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OFFICE OF THE SPECIAL INSPECTOR GENERAL
FOR PANDEMIC RECOVERY
Quarterly Report to the United States Congress
October to December 2023
i SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
MESSAGE FROM THE SPECIAL INSPECTOR GENERAL
FOR PANDEMIC RECOVERY
I am pleased to present our fifteenth Quarterly Report to Congress. During this reporting period, the
Special Inspector General for Pandemic Recovery (SIGPR) has issued our fourth interim report based on
Main Street Lending Program (MSLP) loan information received as part of subpoena requests to the
lender banks. These banks reported over $1 billion in loans that were either in default, impaired, had
delinquent interest payments, or were loans where the borrower made material misrepresentations
during the loan process. Our November 7, 2023, interim report notes that approximately half of the
$164 million in MSLP loan losses are associated with loans that have been under investigation for
alleged fraud. SIGPR will continue to monitor this situation as the actual loan loss figure has increased to
$564 million as of December 31, 2023.
In addition, we are currently conducting a significant number of investigations within SIGPR’s jurisdiction,
as well as continuing to enhance other pandemic oversight efforts through our active participation in
the Pandemic Response Accountability Committee’s Fraud Task Force. Unlike many agencies that work
primarily on cases referred to them, SIGPR has focused most of its efforts on developing its own leads
for cases. Ninety one percent of matters currently under investigation under its statutory authority at
SIGPR came from self-generated leads, and those investigations involve potential fraud arising from
more than $388 million in CARES Act funds.
This quarter SIGPR’s investigations resulted in an individual being sentenced for bank fraud and money
laundering associated to loans obtained through the MSLP and Paycheck Protection Program (PPP)
funds for unauthorized purposes and for their own personal enrichment.
I want to thank the auditors, special agents, attorneys, and administrative staff of SIGPR, all of whom are
professional public servants who share one goal—to protect the American people from fraud, waste, and
abuse.
As I have noted in previous correspondence and other communications with Congress, for this work to
continue, we are asking for a five-year extension beyond our March 2025 sunset date. We need this time
to see our investigations through to completion. Most loans within our jurisdiction mature in 2025;
should defaults then occur, without an extension SIGPR will sunset just when we are most needed. We
at SIGPR will continue our mission and look forward to working with you in the future.
Very respectfully,
Brian D. Miller
Special Inspector General for Pandemic Recovery
REPORT TO CONGRESS | OCTOBER – DECEMBER 2023
ii
PROFILE
ABOUT
SIGPR is an independent organization within Treasury whose mission is to promote the economy,
efficiency, effectiveness, and integrity of CARES Act funds and programs. SIGPR was established by section
4018 of the CARES Act with duties, responsibilities, and authority under the Inspector General Act of
1978.
STAFFING AND BUDGET
SIGPR has 38 employees on board. We continue to be judicious in the execution of our budget in support
of the SIGPR mission.
CONTENTS
SIGPR OVERSIGHT
Audits
1
Investigations
5
FINDINGS AND DEVELOPMENTS
Direct Loans and Other Investments
11
1 SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
SECTION 1
SIGPR OVERSIGHT
SIGPR employs proactive efforts to 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:
Audits
The Office of Audits conducts audits and evaluations of loans and other investments made by Treasury
under programs within SIGPR’s jurisdiction.1
Engagements
During this quarter, the Office of Audits worked on two engagements related to the Direct Loan Program
and one audit of Treasury’s Investment in the Main Street Lending Program. The Direct Loan Program
was established under section 4003 of the CARES Act and 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. Treasury made direct loans to 35 such
businesses, providing them with liquidity to withstand losses incurred as a result of the coronavirus
pandemic. As of January 1, 2024, 10 of these 35 loans were in default.2 These defaults include 2
borrowers who have filed for bankruptcy. The total outstanding loan amount for the loans in default is
over $636 million.3
The Main Street Lending Program (MSLP) supported lending to small and medium-sized for-profit
businesses and nonprofit organizations that were in sound financial condition before the onset of the
1 See CARES Act § 4018(c)(1)
2 Borrowers whose direct loans are currently in default are Aero Hydraulics, Inc.; Caribbean Sun Airlines, Inc.; Elite
Airways, LLC; Island Wings, Inc.; Legacy Airways, LLC; Meridian Rapid Defense Group, LLC; oVio Technologies, Inc.;
Timco Engine Center, Inc.; Visual Semantics, Inc.; and Yellow Corporation.
