Sherman Testimony

Summary

Written testimony of Donald K. Sherman, President and CEO of Citizens for Responsibility and Ethics in Washington (CREW), before the U.S. Senate Committee on Small Business & Entrepreneurship on May 20, 2026, for the hearing Blowing the Whistle: Inside the Grift that Keeps Giving. The testimony argues that fraud enforcement across the federal government has been weakened during President Trump's second term and that this harms small businesses. It cites a survey figure that fraud, scams and ransomware cost small businesses at least $131 billion in 2025. It then addresses three actions it identifies: removal of inspectors general and other oversight mechanisms, cuts to the federal workforce at agencies including the SBA, and pardons of people convicted of fraud. It closes by urging the committee to take a holistic view of how fraud affects small businesses.

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Full text

Donald K. Sherman
President and CEO, Citizens for Responsibility and Ethics in Washington (CREW)

                                        Testimony before the
                 U.S. Senate Committee on Small Business & Entrepreneurship
             Hearing On: “Blowing the Whistle: Inside the Grift that Keeps Giving ”

                                               May 20, 2026

                                        Donald K. Sherman
                              President and Chief Executive Officer
                       Citizens for Responsibility and Ethics in Washington

Chair Ernst, Ranking Member Markey and members of the Committee, thank you for the
opportunity to testify on the dangers that fraud poses to small businesses.

My name is Donald Sherman, and I am the President and CEO of Citizens for Responsibility
and Ethics in Washington (CREW), a nonpartisan nonprofit organization dedicated to
fighting corruption and promoting an accountable, transparent and ethical government. I
have spent the majority of my career investigating waste, fraud and abuse throughout the
federal government, from my work as counsel on the non-partisan staff of the House Ethics
Committee, to my work as Chief Oversight Counsel to the late Elijah Cummings for the
House Committee on Oversight and Government Reform, and as Senior Counsel with the
Senate Homeland Security and Governmental Affairs Committee. My work at CREW has
focused on restoring an ethical government, demanding accountability, preserving
democratic institutions and reducing the corrosive influence of money in politics. I submit
this statement today to highlight how fraud enforcement across the federal government has
been gutted during President Trump’s second term in office and the impact that has on
small businesses.

Small businesses help drive the American economy.

Small businesses are the lifeblood of the American economy, accounting for nearly 46
percent of private sector employment.1 For example, these 36.2 million small businesses
across the country created approximately 9 out of every 10 net new jobs from March 2023 to
March 2024, leading to a net increase of 1.2 million new jobs.2 As a result, supporting small
businesses is a critical component of a successful American economy. Unfortunately, when
the president and his administration routinely grant access and opportunity to the
businesses that pay money to his companies, his political endeavors and his pet projects, big
business gets a seat at the table that most small businesses cannot afford. For example,
corporate giants like Blackstone, Visa, Meta, Apple and Tesla, which contributed to the
president’s inauguration, ballroom or super PAC, were all named as part of the White House
delegation traveling with President Trump to China.3 Despite the “devastating” impact of

1
  SBA No. 25-09 ADV: New Advocacy Report Shows the Number of Small Businesses in the U.S. Exceeds 36 million,
Small Bus. Admin. (June 30, 2025),
https://advocacy.sba.gov/2025/06/30/new-advocacy-report-shows-the-number-of-small-businesses-in-the-u-s
-exceeds-36-million/.
2
  Id.
3
  See Merve Gül Aydoğan Ağlarcı, Trump to Travel to China with 17 Major CEOs, including Musk and Cook: White
House, Anadolu Ajansı (May 11, 2026),
tariffs, including from China, on American small business including “uncertainty, rising
costs, and cancellations,” they did not appear to have a comparable representation at the
summit.4

