Statement of PRAC Chair Michael E. Horowitz before the House Select Subcommittee on the Coronavirus Crisis (June 14, 2022)
Summary
The prepared statement of Michael E. Horowitz, Chair of the Pandemic Response Accountability Committee and Inspector General of the Department of Justice, for the June 14, 2022 hearing of the House Select Subcommittee on the Coronavirus Crisis on federal efforts to prevent, detect and prosecute pandemic relief fraud. Horowitz recounts that the PRAC was created in March 2020 by the CARES Act, that he has chaired it since April 2020, and that it sits within CIGIE with 21 federal Inspectors General overseeing more than $5 trillion in pandemic relief spending on an appropriation of $120 million. He contrasts that with the Recovery and Accountability Transparency Board, which received more than $175 million over almost seven years to oversee the $800 billion 2009 stimulus. He presents the PRAC as a new model for oversight in a crisis.
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“Statement of PRAC Chair Michael E. Horowitz before the House Select Subcommittee on the Coronavirus Crisis (June 14, 2022).”
Original at www.pandemicoversight.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/statement-of-prac-chair-michael-e-horowitz-before-the-house-select-sub-2e5a4bbfa0/
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Statement of Michael E. Horowitz
Chair, Pandemic Response Accountability Committee
Inspector General, U.S. Department of Justice
before the
U.S. House of Representatives
Select Subcommittee on the Coronavirus Crisis
concerning
“Examining Federal Efforts to Prevent, Detect, and Prosecute Pandemic Relief Fraud
to Safeguard Funds for All Eligible Americans”
June 14, 2022
Mr. Chairman, Ranking Member Scalise, and Members of the Subcommittee:
Thank you for inviting me to testify today on the ongoing oversight work of the Pandemic Response
Accountability Committee (PRAC), which was created in March 2020 as part of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act). The PRAC provides independent oversight of pandemic
relief spending and helps coordinate and facilitate oversight by the Inspectors General (IGs) whose
agencies administer pandemic relief programs. It has been my honor to serve as Chair of the PRAC
since April 2020 and, working together with our state and federal oversight partners, we are ensuring
transparency in pandemic spending, helping to reduce fraud in pandemic programs, and holding
accountable those who have stolen from and defrauded these programs.
The PRAC is housed within the Council of the Inspectors General on Integrity and Efficiency (CIGIE)
and is comprised of 21 federal Inspectors General (IGs) that work collaboratively to oversee the more
than $5 trillion in federal pandemic relief emergency spending. Our primary mission is to work with
Offices of Inspector General (OIGs) to ensure that taxpayer money is being used effectively and
efficiently to address the pandemic-related public health and economic needs funded through the
various COVID-19 relief bills.
To facilitate our mission, we
• promote transparency by publicly reporting accessible and comprehensive spending data;
• collaborate across the oversight community to identify cross-cutting issues and risks;
• detect and prevent fraud, waste, abuse, and mismanagement of relief spending through
leading-edge data insights and analytic tools; and
• hold wrongdoers accountable by marshaling the investigative and analytic resources of the
oversight community.
My testimony today highlights the PRAC’s achievements since March 2020 in fulfilling these objectives.
I will also discuss our strategic direction as we have evolved into an organization providing a model for
effective, coordinated government oversight and building a legacy for how the IG community manages
future large-scale government emergency response efforts.
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Background
At the outset, it’s important to emphasize the whole-of-government oversight effort that is required to
oversee spending of this magnitude. With the PRAC’s appropriation of $120 million, we have been
tasked with overseeing the more than $5 trillion in pandemic relief funding exceeds the federal
government’s total spending in 2019 for discretionary, mandatory, and interest on the debt. It is also
more than six times greater than the $800 billion stimulus package passed in 2009 in the wake of the
financial crisis. To lead oversight of the 2009 stimulus, Congress created the Recovery and
Accountability Transparency Board—affectionately known as the RAT Board—and appropriated more
than $175 million to it over the course of its almost seven-year existence. 1 The RAT Board, led by then-
Interior Department Inspector General Earl Devaney and comprised of about a dozen IGs, was widely
praised for its effective oversight efforts. Those included the RAT Board’s development of the Recovery
Operations Center (ROC), a first-ever Inspector General community-wide data analytics effort.
Unfortunately, when the RAT Board sunset by law in 2015, the ROC was shut down as well.
What we have sought to do at the PRAC, with our total Congressional appropriation of $120 million, is
to expand and build upon the prior outstanding work of the RAT Board while developing a new model
for conducting oversight in a crisis. It is a model that should be retained and replicated, built on a
foundation of collaboration, the use of data analytics, and drawing on the existing capabilities of the
oversight community.
