of such records shall not be
maintained by any Government authority
other than in the sealed records of the grand
jury, unless such record has been used in the
prosecution of a crime for which the grand
jury issued an indictment or presentment or
for a purpose authorized by rule 6(e) of the
Federal Rules of Criminal Procedure.

(b)(1) No officer, director, partner, employee,
or shareholder of, or agent or attorney for, a

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

53
sections 5313, 5316, 5322, 5324, 5331, and
5332 of Title 31, or section 6050I of Title 26;
or
     (B) conspiracy to commit such a crime,
about the existence or contents of such
subpoena, or information that has been
furnished to the grand jury in response to
such subpoena.
(2) Section 1818 of this title and section
1786(k)(2) of this title shall apply to any
violation of this subsection.
financial institution shall, directly or
indirectly, notify any person named in a
grand jury or Inspector General subpoena
served on such institution in connection with
an investigation relating to a possible—
      (A) crime against any financial institution
or supervisory agency or crime involving a
violation of the Controlled Substance Act2,
the Controlled Substances Import and Export
Act, section 1956, 1957, or 1960 of Title 18,
sections 5313, 5316, 5322, 5324, 5331, and
5332 of Title 31, or section 6050I of Title 26;
or
     (B) conspiracy to commit such a crime,
about the existence or contents of such
subpoena, or information that has been
furnished to the grand jury or Inspector
General in response to such subpoena.
(2) Section 1818 of this title and section
1786(k)(2) of this title shall apply to any
violation of this subsection.

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

54
Appendix D
Correspondence between SIGPR and Treasury regarding information sharing

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

55

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

56

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

57

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

58

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

59
Appendix E
Correspondence SIGPR sent to the Department of Justice Office of Legal Counsel

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

60

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

61

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

62

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

63

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

64

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

65

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

66

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

67

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

68

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

69

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

70

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

71

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

72

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

73

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

74

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

75

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

76

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

77

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

78

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

79

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

80

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

81

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

82

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

83

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

84

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

85

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

86

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

87

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

88

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

89

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

90

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

91

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

92

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

93

APPENDICES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS | JANUARY 1 – MARCH 31, 2021

94

HELP FIGHT
FRAUD,
WASTE, AND
ABUSE.

hotline@sigpr.gov
202-927-7899

Office of the Special Inspector General for Pandemic Recovery| U.S. Department of the Treasury
1500 Pennsylvania Avenue NW, Suite 4428| Washington, D.C. 20220
www.sigpr.gov

File and source

File

REPORT_SIGPR_special-inspector-general-pandemic-recovery-quarterly-report_2021-04-30.pdf

Size

8,718,758 bytes

SHA-256

a830ea4557c93c4dc22287ee2c3af28457b5a69dee870d0f853b5c6712f538cb

Our copy

REPORT_SIGPR_special-inspector-general-pandemic-recovery-quarterly-report_2021-04-30.pdf

Original

www.oversight.gov