3 A single borrower, Yellow Corporation, owes approximately $597 million of this total.
SIGPR OVERSIGHT
REPORT TO CONGRESS | OCTOBER – DECEMBER 2023
2
pandemic. The Federal Reserve Bank of Boston, which manages the program, set up a Special Purpose
Vehicle to purchase 95 percent of participations in MSLP loans from lender banks. These purchases were
backed by a $16.6 billion equity investment by Treasury.
Limited Scope Review of Yellow Corporation’s Executive Compensation
On August 16, 2023, SIGPR issued a subpoena to Yellow Corporation (Yellow) as part of a limited scope
review of Yellow’s compliance with Section 12.05 – Limitations on Certain Compensations, as found
within its $700 million loan agreement with Treasury.
On July 30, 2023, Treasury received information from Yellow’s financial advisor that Yellow paid over $8
million in compensation to certain corporate officers and employees, including a $3.35 million retention
payment to Yellow’s Chief Executive Officer (CEO). On August 4, 2023, Treasury issued a Notice of
Noncompliance to Yellow to address the situation. Yellow responded to Treasury on August 10, 2023,
that the CEO voluntarily returned the $3.35 million. While Yellow did not make any other self-
disclosures regarding any other violations of their loan agreement, SIGPR has the obligation to further
investigate the self-disclosure they did provide.
We have held meetings with Yellow’s outside counsel and received all documents requested in the
subpoena. We are currently analyzing the provided documentation for any additional violations of
Section 12.05 of the loan agreement.
Audit of Direct Loan Program Borrower – MapLarge, Inc.
MapLarge, Inc. (MapLarge) received a $10 million direct loan from Treasury pursuant to section
4003(b)(3) of the CARES Act. The loan agreement includes covenants by MapLarge to comply with
certain restrictions on employee compensation, stock repurchases, dividends, and other areas as
required by the CARES Act. We are performing the audit to ensure the terms of the loan agreements
between MapLarge and Treasury are being met.
During the course of the audit, the audit team reviewed MapLarge’s responses to Salesforce review card
questions that are designed to monitor compliance with the loan agreement and conducted a site visit
to MapLarge’s headquarters to review supporting documentation and interview MapLarge officials. The
audit team has also corresponded with Treasury officials to gain a better understanding of the nature
and extent of guidance provided to borrowers.
Audit of the Effects the Main Street Lending Program’s Loan Losses Have on Treasury’s Investment in
the Program
On November 7, 2023, SIGPR issued its fourth interim report on Main Street Lending Program loan
information received as part of a subpoena request to the Federal Reserve Bank of Boston. The report is
based on $164 million in actual loan losses declared by the Federal Reserve as of July 31, 2023.
Our interim report notes that of all the loans that comprise the $164 million in actual MSLP loan losses,
approximately half (49 percent) are under investigation for alleged fraud. The amount of actual Main
Street Lending Program loan losses continues to increase ($564 million as of December 31, 2023), and
more initial 15 percent principal payments become due in December 2023. The following chart shows
how Main Street Lending Program losses have increased as SIGPR’s full-time employee count has
dropped approaching its sunset date.
SIGPR OVERSIGHT
3 SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
Main Street Lending Program Loan Losses Increasing as SIGPR Approaches its Sunset
The office tasked with auditing and investigating these loans is reducing employees at the same time the
losses are skyrocketing. We are only in the first of three periods of principal repayment for the loans.
The largest principal payments are not due until after SIGPR is scheduled to sunset. This highlights the
need to extend SIGPR beyond its March 2025 sunset date.