Today, federal Inspectors General are charged with overseeing 426 pandemic relief programs across
more than 40 agencies. Just one of those programs alone—the Paycheck Protection Program (PPP)—
has distributed approximately $800 billion in funding, or roughly the same amount as the entire
American Recovery and Reinvestment Act of 2009. Moreover, in just its first 14 days, about 1.7 million
PPP loans were issued with disbursements of upwards of $343 billion. Importantly, these funds were
allotted with few, if any, controls.
Consequently, effective and coordinated independent oversight has been central to improving how
federal agencies are operating their pandemic relief programs and delivering essential services to the
public, as well as addressing and combating fraud, waste, abuse, and mismanagement involving these
1 The American Recovery and Reinvestment Act of 2009 originally appropriated $84 million for the RAT Board, with a termination date of
September 30, 2013. In subsequent years, Congress appropriated almost $95 million for the RAT Board. The Disaster Relief Appropriations
Act of 2013 subsequently expanded the RAT Board’s mandate to include oversight of other federal spending—specifically funds related to
Hurricane Sandy relief efforts—through September 30, 2015. The RAT Board oversaw $800 billion dollars of relief from the American
Recovery and Reinvestment Act of 2009, and $50 billion from the Disaster Relief Appropriations Act of 2013, for a total of $850 billion.
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funds. Through this work, oversight entities like the PRAC, IGs, the Government Accountability Office
(GAO), and our state and local oversight partners have played and continue to play a critical role in the
success of our national recovery efforts.
In addition to these coordination efforts with our oversight partners, over the past year we have met
weekly with the leadership of the Office of Management and Budget (OMB) and the American Rescue
Plan (ARP) implementation team led by Gene Sperling. These meetings have enabled the PRAC and
Inspectors General to, among other things, timely share any issues that have arisen with Executive
Branch leadership and ensure that any impediments to our oversight work are addressed promptly. We
also have, separately, participated in more than 25 meetings focused on agency-specific pandemic
relief programs where the agency provides an overview of the program to be implemented, payment
integrity risks, and reporting and performance mechanisms. Participants in the briefings, which are
hosted by the ARP implementation team and OMB leadership, include the implementing agency, that
agency’s OIG, and the PRAC. This model allows for the presentation and consideration of antifraud
controls before a program is implemented and money goes out the door.
In December 2021, OMB Memorandum M-22-04 highlighted the importance of this approach:
“Agencies have been encouraged to proactively engage with their IGs in the design of new or expanded
ARP programs. The White House ARP Implementation Coordinator, working with OMB, developed a new
process bringing together the agency, their IG, the PRAC, OMB, and the ARP Implementation team to
collectively review and assess program design, financial controls, and reporting measures prior to the
release of funds from programs that were newly created, received substantial funding increases, or
required significant changes to program design.” In April 2022, OMB memorandum M-22-12 directed
agencies to oversee infrastructure spending with the same collaborative approach we have used for
pandemic spending.
This process of engagement by senior Executive Branch and agency officials with Inspectors General
and the PRAC has become a model for how to manage large-scale emergency spending initiatives and
balance the need for robust independent oversight with timely program implementation.
The PRAC Is Promoting Transparency and Collaboration across the Oversight
Community
One of our foundational responsibilities at the PRAC is to provide transparency to the public about
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pandemic-related spending. The PRAC is promoting transparency through our advanced website,
PandemicOversight.gov, which features interactive dashboards organizing 20 million rows of data and
providing timely information and relevant insights that allows the public to make sense of the more
than $5 trillion in pandemic relief spending.
If a visitor to PandemicOversight.gov is seeking information about how much money the State of South
Carolina or Louisiana, for instance, spent on payroll for health and safety employees, they can drill
down in the nearly 200,000 rows of prime- and sub-recipient data on our Coronavirus Relief Fund (CRF)
dashboard. There, they can find details, to the dollar, on how cities and counties in those states used
their federal relief funds. The PRAC has also posted newly available data from the U.S. Department of
the Treasury on the Coronavirus State and Local Fiscal Recovery Fund (SLFRF), part of the American
Rescue Plan Act.
Another visitor to our website might be looking for a broader view on how states are using Elementary
and Secondary School Emergency Relief grants to close learning gaps resulting from pandemic-related
school closures and remote learning. There, they would find a data story about that issue detailing how
schools across the country distributed $189.5 billion for a range of programs and equipment, including
summer school, laptops, and mental health services and support.