Financial harms like fraud that impact any wide swath of Americans will inevitably and
invariably also harm small businesses either as a unit or through their owners and
employees. Further, the structure of small businesses leaves them more susceptible to
fraud. According to a recent survey, 72 percent of small businesses were hit by fraud, scams
or ransomware in 2025, costing them at least $131 billion.5 This risk is caused in part by the
limited resources small businesses have to invest in anti-fraud programs. Compared to
larger businesses, small businesses are far less likely to have a variety of anti-fraud controls
in place like external audits, fraud training, tiplines or staff dedicated to fraud prevention.6
They also have fewer checks and balances and less segregation of duties due to smaller staff
size.7 Additionally, small businesses are more acutely impacted by fraud because they tend
to have smaller budgets and revenues. This reality both makes financial losses more
existential and makes recovery more difficult because they frequently lack the institutional
resources to launch successful campaigns to recoup losses at scale.8

The government has long recognized these concerns, which is why it has historically
provided training and information for small businesses to identify frauds and scams.9 Yet
even government funding can become a locus of fraud, with fraudsters capturing funds
intended to benefit small businesses, as happened with the Small Business Administration’s
(SBA) Preferred Lender Program. The Preferred Lender Program is designed to help small
businesses in need of financing, but has been targeted by fraudsters. For example, following
a years-long investigation led by the Department of Justice (DOJ) and SBA Office of the
Inspector General (OIG) 18 individuals were charged with defrauding the government of



https://aa.com.tr/en/americas/trump-to-travel-to-china-with-17-major-ceos-including-musk-and-cook-white-
house/3934290; Monica Alba & Amanda Terkel, Here's the List of Donors Paying for Trump's New White House
Ballroom, NBC News (Oct. 23, 2025),
https://www.nbcnews.com/politics/white-house/list-donors-trump-new-white-house-ballroom-east-wing-rcn
a239481; Trump’s Inauguration Donor Pool Includes $50 Million in Contributions from Corporations Under
Investigation or Facing Federal Enforcement, Pub. Citizen (Apr. 21, 2025),
https://www.citizen.org/news/trumps-corporate-inauguration-donor-pool-littered-with-federal-investigations-
enforcement-lawsuits/; Jessica Piper, Elon Musk Gave Trump and the GOP $15M Even as He Was Fighting with the
President, Politico (July 31, 2025),
https://www.politico.com/news/2025/07/31/elon-musk-donations-clf-slf-00487699.
4
  Alicia Wallace, China Tariffs are No Longer 145%, but for Small Businesses in the Crossfire, ‘It’s Still Awful’, CNN
(May 19, 2025), https://www.cnn.com/2025/05/19/economy/china-tariffs-small-businesses; Neil Bradley & John G.
Murphy, Helping Small Businesses Navigate Tariffs: Seeking Relief, FAQs, U.S. Chamber of Com. (Aug. 7, 2025)
https://www.uschamber.com/small-business/small-business-faq-what-you-need-to-know-about-tariffs.
5
  Press Release, Press Release: New National Survey of Small Businesses: Fraud, Scams and Ransomware Impose a
$131 Billion “Hidden Tax” on Main Street, Pub. Priv. Strategies Inst. (Apr. 9, 2026),
https://www.ppsi.org/fraud-scams-ransomware-press-release.
6
  Ass’n of Certified Fraud Exam’rs, Occupational Fraud 2024: A Report to the Nations 44 (2024)
https://www.acfe.com/-/media/files/acfe/pdfs/rttn/2024/2024-report-to-the-nations.pdf.
7
  Id.
8
  Id. at 32.
9
  Preventing Fraud and Identity Theft, Small Bus. Admin.,
https://www.sba.gov/funding-programs/loans/covid-19-relief-options/preventing-fraud-identity-theft (last
visited May 11, 2026).
over $25 million in taxpayer-funded COVID-19 relief funds and federally-guaranteed small
business loans.10

For all of these reasons, it is essential that any administration takes a holistic approach to
fighting fraud. Unfortunately, this administration, instead of tackling this challenge, has
taken action after action that enables fraudsters and puts small businesses at risk. In this
testimony I want to highlight three of these actions and the effects they’ve had on small
business’ ability to deter and prevent fraud: (1) removal of oversight mechanisms including
inspectors general; (2) cuts to government operations; and (3) thereby creating a culture of
impunity by pardoning fraudsters.

