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OFFICE OF THE SPECIAL INSPECTOR GENERAL
FOR PANDEMIC RECOVERY
Quarterly Report to the United States Congress
October through December 2024
MESSAGE FROM THE SPECIAL INSPECTOR GENERAL
FOR PANDEMIC RECOVERY
I am pleased to present our 19th semi-annual report to Congress. This will be our final report if SIGPR
sunsets in less than three months. With award winning criminal investigations that have yielded a
myriad of judicial actions, a return on investment of over 300%, and 130 potential defendants that will
more than likely never be prosecuted if SIGPR sunsets, it would be unwise not to extend SIGPR in order
for us to continue our mission. The Federal Reserve has reported over $1.36 billion in loan losses, which
will only increase as the 70% principal payments start coming due on the loans four months after SIGPR
terminates operations.
During this reporting period, SIGPR issued its final memorandum on the effect the Main Street Lending
Program (MSLP) loan losses have on Treasury’s investment in the program. SIGPR continues to rely
almost entirely upon leads it developed itself (as opposed to the referrals that most agencies pursue)
and has continued its pursuit of a significant number of investigations within SIGPR’s jurisdiction. These
investigations encompass potential fraud totaling $577 million and as many as 130 potential defendants.
This quarter the Office of Investigations was responsible for numerous outcomes involving fraud
schemes against multiple CARES Act programs. A nationwide telecommunications provider and its CEO
pled guilty to a scheme to defraud programs administered by the Federal Communications Commission
(FCC) and Small Business Administration (SBA) totaling over $127 million. In Texas, two individuals pled
guilty for their involvement in a $53 million fraud scheme that included over $13 million in CARES Act
funding. In another case, three individuals were arrested in connection with a Paycheck Protection
Program (PPP) fraud scheme where PPP lending service providers were submitting fraudulent
applications. Additionally, six individuals in the Western District of Virginia pled guilty to filing fraudulent
claims totaling more than $341,000 to obtain pandemic unemployment benefits while incarcerated.
I want to thank the auditors, special agents, attorneys, and administrative staff of SIGPR, all of whom are
professional public servants sharing 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 and program audits to conclusion. Most loans
within our jurisdiction mature in 2025; should defaults then occur, without an extension SIGPR will
sunset just when it is 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
SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
1
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 21 employees on board. We continue to be judicious in the execution of our budget in support
of the SIGPR mission.
CONTENTS
SIGPR OVERSIGHT
Audits
3
Investigations
5
FINDINGS AND DEVELOPMENTS
Direct Loans and Other Investments
13
REPORT TO CONGRESS | APRIL – JUNE 2024
2
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 completed one engagement related to Treasury’s investment in
the MSLP. The 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 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.
The office also continued to monitor the performance of Treasury’s Direct Loan 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, 2025, nine loans with outstanding balances were in default.2 The total
outstanding loan amount for the loans in default is approximately $49.7 million.
Audit of the Effects the Main Street Lending Program’s Loan Losses Have on Treasury’s Investment in
the Program
SIGPR issued its final memorandum, which focuses on whether MSLP loan losses will prevent the
Department of the Treasury from being reimbursed its entire $37.5 billion equity investment into the
program. MSLP 5-year term loans do not become due until July 2025 through January 2026. Without
extension to SIGPR’s currently scheduled March 2025 statutory sunset date, it will not exist to
definitively determine whether Treasury will recover all its investment into the program.
As of November 30, 2024, Treasury has been reimbursed all but $3.46 billion of its initial investment.
However, MSLP loan losses continue to increase, and as of December 31, 2024, the total loss figure is
approximately $1.36 billion. MSLP borrowers recently made their second 15 percent principal payments
and are facing 70 percent principal balloon payments starting later this year as well as variable loan
interest rates that have increased significantly since loan origination. These are contributing factors to
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.; and Visual Semantics, Inc.
SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
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the MSLP’s high loan loss allowance, which indicates that the program may experience approximately
$624 million in additional loan losses by program’s end. These factors, in addition to expected increases
in program support costs over the next year and over $1 billion in interest Treasury has paid as part of
its participation in the MSLP, cast doubt on whether Treasury will be made whole on its MSLP
investment.
Main Street Lending Program Loan Losses Increasing as SIGPR Approaches its Sunset
Source: SIGPR. Data is as of 12/31/2024.
REPORT TO CONGRESS | OCTOBER – DECEMBER 2024
4
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.