The PRAC also is advancing transparency by providing the public with access, through our website, to
the more than 420 pandemic oversight reports issued to date by federal Inspectors General and the
more than 154 reports issued to date by the GAO. These reports provide information about how
pandemic programs are operating and include recommendations on how to improve them. As of June
2022, federal IGs have issued reports containing 784 recommendations to improve the pandemic
response. Those reports contain over $57.1 billion in total monetary findings, which includes findings
where an OIG questioned costs associated with a pandemic response program or determined that the
agency could have put pandemic response funds to better use. In the PRAC’s most recent Semiannual
Report to Congress, we identified four key insights from oversight work completed between October 1,
2021, and March 31, 2022: the need for increased focus on fraud controls and managing risk; how
incomplete data can hinder agency leadership decision-making; the importance of improving customer
service performance and reform; and the need to address remote work capabilities.
In addition, as part of our close working relationship with our state and local partners, the PRAC is
posting to our website pandemic-related reports issued by state and local auditors so that the public
has access to oversight information at all levels of government. More than 200 state and local auditor
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reports are already on our website covering programs in 33 different states and the District of
Columbia.
Information is power, and through our transparency efforts we are empowering American taxpayers to
dig into the data to see how pandemic relief dollars have been put to work in their communities.
Information and transparency are also critical to ensuring accountability. As Justice Brandeis so aptly
stated, “sunlight is said to be the best of disinfectants.” Without transparency and that sunlight, you
cannot have accountability. Indeed, transparency drives accountability. To assess whether a program
has had its intended impact, you first need to know where the money has gone and how it has been
spent.
This transparency also has resulted in the PRAC and Inspectors General benefiting from tips that the
public and whistleblowers have provided about waste, fraud, and abuse after reviewing the spending
data on our website. We rely on information from whistleblowers and citizen watchdogs to help us
prevent and detect wrongdoing, recover funds for the taxpayers, and hold wrongdoers accountable.
In terms of collaboration, from the earliest days of the pandemic we recognized the importance of
coordinating with GAO and our state and local oversight partners. The Inspector General community is
fortunate to have developed over the years a strong working relationship with GAO, thanks in significant
part to the leadership of Comptroller General Gene Dodaro; we also have benefitted from Comptroller
General Dodaro’s tireless efforts to bring together the GAO, federal Inspectors General, and the state
and local oversight community to share information and best practices. At the PRAC, we have sought to
build on those relationships and to raise to a new level our collaboration with our oversight partners.
For instance, the PRAC’s leadership regularly coordinates with GAO leadership on pandemic oversight
issues and is engaging with state and local oversight offices to share the results of our work and to
enable state and local oversight offices to provide the PRAC, or the appropriate OIG, with investigative
information applicable to a federal pandemic response. The PRAC also conducts quarterly briefings to
share fraud indicators with state and local investigators and auditors. To date, close to 400 state and
local officials have attended these briefings.
Furthermore, in our recently updated communication guide for state, local, and Tribal government
auditors, we provide quick and easy access to information on how to post oversight products to our
website, submit information to our hotline, and refer hotline complaints to the PRAC and federal OIGs.
We have also included a new section titled Interact with Our Data, which includes guidance on how to
use interactive maps and dashboards for Provider Relief Fund, Coronavirus Relief Fund, and Paycheck
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Protection Program data. We also are launching a first-ever state auditor-in-residence program to detail
an official from a state audit office to the PRAC to better inform federal pandemic oversight with local
insights; this program also will, inevitably, help the federal IG community build a coordination
infrastructure that can be sustained post-pandemic.
Additionally, through regular stakeholder listening sessions that we are holding with the GAO and
federal, state, local, and Tribal auditors, we hear about the impact that pandemic programs have had
on local communities and provide an essential platform for auditors across the country to collaborate
and share information on best practices and lessons learned. These close partnerships enhance our
own independent oversight and go a long way in helping our state and local partners raise priority risks
and issues, such as fraud alerts and other early warnings, and resolve questions in their own oversight
work including those around Single Audit requirements and Office of Management and Budget
guidance. These sessions have provided such value to the community that members from CIGIE’s
infrastructure working group are using this platform to efficiently coordinate future infrastructure
oversight at all levels of government.
Further, consistent with the authority provided to the PRAC to hold public hearings, we have hosted a
series of programs over the past two years, including with the bipartisan National Academy of Public
Administration, so that the PRAC can share insights on the successes and challenges of pandemic
programs at the grassroots level. The recordings of these events can be found on our website, and in
the past year the topics have included:
• the impact of pandemic response programs and spending in underserved communities,
• the effectiveness of pandemic housing relief programs
• the extent to which efforts like the Emergency Broadband Benefit program connected
communities to the internet during the pandemic, and
• the experience of applicants who applied for pandemic benefits, and challenges they faced,
such as identity theft.