Trump’s removal of oversight mechanisms and watchdogs like inspectors general
undercuts the government’s ability to weed out fraud.

Since the beginning of the president’s second term, President Trump has systematically
disrupted, weakened or outright eliminated the guardrails meant to protect against waste,
fraud and abuse within the executive branch.11 Most notably, days after returning to office,
the president unlawfully fired 17 inspectors general (IGs), including SBA IG Hannibal Ware,
who also served as chairperson of the Council of the Inspectors General on Integrity and
Efficiency (CIGIE), which oversees the IG community itself.12 As a result of both the
administration’s action and inaction, at the end of 2025, over half—55 percent—of the 38
presidentially appointed federal IG positions remained vacant, and of the total 72 federal IG
positions, there were 29 vacancies across the federal government.13 As Chair Ernst said just
last year when launching the inspector general caucus days before President Trump’s mass
firing of IGs, “Inspectors general serve a vital role in uncovering waste in Washington and
must be empowered to continue looking out for taxpayers.”14

To quote Ware in the aftermath of his firing, “IGs are not immune from removal. However,
the law must be followed to protect independent government oversight for America.”15
Within the last 20 years, Congress has passed two laws with bipartisan support to prevent



10
   14 Arrested on Complaints Alleging More Than $25 Million in COVID-19 Relief and Small Business Loans Were
Fraudulently Obtained, U.S. Att’y’s Off., C.D. Cal. (May 28, 2025),
https://www.justice.gov/usao-cdca/pr/14-arrested-complaints-alleging-more-25-million-covid-19-relief-and-s
mall-business.
11
   Dani Schulkin et al., The Anti-Corruption Tracker: Mapping the Erosion of Oversight and Accountability, Just
Security (Apr. 14, 2026), https://www.justsecurity.org/117267/anti-corruption-tracker/.
12
   Danielle Caputo, The Significance of Firing Inspectors General: Explained, Campaign Leg. Ctr. (Jan. 31, 2025),
https://campaignlegal.org/update/significance-firing-inspectors-general-explained; Storch v. Hegseth, 804 F.
Supp. 3d 216, 225 (D.D.C. 2025) (finding it certain that plaintiffs “will succeed in arguing that their terminations
violate the IGA”).
13
   Isabel Rogers, By Leaving over 55% of Presidentially Appointed IG Posts Vacant, Trump is Opening the Door for
Waste, Fraud and Abuse, CREW (Feb. 4, 2026),
https://www.citizensforethics.org/news/analysis/by-leaving-over-55-of-presidentially-appointed-ig-posts-vaca
nt-trump-is-opening-the-door-for-waste-fraud-and-abuse/.
14
   Ernst Launches Inspector General Caucus, Sen. Joni Ernst (Jan. 15, 2025),
https://www.ernst.senate.gov/news/press-releases/ernst-launches-inspector-general-caucus.
15
   Council of the Inspectors General on Integrity and Efficiency, Statement from the Honorable Hannibal Ware,
Chairperson of the Council of the Inspectors General on Integrity and Efficiency (Jan. 25, 2025)
https://www.ignet.gov/sites/default/files/files/CIGIE%20Statement%20--%201_25_2025.pdf.
the precise type of action President Trump took.16 The bipartisan Inspector General Reform
Act of 2008 established a requirement that Congress be notified in writing no later than 30
days before removal or transfer of an IG,17 and the Securing Inspector General
Independence Act of 2022, provisions of which became law as part of the James M. Inhofe
National Defense Authorization Act for Fiscal Year 2023, added a requirement that Congress
be given a detailed account of the justification for the removal of an inspector general and
the inspector general remain in place for 30 days while Congress considers that
justification.18 To the best of our knowledge, none of those legal requirements were followed
in any of these firings.