Data Analytics
The Office of Audits data analytics program plays an important role in SIGPR’s mission. The data
analytics platform uses various software and tools that process and analyze large quantities of data to
detect potential red flags and anomalies. These tools are valuable not only for SIGPR’s audit work, but
also for other proactive initiatives throughout SIGPR. The program has developed a data library
containing over 150 million rows of CARES Act funding information, drawn from both public and
sensitive government sources. The program updates the library at least quarterly to maintain accurate
and relevant information.
The data analytics program:
•
Maintains complex risk assessment metrics by creating analytics that identify audit red flags;
•
Harmonizes, cleanses, normalizes, and joins relevant data tables;
•
Maintains a growing library of data tables that provide information and support the detection of
irregularities;
•
Creates interactive dashboards and visualizations to assist users in better understanding and
prioritizing program areas for audits, investigations, and evaluations;
•
Shares analytic methodologies and processes with various external government agencies,
including the Department of Homeland Security, Department of Defense, U.S. Agency for
International Development Office of Inspector General, Pandemic Response Accountability
SIGPR OVERSIGHT
REPORT TO CONGRESS | OCTOBER – DECEMBER 2023
4
Committee (PRAC), Department of Health and Human Services, Amtrak, National Aeronautics
and Space Administration, Department of Education Office of Inspector General, Small Business
Administration Office of Inspector General, General Services Administration Office of Inspector
General, Treasury’s Office of the Chief Data Officer, and others;
•
Collaborates with various inter-governmental agencies, committees, and third-party vendors to
stay informed about emerging analytic technologies, techniques, tools, and methodologies; and
•
Continues to work closely with CIGIE’s Pandemic Analytics Center of Excellence’s data sharing
program and analytics effort in mining data for the benefit of many government agencies and
Offices of Inspector General.
SIGPR OVERSIGHT
5 SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
Investigations
The Office of Investigations (OI) conducts criminal and civil investigations regarding
allegations of fraud, waste, abuse, or misconduct involving CARES Act funds and programs
within SIGPR’s jurisdiction. In addition, OI manages SIGPR’s hotline, which serves as a
primary avenue for reporting fraud, waste, abuse, or misconduct.
Investigative Activities
OI routinely collaborates with the entire SIGPR team, including auditors, analysts, and attorneys to vet
complaints, develop proactive initiatives, and pursue investigations. SIGPR’s investigations are conducted
in partnership with various U.S. Attorneys’
Offices and the U.S. Department of Justice
(DOJ). Additionally, OI continues its
partnership building efforts with other law
enforcement agencies. OI participates in task
forces and working groups throughout the
federal law enforcement and Inspector General
communities, including the Pandemic
Response Accountability Committee’s (PRAC)
Task Force, DOJ COVID-19 Fraud Enforcement
Task Force, and the DOJ COVID-19 Fraud
Enforcement Strike Forces.
OI’s Historical Accomplishments (January 2021 – present)
As a result of statutory authority challenges to hire criminal investigators (1811 series), imposed by
Department of Treasury, SIGPR’s first 1811 was not onboarded until late December 2020, six months
after Brian Miller was appointed as the IG. Three more 1811s came on in January and February 2021.
Ultimately, OI was able to move ahead by hiring a highly skilled staff that has been very productive in
what has been only three full years of operation. Just a few of the successes are highlighted below:
• OI has opened a total of 72 cases, of which 49 remain pending, with at least 130 potential
defendants.
• 94% of OI’s investigations involve a combination of MSLP, Payroll Protection Program, and
Economic Injury Disaster Loan Program fraud (multi-dippers).
• OI’s investigations have resulted in 21 federal indictments, 21 arrests, four guilty pleas, and four
sentencings which have generated more than $11.9 million in court ordered restitution, $9.8
million in seizure/forfeiture orders, and $350,000 in a civil settlement.
• OI’s investigations also caused $20.8 million in MSLP loans to be repaid, as a result of notification of
an investigation.