SIGPR’s first special agent was not onboarded until late December 2020, six months after Brian Miller was
appointed as the Special Inspector General, because of statutory authority challenges to hire special
agents imposed by the Department of Treasury. Despite these challenges, OI was able to hire a highly
skilled staff that has been very productive. Currently, as MSLP loan defaults rise at an alarming rate, SIGPR
faces the reality of its sunset date in March 2025. To date, OI’s successes include: 39 federal indictments,
27 criminal informations, 49 arrests, 30 guilty pleas, five sentencings, more than $138.7 million in court
ordered restitution, over $11.4 million in seizure/forfeiture orders, a $350,000 civil settlement, over $36.8
million in recoveries, resulting in more than $187 million in total investigative outcomes. SIGPR’s overall
funding from inception (March 2020) to date was $62 million, bringing OI’s return on investment to 300%.
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)
Fraud Task Force, the DOJ COVID-19 Fraud Enforcement
Task Force, and the DOJ COVID-19 Fraud Enforcement
Strike Forces.
Current Reporting Period
During this reporting period, SIGPR 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.
SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
5
SIGPR Investigative Activity – October 1, 2024, through December 30, 2024
Hotline Complaints
Hotline Complaints Received
106
Referrals to Other Agencies
20
Preliminary Inquiries
Opened
0
Closed
3
Converted to Full Investigation
1
Ongoing
4
Investigations*
Opened
3
Closed
0
Ongoing
38
Criminal Actions †
Referrals to the Department of Justice
1
Referrals to State/Local Prosecuting Authorities
0
Indictments/Informations
9
Arrests/Summons
3
Convictions/Pleas
12
Sentencings
1
Civil Actions †
Referrals to the Department of Justice
0
Civil Judgments/Settlements
0
Other Enforcement Actions
IG Subpoenas Issued
3
Suspension/Debarment Recommendations
0
Administrative Suspension
2
Administrative Debarment
0
Investigative Monetary Results †
Funds Seized/Forfeitures
$17,559,118
Restitution Ordered
$109,654,891
Fines and Penalties
0
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.
REPORT TO CONGRESS | OCTOBER – DECEMBER 2024
6
Casework Highlights
Throughout the first quarter of fiscal year 2025, OI continued to expand its investigative oversight work
through SIGPR’s collaborative and proactive efforts as exhibited below.
South Florida Telecom Company and its CEO pled guilty for Defrauding Federal
Government Programs
A Florida man and his company were arraigned in federal court in connection with a multi-year scheme
to steal over $100 million from a celebrated federal program providing discounted cell phone service to
people in need. Both were charged with conspiring to commit wire fraud and steal government money,
as well as conspiring to defraud the United
States. The individual was also charged with
money laundering.
The defendant and his company allegedly
schemed to defraud the FCC’s Lifeline
program. Lifeline makes basic
communications services more affordable for
low-income consumers. It provides
subscribers a deep discount on qualifying
monthly cellphone service, broadband
Internet service, or bundled voice-broadband
packages purchased from participating
telecommunications providers. The discount
helps ensure that low-income consumers can
afford 21st century connectivity services and
the access they provide to jobs, healthcare,
and educational resources.
The man also allegedly defrauded the SBA
Paycheck Protection Program (PPP) by making
false statements about his business. The man,
in his company’s name, executed a fraudulent
scheme to obtain, and keep, PPP proceeds. To further the scheme, he made false statements about his
business, including a false claim that his business reimbursements substantially decreased because of
the pandemic. The man spent PPP loan proceeds overseas, and on a Land Rover payment, his personal
Amex card, jewelry, and personal property.
Southern District of Florida | Nationwide Telecommunications Provider and its CEO Plead Guilty to
Massively Defrauding Federal Government Programs Meant to Aid the Needy | United States
Department of Justice
SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
7
Co-Founder of Paycheck Protection Program Lender Service Provider
Charged for COVID-19 Relief Fraud Scheme
Two co-founders of a PPP lender service provider were indicted and arrested, another associate pled
guilty to related charges for their alleged participation in a scheme to obtain, through multiple
fraudulent loan applications, COVID-19 relief money guaranteed by the SBA through the PPP under the
CARES Act.
They allegedly submitted false and fraudulent PPP loan applications on behalf of themselves and their
businesses, including by fabricating documents that they submitted in their loan applications to receive
loan funds for which they were not eligible.
They also purportedly assisted small
businesses and individuals in obtaining PPP
loans. In order to obtain larger loans for
certain PPP applicants, they and other
coconspirators fabricated documents,
including payroll records, tax documentation,
and bank statements. The scheme also
charged borrowers kickbacks based on a
percentage of the funds received, despite
knowing that borrowers were prohibited from
using PPP loan proceeds to make such
payments.
As part of the scheme, they and others
expanded the company’s operations through
lender service provider agreements (LSPAs)
with two lenders. Under the LSPAs, their
company collected and reviewed PPP
applications from potential borrowers on
behalf of the lenders and worked with the lenders to submit applications to the SBA in exchange for a
percentage of the fees the SBA paid to the lenders for approved PPP loans. The two co-founders and
their coconspirators submitted and caused to be submitted PPP loan applications that they knew
contained materially false information to make more money.