Now, more than a year into his second term, the clear signal that President Trump has sent
to the IG community is that efforts to conduct oversight to root out waste, fraud and abuse
will be resisted by this administration, and that attempts to sound the alarm on issues of
concern or improper conduct by the administration could subject IGs and their staff to
retribution. For example, last June, the president demoted Department of Education Acting
IG René Rocque two weeks after she sent a letter to Congress reporting that her office
“experienced unreasonable denials and repeated delays” in being provided “access to
documents, staff, and information,” preventing the OIG from conducting its “statutory
mission to oversee the Department’s programs and operations under the Inspector General
Act.”19 In November, Federal Housing Finance Agency IG Joe Allen was fired after reportedly
preparing a notification to Congress that the administration was not cooperating with the
OIG’s oversight efforts.20 And, in March, the Department of Homeland Security (DHS) IG sent
a letter to Congress saying that DHS has been “systematically obstructing” investigations by
withholding records,21 just days before DHS Secretary Kristi Noem was fired amidst a myriad
of allegations of improper or wasteful government spending, including the questionable
purchase of two luxury Gulfstream jets.22

It is obvious that the Trump administration's efforts are intended to have a chilling effect on
investigations and oversight—an effect that will lead to more government waste. In fact, in
testimony submitted to this committee, the Government Accountability Office found that
the SBA had implemented most pandemic-related fraud risk recommendations but had
fallen short with respect to improving referrals to the SBA OIG, a critical step in identifying
fraudulent loans.23 Yet, despite over $3.7 billion in monetary accomplishments provided to


16
   Roll Call 661, Inspector General Reform Act of 2008, H.R. 928, 110th Cong. (Sept. 27, 2008)
https://clerk.house.gov/Votes/2008661; Securing Inspector General Independence Act of 2021, S. 587, 117th Cong.
https://www.congress.gov/bill/117th-congress/senate-bill/587.
17
   Pub. L. No. 110-409, 122 Stat. 4302 (2008).
18
   Pub. L. No. 117-263, 136 Stat. 2267 (2022).
19
   Letter from René L. Rocque, Acting DOE IG, to House Committees (May 23, 2025),
https://democrats-edworkforce.house.gov/imo/media/doc/ed_oig_letter_to_house_committees.pdf; Luke
Broadwater, In the Trump Administration, Watchdogs Are Watching Their Backs, N.Y. Times (July 17, 2025),
https://www.nytimes.com/2025/07/17/us/politics/inspectors-general-trump.html.
20
   Douglas S. Pasternak, Undoing Accountability: An Update on Trump’s Attacks on Inspectors General, Pub. Citizen
(Mar. 11, 2026), https://www.citizen.org/article/undoing-accountability/.
21
   Eric Bazail-Eimil, Internal DHS watchdog: Noem is Obstructing Our Work, Politico (Mar. 4, 2026),
https://www.politico.com/news/2026/03/03/dhs-noem-obstruction-00810919.
22
   Marc Caputo & Brittany Gibson, How the Ice Finally Broke Under Kristi Noem, Axios (Mar. 5, 2026),
https://www.axios.com/2026/03/06/kristi-noem-dhs-trump-inside-firing.
23
   U.S. Gov’t Accountability Off., GAO-26-108820, Small Business Administration: Opportunities to Improve
Management of Fraud Risks, Improper Payments, and Contracting Programs (2025).
American taxpayers in FY 2025, the FY 2027 congressional budget justification for the SBA
proposes a 10% cut to the OIG.24 With all due respect to those public servants now serving,
including new SBA IG William Kirk, the Trump administration’s hostility toward IGs has
called into question whether anyone filling OIG positions will be fully willing and
empowered to conduct robust oversight, or whether they will be intimidated or blocked
from effectively performing their duties.

The Trump Administration’s cuts to the federal government enables fraud.