• Recently, multiple arrests were made in connection with a complex fraud scheme representing
over $52 million in alleged fraud.
• Two defendants were recently sentenced to a total of 6 years in prison and ordered to pay over
$7.6 million in court ordered restitution.
SIGPR OVERSIGHT
REPORT TO CONGRESS | OCTOBER – DECEMBER 2023
6
• Last Spring, an individual was sentenced to more than 7 years in prison and ordered to pay over
$2.6 million in court ordered restitution.
• Most recently, a woman was sentenced to serve 20 months in prison and ordered to pay more than
$252 thousand in restitution for bank fraud and money laundering violations related to a MSLP
loan.
Current Report Period
During this reporting period, the office continued its investigative and proactive efforts to uncover and
vigorously pursue fraud and wrongdoing related to CARES Act funding under Title IV, Subtitle A. The
following table highlights SIGPR’s investigative activity as it relates to the various CARES Act programs.
SIGPR Investigative Activity – October 1, 2023, through December 31, 2023
Hotline Complaints
Hotline Complaints Received
208
Referrals to Other Agencies
28
Preliminary Inquiries
Opened
6
Closed
0
Converted to Full Investigation
5
Ongoing
7
Investigations*
Opened
6
Closed
1
Ongoing
42
Criminal Actions †
Referrals to the Department of Justice
5
Referrals to State/Local Prosecuting Authorities
0
Indictments/Informations
0
Arrests/Summons
0
Convictions/Pleas
0
Sentencings
1
Civil Actions †
Referrals to the Department of Justice
1
Civil Judgments/Settlements
0
Other Enforcement Actions
IG Subpoenas Issued
11
Suspension/Debarment Recommendations
2
Administrative Suspension
0
Administrative Debarment
0
Investigative Monetary Results †
Funds Seized/Forfeitures**
252,143
Restitution Ordered
252,143
Fines and Penalties
0
SIGPR OVERSIGHT
7 SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
Civil Judgments/Settlements
0
Recoveries***
0
*
Includes all SIGPR program-related cases, including PRAC Fraud Task Force investigations and joint investigations with other
agencies.
†
Includes all SIGPR actions reported, including those resulting from PRAC Fraud Task Force investigations and joint investigations
with other agencies.
**
Includes statistical information not captured in past reporting periods.
*** Includes MSLP funds repaid following notification of an investigation.
Casework Highlights
Throughout the first quarter of fiscal year 2024, OI continued to expand its investigative oversight work
through SIGPR’s collaborative and proactive efforts as exhibited below.
FORMER EDMONDS RESIDENT SENTENCED TO SERVE 20 MONTHS IN FEDERAL PRISON FOR
FRAUD ON MAIN STREET LENDING PROGRAM CREATED IN RESPONSE TO THE PANDEMIC
In November 2023, a woman, formerly of Edmond, Oklahoma, was
sentenced to serve 20 months in federal prison and pay more than
$252 thousand in restitution. The woman committed bank fraud and
money laundering related to a loan obtained through the MSLP, a
lending facility established by the Federal Reserve Board and
supported with funding authorized by the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act). In January 2022, the woman was
charged by a criminal information. The woman executed a loan
agreement falsely representing on how she would use MSLP funds for
working capital and payroll only. The individual also falsely
represented she would not make financial distributions to herself as
the owner of the company. The criminal information further alleged
that the individual laundered the loan proceeds by using them to pay
for construction of a personal home. Other loan funds were used to
purchase a luxury SUV for personal use. https://www.justice.gov/usao-wdok/pr/former-edmond-
resident-sentenced-serve-20-months-federal-prison-fraud-main-street
Suspension and Debarment Activity
Suspension or debarment of an organization or individual excludes that company or individual from
doing business with the Federal Government. These exclusions are intended to ensure that only
responsible companies or individuals participate in contracts and financial assistance awards with the
Federal Government. A suspension temporarily disqualifies the entity; a debarment disqualifies the
entity for a fixed period.