As further alleged in the indictment, the two co-founders and their coconspirators also made money
through their company program called “VIPPP” in which they had a personalized service to help
potential borrowers complete PPP loan applications. They recruited coconspirators to work as VIPPP
referral agents and coach borrowers on how to submit false PPP loan applications. In order to obtain a
greater volume of kickbacks from borrowers and fees from the SBA, they and their coconspirators
submitted PPP loan applications that they knew contained materially false information.
Justice Department | Co-Founders of Paycheck Protection Program Lender Service Provider
Charged for COVID-19 Relief Fraud Scheme
REPORT TO CONGRESS | OCTOBER – DECEMBER 2024
8
Two Individuals pled guilty in $53 Million Fraud Scheme involving
Pandemic Relief Programs
Two individuals pled guilty for cheating the SBA PPP, a COVID-era financial program, and numerous
financial institutions out of more than $53 million in loan proceeds.
In June/July 2023, 15 defendants were arrested in Texas, California, and Oklahoma by special agents of
SIGPR, the Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG), and the FBI.
According to a series of indictments, several of the charged defendants purportedly operated a group of
affiliated recycling companies. They allegedly submitted at least 29 PPP loan applications that falsified
payroll expenses, altered both bank statements and Internal Revenue Service tax forms to falsely inflate
business income. They then routed PPP loan funds through a series of bank accounts to create a false
paper trail of payroll expenses.
At least two of the defendants also allegedly submitted false applications to financial institutions on
behalf of their purported recycling companies to fraudulently obtain, in the aggregate, millions of dollars
in business loan proceeds. And one defendant allegedly lied to the Federal Deposit Insurance
Commission (FDIC) by stating that he did not know several of his other alleged coconspirators.
Six Defendants Plead Guilty in Virginia to Federal Pandemic
Unemployment Benefit Scheme
This quarter, 6 defendants pled guilty to fraud charges related to CARES Act funding. The defendants
entered guilty pleas to one count of conspiring to
defraud the United States in connection with
emergency benefits.
In May 2024, 17 defendants were indicted and
arrested for conspiring to defraud the United States,
commit program fraud, and commit mail fraud in
connection to a scheme involving the filing of
fraudulent claims for pandemic unemployment
benefits.
Between March 2020 and September 2021, these
defendants conspired to file fraudulent claims and
recertifications for pandemic unemployment benefits
via the Virginia Employment Commission website
while they were incarcerated in jails throughout the
Western District of Virginia and, due to their
incarceration status, were ineligible for pandemic
unemployment benefits.
Western District of Virginia | Six More Defendants Plead Guilty in Federal Pandemic Unemployment
Benefit Scheme | United States Department of Justice
SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
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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, two 2
were suspended this quarter, while the remaining referrals are being considered for action.
PRAC Fraud Task Force
In January 2021, the PRAC established a Fraud Task Force to serve as a resource for
the Inspector General community by surging investigative resources into the areas of
greatest need. The PRAC Task Force brings together agents from 16 Offices of
Inspectors General to investigate fraud involving a variety of programs, including the
PPP. Special agents who are detailed to the PRAC Task Force receive expanded
authority to investigate pandemic fraud as well as tools and training to support their
investigations. These special 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/
Recognition of SIGPR’s Casework
26th Council of the Inspectors General on Integrity and Efficiency (CIGIE) Annual Awards Ceremony
CIGIE hosted the Federal Inspector General community’s 27th Annual Award Ceremony (CIGIE’s YouTube
Channel) on
November 13, 2023,
at the Department of
the Interior, Yates
Auditorium, 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
REPORT TO CONGRESS | OCTOBER – DECEMBER 2024
10
Excellence (team award) was presented for the Bull Run Capital Investments LLC investigation. The
team was recognized for its outstanding collaboration by a multidisciplinary investigative team of a
financial analyst, a paralegal specialist, investigators, and attorneys resulting in the prosecution of
Bennie Magee and Michael Gilcher. This was a joint investigation involving the Criminal and Civil
Assistant United States Attorneys from the Eastern District of Virginia, SIGPR, and the FBI.
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, SIGPR had no reportable activity
relating to complaints of human trafficking or any related investigations.
EXECUTIVE ORDER 14074 - Advancing Effective, Accountable Policing and Criminal Justice
Practices to Enhance Public Trust and Public Safety - ‘‘No Knock Entries’’
In compliance with the reporting requirements in this Executive Order, SIGPR had no reportable activity
relating to no-knock entries.
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 106 hotline complaints, of which the
majority pertained to matters outside SIGPR’s jurisdiction, as indicated in the table and chart below.