Fighting fraud at the federal level is a coordinated effort, with multiple agencies responsible
for safeguarding legal protections, raising awareness and pursuing civil or criminal actions.
The Trump administration’s decimation of the federal workforce has devastated fraud
enforcement.

Reductions in force and changing priorities have severely hindered federal fraud
enforcement. Across the government in 2025, almost 350,000 workers quit, retired, or were
laid off, leading to a net reduction of over 10 percent of the federal workforce, with rates even
higher at agencies that play key roles in preventing, detecting, and deterring fraud like the
SBA (net loss of around 3,000 employees or 33% of staff), the Consumer Financial Protection
Bureau (CFPB) (a net loss of around 500 employees or 29% of staff) and the Securities and
Exchange Commission (SEC) (a net loss of around 900 employees or 18% of staff).25 At the
CFPB these reductions have led to the dismissal of 22 public enforcement actions and the
abolishment or modification of 23 other settled actions, some of which included a reduction
in relief for victims of fraud.26 The effect at the SEC has been similarly stark, with the agency
bringing almost 30 percent fewer enforcement actions in 2025 and a significant decrease in
collection of financial fines and disgorgement.27 The enforcement decrease of
cryptocurrency cases by the agency, including high-profile fraud cases, has, according to a
New York Times investigation, benefitted multiple firms with financial ties to Trump.28

The hollowing out of the Justice Department is of particular concern. Around 10,000
employees left the DOJ over the course of 2025.29 Despite a stated priority to pursue cases of
fraud, the DOJ closed over 900 cases of federal program or procurement fraud and over 100
cases of health care fraud in the first six months of the Trump administration, declining
about three times as many cases of major fraud against the U.S. compared to prior




(https://files.gao.gov/reports/GAO-26-108820/index.html?_gl=1*1ci6lgv*_ga*MTIxNjQ3NjE3MS4xNzc3OTI4MDY5
*_ga_V393SNS3SR*czE3Nzc5MjgwNjkkbzEkZzAkdDE3Nzc5MjgwNjkkajYwJGwwJGgw).
24
   Small Bus. Admin., FY 2027 Congressional Budget Justification, FY 2025 Annual Performance Report 9, 91 (2026)
(https://www.sba.gov/sites/default/files/2026-04/5%20SBA%20FY%202027%20CBJ%20Final.pdf).
25
   Drew DeSilver, Federal Workforce Shrank 10% in Trump’s First Year Back in Office, Pew Rsch. Ctr. (Mar. 13, 2026),
https://www.pewresearch.org/?p=293637.
26
   Minority Staff of S. Comm. on Banking, Hous., & Urban Affs., The Price of Gutting the CFPB 3, 7 (2026)
(https://www.banking.senate.gov/imo/media/doc/cfpb_year_in_review_report.pdf).
27
   Hannah Levintova, Trump’s SEC Is Going After Fewer Wall Street Crimes, Mother Jones (Apr. 12, 2026),
https://www.motherjones.com/politics/2026/04/trump-sec-financial-crimes-enforcement-drop-wall-street/.
28
   Ben Protess et al., The S.E.C. Was Tough on Crypto. It Pulled Back After Trump Returned to Office., N.Y. Times (Dec.
14, 2025), https://www.nytimes.com/2025/12/14/us/politics/sec-crypto-firms-trump-investigation.html.
29
   DeSilver, supra note 25.
administrations.30 Moreover, a new fraud division has been criticized by DOJ veterans for
shifting attorneys from long-established enforcement teams into a new one that takes
criminal referrals from the White House and may be weaponized to pursue Trump’s
perceived enemies.31

Trump has used the pardon power to bail out convicted fraudsters, harming victims.

Traditionally, the pardon power has been a crucial but underused constitutional mechanism
to address injustices in the criminal justice system and show mercy to those who have
admitted responsibility for their wrongdoing.32 It is one of the most important powers that a
president has. But as with anything, it can—and has—been weaponized and perverted by the
current administration.