SIGPR has a suspension and debarment referral process when there are indicating acts, events, or
conditions that could serve as the basis for suspension or debarment of a business or individual. This
referral process is used for the purpose of protecting the interests of the government, and not for
punishment. SIGPR’s process involves sending a formal memorandum to Treasury’s Suspension and
Debarment Office (SDO) for consideration. Currently, SIGPR has forwarded 22 referrals to SDO, seven
are in suspension, while the remaining referrals are being considered for action.
SIGPR OVERSIGHT
REPORT TO CONGRESS | OCTOBER – DECEMBER 2023
8
Recognition Of SIGPR’s Casework
26th Council of the Inspectors General on Integrity and Efficiency (CIGIE) Annual Awards Ceremony
On November 7, 2023, the 26th CIGIE Annual Award Ceremony was held at the Ronald Reagan Building in
Washington, DC. The event was in celebration of the very best of work
conducted by the dedicated men and women of the Inspector General
community in all
disciplines. An
Award for
Excellence (team
award) was
presented for the
TEC Ventures LLC
investigation.
The team was
recognized for
outstanding collaboration by a multidisciplinary
investigative team of forensic accountants,
investigators, and attorneys resulting in the
prosecution of Daniel Tisone. The investigative
team consisted of: Trenton Reichling, Assistant United States Attorney (AUSA) MDFL, Suzanne Nebesky,
AUSA MDFL, Julie Simonsen, AUSA MDFL, Grace Bruno, FBI, Rogelio De Se Sedas, SIGPR, Peter Gabrielli,
SIGPR, Jack Hanly, SIGPR, Christopher Hall, IRS-CI, Megan Heister, FBI, Barry McKinley, MDFL.
https://www.ignet.gov/sites/default/files/files/CIGIE2023AwardBooklet_508-compliancex.pdf
Brian Miller, Special Inspector General for Pandemic Recovery recognized SIGPR employees with
CIGIE Awards for Excellence
In December 2023, Inspector General Brain Miller recognized SIGPR employees for their contribution in
the TEC Ventures LLC investigation. Employees
Rogelio De Se Sedas, Jack Hanly, and Peter
Gabrielli (former) were recognized with individual
awards. The team Award for Excellence was in
recognition for their outstanding collaboration
with in a multidisciplinary investigative team of
forensic accountants, investigators, and attorneys
resulting in the prosecution of Daniel Tisone. The
remaining FBI, DOJ, and IRS CI team members will
be recognized at a later date.
SIGPR OVERSIGHT
9 SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
PRAC Fraud Task Force
In January 2021, the PRAC established a Fraud Task Force to serve as a resource for
the Inspector General (IG) community by surging investigative resources into the
areas of greatest need. The PRAC Fraud Task Force brings together agents from 16
Inspectors General to investigate fraud involving a variety of programs, including the
Paycheck Protection Program. Task force agents who are detailed to the PRAC receive
expanded authority to investigate pandemic fraud as well as tools and training to
support their investigations. These agents have partnered with prosecutors at DOJ’s Fraud Section and at
United States Attorneys’ Offices across the country.
Due to the large scale of CARES Act related fraud, the PRAC extended its authority to SIGPR to investigate
additional pandemic-related fraud through a Memorandum of Understanding. Currently, SIGPR has five
special agents assigned to the PRAC Fraud Task Force on a part-time basis. These special agents are
assigned CARES Act (PPP/EIDL/UI) related cases while continuing to work their SIGPR investigative
caseloads (MSLP/Direct Loans). This initiative allows SIGPR to make a broader contribution to the IG
community by assisting with a range of critical investigations that might otherwise remain unstaffed.
https://www.pandemicoversight.gov/
PUBLIC LAW 117–348—JAN. 5, 2023 ‘‘Trafficking Victims Prevention and Protection Reauthorization
Act of 2022’’
In compliance with the reporting requirements to Congress by this law, the Special Inspector General for
Pandemic Recovery had no reportable activity relating to complaints of human trafficking or any related
investigations.