Complaints by Category
Received October 2024 through December 2024
Category
Total
Title I – Paycheck Protection Program
7
Title IV, Subtitle A — Loans and Investments
0
Title IV, Subtitle A — (13(3) Facilities (MSLP)
0
Title IV, Subtitle B — Payroll Support Program
0
Title V – Coronavirus Relief Fund
10
Multiple CARES Act Programs
6
Economic Impact Payments
1
Unemployment Insurance Programs
1
Rental and Housing Assistance Programs
6
Emergency Income Disaster Loans
2
Income Tax Related
0
Social Security Benefits
12
Financial Institution Related
2
Non-Program Related
59
Grand Total
106
SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
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REPORT TO CONGRESS | OCTOBER – DECEMBER 2024
12
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 of the Treasury under section 4003, as well as the information collected under subsection
(c)(1).”3
Accordingly, below are the categories of loans and other investments made by Treasury under CARES
Act section 4003,4 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),
3 CARES Act § 4018(f)(1)(B)
4 Treasury did not establish a program for “loan guarantees” under CARES Act section 4003.
13
SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
FINDINGS AND DEVELOPMENTS
and businesses critical to maintaining national security ($17 billion).5 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.6 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, 2020.7
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).8 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.”
Outstanding and repaid loans as of this quarter underTreasury’s Directloanprogram are reported on
Treasury’s website.9
5 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
6 See Consolidated Appropriations Act, 2021, Pub. L. 116-260, div. N §§ 1003, 1005
7 Id. § 1005.
8 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.,
9 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 (Dec. 1, 2024)
https://home.treasury.gov/system/files/136/4026b1CLoanReport12012024.pdf ; see also U.S. Department of the
Treasury, Loans to Air Carriers, Eligible Businesses, and National Security Businesses, 4003 Loan Program | U.S.
Department of the Treasury (last updated Jan. 21, 2021).
REPORT TO CONGRESS | OCTOBER – DECEMBER 2024
14
FINDINGS AND DEVELOPMENTS
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.”10
The Federal Reserve established several liquidity programs (facilities) pursuant to section 13(3) of the
Federal Reserve Act.11 That provision, used extensively during the 2008 financial crisis and amended by
the Dodd-Frank Wall Street Reform and Consumer Protection Act,12 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.”13 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.14 The Federal Reserve may not establish any emergency
lending program under section 13(3) without prior approval of the Secretary of the Treasury.15
Of note, as of December 31, 2024, 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
$1.36 billion in actual loan losses, net of subsequent recoveries.16 More than $1 billion of these losses
have occurred since the beginning of calendar year 2023. Nonetheless, the Federal Reserve Board
reports that “the Board continues to expect that the MSLP will not result in losses to the Federal
Reserve.”17
In addition, an evaluation of loan participations purchased by the MS Facilities, LLC resulted in a
reported loan loss allowance in the amount of $623 million.18 The allowance for loan losses is estimated
based upon MS Facilities, LLC’s holdings as of September 30, 2024.19
These facilities have stopped extending loans or purchasing obligations. Additional details for the facilities
10 CARES Act § 4003(b)(4)(A)–(C).
11 See 12 U.S.C. § 343(3).
12 Pub. L. 111-203, 124 Stat. 1375.
13 12 U.S.C. § 343(3)(A); see also 12 C.F.R. § 201.4(d).
14 12 U.S.C. § 343(3)(B)(i).
15 12 U.S.C. § 343(3)(B)(iv).
16 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, 3 n.3. (Jan. 10, 2025)
https://www.federalreserve.gov/publications/files/13-3-report-20250113.pdf
Beginning in February of 2024, the Board of Governors changed the name of the category “loan losses” to “credit
losses” in its monthly report to Congress.
17 See id.
18 See id.
19 See id.
SPECIAL INSPECTOR GENERAL | PANDEMIC RECOVERY
15
FINDINGS AND DEVELOPMENTS
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.
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, 2024.21
Treasury Investment Remaining as of
Recipient
December 31, 2024
MS Facilities, LLC
$3,823,742,390.03
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
December 31, 2024
MS Facilities, LLC
$34,039,336,592.89
TALF II, LLC
$10,088,897,074.20
Corporate Credit Facilities, LLC
$37,980,215,713.55
Municipal Liquidity Facility, LLC
$17,836,181,319.51
20 See id.
21 Jason E. Morrow, Senior Counsel, Office of General Counsel, U.S. Department of the Treasury, response to
Vincent Mulloy, Special Counsel, Office of General Counsel, SIGPR, Treasury (Jan. 28, 2025) (on file with SIGPR).
REPORT TO CONGRESS | OCTOBER – DECEMBER 2024
16
HELP FIGHT
FRAUD, WASTE, AND ABUSE
BY EMAIL: hotline@sigpr.gov
BY PHONE: 202-927-7899
www.sigpr.gov