Since returning to office, Trump has aggressively issued pardons and commutations to
pursue a political agenda.33 Among his second term pardons and commutations are
numerous convicted fraudsters where, through the use of clemency, he has wiped out over
$1.5 billion in restitution, fines and forfeitures, including money owed to fraud victims.34 One
of the most egregious examples is his pardon of Trevor Milton, the founder of Nikola, who
was sentenced to four years in prison for defrauding investors, and who prosecutors argued
should pay more than $660 million in restitution.35 After he was sentenced in December
2023, Milton and his wife donated more than $3.6 million to Trump and other Republican
candidates and committees during the lead up to the 2024 election.36 Although a pardon
could still require its recipient to fulfill their restitution obligations, Milton’s March 2025
pardon did not, thereby relieving him of paying restitution to his victims, at least some of
whom likely own or work at small businesses.37 Milton’s company, Nikola Motor Company,
also received $4.1 million in Paycheck Protection Program coronavirus small business
funds.38

30
   Ken B. Morales & David Armstrong, Trump’s Justice Department Dropped 23,000 Criminal Investigations in Shift
to Immigration, ProPublica (Mar. 31, 2026),
https://www.propublica.org/article/trump-doj-immigration-bondi-declinations-criminal-investigations.
31
   Ben Penn, DOJ Moves Fraud Attorneys to New Division, Reversing Plans, Bloomberg L. (Apr. 7, 2026),
https://news.bloomberglaw.com/us-law-week/doj-poaches-fraud-attorneys-for-new-division-in-reversal-of-pl
an; Ben Penn, New DOJ Fraud Chief Position Has Ex-Officials Questioning Motive, Bloomberg L. (Jan. 9, 2026),
https://news.bloomberglaw.com/us-law-week/new-doj-fraud-chief-position-has-ex-officials-questioning-moti
ve.
32
   See, e.g., Rethinking the Use of the Clemency Power, Harv. C.R.-C.L. L. Rev. (Feb. 12, 2020),
https://journals.law.harvard.edu/crcl/rethinking-the-use-of-the-clemency-power/.
33
   Ruth Marcus, Donald Trump’s Pardon Economy, New Yorker (Apr. 27, 2026),
https://www.newyorker.com/magazine/2026/05/04/donald-trumps-pardon-economy?_sp=639f98b3-8b1c-49c9
-ab0f-d9689ff11ed8.1777298231409.
34
   Liz Oyer, Trump's Year-One Pardons Have Erased Over $1.5 Billion in Penalties for Fraud and Other Crimes, Lawyer
Oyer (Jan. 20, 2026), https://www.lawyeroyer.com/p/trumps-year-one-pardons-have-erased.
35
   Press Release, Trevor Milton Sentenced To Four Years In Prison For Securities Fraud Scheme, U.S. Atty’s Off., S.D.
N.Y. (Dec. 18, 2023),
https://www.justice.gov/usao-sdny/pr/trevor-milton-sentenced-four-years-prison-securities-fraud-scheme;
Beth Reinhard & Aaron Schaffer, Trump’s Pardons Wipe Out Payments to Defrauded Victims, Wash. Post (Dec. 19,
2025), https://www.washingtonpost.com/politics/2025/12/19/donald-trump-pardons-trevor-milton-nikola/;
Marcus, supra note 33.
36
   Marcus, supra note 33.
37
   Id.
38
   Robert Frank, Billionaire Trevor Milton’s Nikola Motor Received $4 Million from PPP Coronavirus Small Business
Fund, CNBC (Apr. 22, 2020),
There are numerous more examples of pardoned fraudsters, many of whom have
connections to Trump, including Robert Harshbarger, Adriana and Andres Camberos and
Joseph Schwartz.39 Schwartz’s conduct is particularly egregious. Through his company
Skyline Healthcare, Schwartz bought out individual nursing homes.40 These homes were
then left understaffed and missed multiple payments all while Schwartz siphoned money
from a variety of sources and paid himself $5 million as a “ghost employee.”41 At its peak,
Skyline Healthcare owned or ran more than 100 facilities in 11 states, overseeing the care of
more than 7,000 elderly Americans.42 But after the chain collapsed, more than a dozen
Skyline-operated nursing homes shut their doors, throwing residents, vendors, employees
and state regulators into chaos.43 For example, small businesses in South Dakota were
adversely impacted including being left with unpaid bills.44