SIGPR Hotline Activity
The SIGPR hotline accepts reports of potential fraud, waste, abuse, and
mismanagement related to CARES Act funding, programs, and personnel. The hotline
also accepts whistleblower complaints from federal employees, former federal
employees, employment applicants, employees of contractors, subcontractors,
grantees and subgrantees, and personal service contractors who wish to report fraud,
waste, abuse, mismanagement, or reprisal actions under the jurisdiction of SIGPR.
During this reporting period, SIGPR received 208 hotline complaints, of which the
majority pertained to matters outside SIGPR’s jurisdiction, as indicated in the table and chart below.
SIGPR OVERSIGHT
REPORT TO CONGRESS | OCTOBER – DECEMBER 2023
10
Complaints by Category
Received October 2023 through December 2023
Category
Total
Title I – Paycheck Protection Program
10
Title IV, Subtitle A — Loans and Investments
2
Title IV, Subtitle A — (13(3) Facilities (MSLP)
2
Title IV, Subtitle B — Payroll Support Program
1
Title V – Coronavirus Relief Fund
3
Multiple CARES Act Programs
4
Economic Impact Payments
3
Unemployment Insurance Programs
7
Rental and Housing Assistance Programs
6
Emergency Income Disaster Loans
1
Income Tax Related
2
Social Security Benefits
95
Financial Institution Related
3
Non-Program Related
69
Grand Total
208
11 SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
SECTION 2
FINDINGS AND DEVELOPMENTS
The CARES Act requires SIGPR to regularly report “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).”4
Accordingly, below are the categories of loans and other investments made by Treasury under CARES
Act section 4003,5 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.
Direct Loans and Other Investments
Introduction
CARES Act section 4003(a) authorized the Secretary of the
Treasury “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),
4 CARES Act § 4018(f)(1)(B)
5 Treasury did not establish a program for “loan guarantees” under CARES Act section 4003.
FINDINGS AND DEVELOPMENTS
REPORT TO CONGRESS | OCTOBER – DECEMBER 2023
12
and businesses critical to maintaining national security ($17 billion).6 The fourth category, described in
section 4003(b)(4), authorized the Secretary to invest in various liquidity programs established by the
Board of Governors of the Federal Reserve System under section 13(3) of the Federal Reserve Act ($454
billion).
The Consolidated Appropriations Act, 2021, amended the CARES Act to rescind unobligated balances of
funds ($429 billion) in these programs.7 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 MSLP, that were authorized to purchase loans until January 8, 2021,
for applications submitted by December 14, 2020.8
Direct Loans
On March 30, 2020, Treasury first announced guidelines for businesses interested in applying for loans
under CARES Act section 4003(b)(1)–(3).9 Those guidelines incorporated several mandatory loan terms
and conditions, with many designed to protect American taxpayers. A summary of these terms and
conditions can be accessed in SIGPR’s previous quarterly reports.
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.
National Security Loan Program
CARES Act section 4003(b)(3) allocated $17 billion for
loans and loan guarantees to “businesses critical to
maintaining national security.” The report excerpts on
the following pages summarize the section 4003(b)(1) – (3) loans current through this quarter.10
6 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. Department of the Treasury, Other Programs,
https://home.treasury.gov/data/other-programs
7 See Consolidated Appropriations Act, 2021, Pub. L. 116-260, div. N §§ 1003, 1005
8 Id. § 1005.
9 U.S. Department of the 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 and Minimum
Requirements for Loans.pdf.,
10 See U.S. Department of the Treasury, Report Under Section 4026(b)(1)(C) of the CARES Act on Loans to Air
Carriers, Eligible Businesses, and National Security Businesses (Jan. 1, 2024) 4026b1CLoanReport010124.pdf
(treasury.gov); see also U.S. Department of the Treasury, Loans to Air Carriers, Eligible Businesses, and National
Security Businesses, Loans to Air Carriers, Eligible Businesses, and National Security Businesses | U.S. Department
of the Treasury (last updated Jan. 21, 2021).