Schwartz ultimately admitted to failing to pay to the IRS around $39 million in withheld
employee payroll taxes and court records demonstrate the significant toll his fraud took on
patients and workers.45 After spending heavily on lobbyists, Schwartz received a pardon for
his crime in November 2025.46

While we know that the pardon lobbying business is booming, especially for those boasting
connections to Trump, what we don’t know is how many fraudsters, convinced that the




https://www.cnbc.com/2020/04/22/coronavirus-nikola-motor-received-4-million-from-ppp-small-business-fu
nd.html.
39
   Id.; The Real Fraud: Trump Pardoned the Nation's Biggest Health Care Fraudsters, Protect Our Care (Apr. 2026)
(https://www.protectourcare.org/wp-content/uploads/2026/04/The-Real-Fraud-Trump-Pardoned-the-Nations-
Biggest-Health-Care-Fraudsters-Final.pdf); Press Release, Owner Of Florida Health Care Companies Sentenced for
Employment Tax Crimes, U.S. Dept of Just., Off. of Pub. Affs. (Apr. 11, 2025),
https://www.justice.gov/opa/pr/owner-florida-health-care-companies-sentenced-employment-tax-crimes;
Press Release, Federal Jury Convicts Siblings of Fraud; Defendants Made Tens of Millions of Dollars from Lying to
Manufacturers in Years-Long Scheme, U.S. Atty’s Off., S.D. Cal. (Nov. 13, 2024),
https://www.justice.gov/usao-sdca/pr/federal-jury-convicts-siblings-fraud-defendants-made-tens-millions-dol
lars-lying-0.
40
   Jeremy Kohler, A Nursing Home Owner Got a Trump Pardon. The Families of His Patients Got Nothing.,
ProPublica (Mar. 30, 2026),
https://www.propublica.org/article/joseph-schwartz-trump-pardon-skyline-nursing-home-patients.
41
   Id.
42
   Laura Strickler, Stephanie Gosk & Shelby Hanssen, A Nursing Home Chain Grows Too Fast and Collapses, and
Elderly and Disabled Residents Pay the Price, NBC News (July 19, 2019),
https://www.nbcnews.com/health/aging/nursing-home-chain-grows-too-fast-collapses-elderly-disabled-reside
nts-n1025381.
43
   Id.
44
   Angela Kennecke, Small SD Business Left with Skyline’s Unpaid Bill Outraged by Federal Award to Owner’s NJ
Homes, Keloland (Aug. 11, 2020),
https://www.keloland.com/news/investigates/small-sd-business-left-with-skylines-unpaid-bill-outraged-by-fe
deral-award-to-owners-nj-homes/.
45
   Press Release, Former Owner of Collapsed Nursing Home Empire Admits $38 Million Tax Fraud Scheme, U.S.
Atty’s Off., D.N.J. (Nov. 18, 2024),
https://www.justice.gov/usao-nj/pr/former-owner-collapsed-nursing-home-empire-admits-38-million-tax-fra
ud-scheme; Jeremy Kohler, Trump Pardoned a Nursing Home Owner Who Owed Almost $19 Million to a Grieving
Family, ProPublica (Apr. 20, 2026), https://www.propublica.org/article/trump-joseph-schwartz-pardon-lawsuit.
46
   Kohler, supra note 40.
president is sympathetic to their cause given his organization’s prior conviction for tax
fraud, are proactively seeking reprieves from their crimes.47