FINDINGS AND DEVELOPMENTS
13 SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
FINDINGS AND DEVELOPMENTS
REPORT TO CONGRESS | OCTOBER – DECEMBER 2023
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FINDINGS AND DEVELOPMENTS
15 SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
FINDINGS AND DEVELOPMENTS
REPORT TO CONGRESS | OCTOBER – DECEMBER 2023
16
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.”11
The Federal Reserve established several liquidity programs (facilities) pursuant to section 13(3) of the
Federal Reserve Act.12 That provision, used extensively during the 2008 financial crisis and amended by
the Dodd-Frank Wall Street Reform and Consumer Protection Act,13 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.”14 The Federal Reserve Board was required to consult with the Secretary of the Treasury
prior to the Federal Reserve Board’s 2015 issuance of its regulations governing emergency lending under
section 13(3) of the Federal Reserve Act.15 The Federal Reserve may not establish any emergency
lending program under section 13(3) without prior approval of the Secretary of the Treasury.16
Of note, as of December 31, 2023, MS Facilities, LLC—a special-purpose vehicle (SPV) jointly formed by
Treasury and the Federal Reserve Bank of Boston to operate the MSLP—has recognized approximately
$564 million in actual loan losses, net of subsequent recoveries.17 This number has more than doubled
from $257 million since SIGPR’s last quarterly report, and is over $500 million in estimated loan losses
for calendar year 2023 alone.
In addition, an evaluation of loan participations purchased by the MS Facilities, LLC resulted in a
reported loan loss allowance in the amount of $820 million.18 The allowance for loan losses is estimated
based upon MS Facilities, LLC’s holdings as of September 30, 2023.19
These facilities have stopped extending loans or purchasing obligations. Additional details for the facilities
are available on the Federal Reserve’s website.20 The Federal Reserve has indicated that because the
MSLP ceased purchasing participations on January 8, 2021, it will not provide additional transaction-
specific disclosures about the MSLP on a periodic basis going forward.
11 CARES Act § 4003(b)(4)(A)–(C)
12 See 12 U.S.C. § 343(3)
13 Pub. L. 111-203, 124 Stat. 1375
14 12 U.S.C. § 343(3)(A); see also 12 C.F.R. § 201.4(d)
15 12 U.S.C. § 343(3)(B)(i)
16 12 U.S.C. § 343(3)(B)(iv)
17 See Bd. of Governors of the Fed. Reserve Sys., Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act. Section 13(3) Reports (federalreserve.gov)
(Jan. 10, 2024)
18 See id.
19 See id.
20 See id.
FINDINGS AND DEVELOPMENTS
17 SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
The following table summarizes the total amount of remaining CARES Act funds that Treasury invested
in MS Facilities, LLC and other SPVs created in conjunction with other lending programs as of December
31, 2023.21
Recipient
Treasury Investment Remaining as of
Dec. 31, 2023
MS Facilities, LLC
$7,976,892,373.63
TALF II, LLC
$0.00
Corporate Credit Facilities, LLC
$0.00
Municipal Liquidity Facility, LLC
$0.00
The SPVs have returned the following amounts to Treasury as of December 31, 2023.
Recipient
Investment Returned to Treasury as of
Dec. 31, 2023
MS Facilities, LLC
$30,061,521,137.36
TALF II, LLC
$10,047,592,763.45
Corporate Credit Facilities, LLC
$37,980,215,713.55
Municipal Liquidity Facility, LLC
$17,643,802,707.72
21 Letter from Michelle Dickerman, Deputy Assistant General Counsel, Office of General Counsel, Treasury, to
Vincent Mulloy, Special Counsel, Office of General Counsel, SIGPR, Treasury (Jan. 29, 2024) (on file with SIGPR).
HELP FIGHT
FRAUD, WASTE, AND ABUSE.
BY EMAIL: hotline@sigpr.gov
BY PHONE: 202-927-7899
www.sigpr.gov