Trump’s use of the pardon power is also concerning for the collateral consequences it is
having in undermining civil enforcement and deterring prosecutors from pursuing new
cases. For instance, after Trump pardoned Ozy Media co-founder Carlos Watson and venture
capitalist Devon Archer for securities fraud, the SEC dropped their civil enforcement actions
against both of them without requiring penalties or repayments to investors who had been
harmed.48 Multiple experts have also expressed concern that these pardons could have a
chilling effect on future prosecutions, with prosecutors now potentially factoring in how
closely-aligned a potential defendant is with Trump.49 This puts a target squarely on the
backs of small businesses, who are more susceptible to fraud in the first place.

Real opportunities for reform.

There is direct action that Congress can take to better fight fraud and push back on this
administration’s failures. It starts with taking a robust approach to oversight and protecting
IGs in charge of uncovering waste, fraud and abuse, investigating the impact of reductions
in force across the government on rooting out fraud, and demanding answers from the
president regarding why he seems so inclined to pardon convicted fraudsters. Congress
should also remove the president from the comptroller general appointment process given
his firings of IGs and other attacks against federal workers. As Chair of the Inspector General
Caucus, Chair Ernst can work with good government groups and the previously removed
inspectors general to identify other ways to bolster the independence of the IG community
in order to root out waste, fraud and abuse.

Legislation like the Protecting Our Democracy Act,50 the Anti-Corruption and Public Integrity
Act,51 the Presidential Pardon Transparency Act52 and other bills designed to block the
exchange of donations for pardons53 are also a key component of fighting fraud, especially as
fraudsters with financial connections to Trump receive clemency, raising red flags that the
system is being abused. The cuts across the federal government and the drop in white-collar
enforcement over Trump’s second term have had a direct impact on preventing and
prosecuting fraud, and Congress should act to protect federal workers and reclaim the
power of the purse in order to reinvigorate this work.

The fact that this Committee is having a hearing today focused on fraud at the state and local
level without acknowledging the massive dismantling of oversight and fraud prevention

47
   Marcus, supra note 33; Dareh Gregorian & Adam Reiss, Trump Organization Fined $1.6 Million for Long-Running
Tax Fraud Scheme, NBC News (Jan. 13, 2023),
https://www.nbcnews.com/politics/donald-trump/trump-organization-faces-sentencing-tax-fraud-scheme-rcn
a65013.
48
   Ben Miller, SEC Enforcers Ease Up on Fraudsters After Trump Criminal Pardons, Bloomberg L. (Apr. 9, 2026),
https://news.bloomberglaw.com/bankruptcy-law/trumps-criminal-pardons-have-sec-enforcers-following-suit.
49
   Phillip Bantz, How Trump’s Pardons Could Sway Prosecutorial Discretion, Law360 (June 5, 2025),
https://www.law360.com/articles/2349941/how-trump-s-pardons-could-sway-prosecutorial-discretion.
50
   S. 2838, 119th Cong. (2025) (https://www.congress.gov/bill/119th-congress/senate-bill/2838).
51
   S. 5315, 117th Cong. (2022) (https://www.congress.gov/bill/117th-congress/senate-bill/5315).
52
   S. 318, 117th Cong. (2021) (https://www.congress.gov/bill/117th-congress/senate-bill/318).
53
   See, e.g., S. 3191, 119th Cong. (2025) (https://www.congress.gov/bill/119th-congress/senate-bill/3191); S. 2300,
119th Cong. (2025) (https://www.congress.gov/bill/119th-congress/senate-bill/2300).
efforts at the federal level is concerning. If this Committee truly wants to protect small
businesses from fraud, it must start by acknowledging that the Trump administration’s
approach to fighting fraud has been selective at best and directly enabling at worst. I urge
this Committee to protect and empower small businesses by taking a holistic view of how
fraud impacts their operational ability. Ignoring the issues created by the Trump
administration’s haphazard, venal tack on fraud only exacerbates them, increasing the risk
that small businesses and other victims suffer.


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