Indeed, the pandemic affected every part of our society, from small business to health care providers to
schools. That is why I am also proud of the important oversight work that the PRAC and Inspectors
General have done on pandemic-related health issues. For example, last year our health care issue
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group released a report on COVID-19 testing, a risk area the group identified that cuts across agencies,
and collaborated to create a data brief on COVID-19 testing administered between February 2020 and
August 2020 in six select federal health care programs. 2 This report highlights crucial areas
policymakers should consider to improve testing for Americans, including availability, accessibility, and
cost effectiveness of tests. A year later, this issue remains as relevant as ever. The PRAC is also
currently coordinating a review related to the use of telehealth services during the pandemic.
Specifically, the project involves assessing six federal health care programs to identify the nature of
telehealth use across these programs and to identify potential integrity risks associated with telehealth
programs and the facilitation of telehealth care.
We will continue to engage in collaborative outreach efforts like these to increase the public’s
awareness of how their tax dollars are being spent and to promote ideas that may improve the
government’s response to this and future crises.
The PRAC Is Identifying Necessary Improvements in How Agencies Collect and Track
Spending Data and Operate Pandemic Programs
Despite the PRAC’s significant accomplishments in advancing transparency, we have had a number of
challenges in making available to the public full and complete information about the federal
government’s pandemic spending, as well as providing data on how that money was being used. Early
on, we had difficulty obtaining spending data for several significant pandemic programs and few
agencies required relief recipients to provide detail about how they were spending federal funds that
they received. As we reported in November 2020, data completeness and transparency gaps
presented challenges to our ability to oversee pandemic relief spending and, as a result, we found that
policymakers, senior leaders, and program managers may not have access to all the data needed to
inform program and funding decisions for their pandemic response programs. We recognize that
pandemic relief funds were distributed amid a worldwide health and economic crisis, creating a
potential tension between imposing an undue burden on aid recipients and requiring those recipients
to provide information about how they spent the money that they received. Nonetheless, we believe
that taxpayers have a right to know how their money is being spent, and that policymakers also need
this information to be able to assess whether and how these relief programs worked.
2 The PRAC has five subcommittees and four issue groups, including health care, financial institutions, data sharing, and identity fraud
reduction and redress. These subcommittees and groups share ongoing oversight and accountability efforts, best practices, and lessons
learned among our 21 member IGs.
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We further highlighted this challenge in our October 2021 report Increasing Transparency into COVID-
19 Spending. In that report, we examined 51,000 grants worth $347 billion, spread across 250
programs to assess the level of transparency in agency information. We found numerous challenges
and problems:
• 15,000 awards worth $33 billion had meaningless descriptions that made it difficult to know
what that money was used for;
• more than 12,000 of those awards used opaque descriptions that repeated the name of the
program, such as “Community Development Block Grants/Entitlement Grants”; and
• another 2,500 awards used indecipherable technical jargon like CCC5-2021.
Both our November 2020 report and our October 2021 report contain recommendations for improving
the federal government’s data transparency and spending information. We also have had numerous
discussions with the Administration and Congressional officials about the need to improve the quality of
future spending data. Without high-quality data, policymakers and the public cannot fully assess the
successes and shortcomings of pandemic relief programs. Equally important, this lack of transparency
can hinder efforts to ensure accountability. We have been working with OMB, the Chief Financial
Officers Council, Inspectors General, and agencies on these gaps with the goal of improving data
quality and transparency. For example, in December 2021, the PRAC briefed the Chief Financial
Officers Council to highlight common issues identified in the report, share lessons learned, and
promote improvements in federal award data. Moreover, the PRAC followed up with OMB to close
recommendations that address issues in award descriptions for federal award data, enhance
independent oversight of agency award data submissions, and pilot solutions to better track sub-
recipient data reported to USAspending.gov.
An important result from these discussions was OMB Memorandum M-21-20, Promoting Public Trust in
the Federal Government through Effective Implementation of the American Rescue Plan Act and
Stewardship of the Taxpayer Resources, issued on March 19, 2021. This guidance addresses several
of the concerns PRAC leadership and staff have been discussing with OMB since March 2020,
particularly the need for detailed and accurate award descriptions, enhanced transparency of spending
through use of disaster and emergency funding codes, and a commitment to work with the PRAC and
Inspectors General to strengthen payment integrity. Additionally, the guidance notes that “OMB
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anticipates continued collaboration with the PRAC to include joint communications on issues related to
ARP relief that will raise awareness on specific challenges and opportunities for payment integrity.”
Indeed, in April 2021, we issued a Joint Alert with OMB on payment integrity. The joint alert identifies
risk factors and mitigating strategies that agencies can consider when assessing impact to their
respective programs. In July 2021, we issued a second Joint Alert with OMB, this one on the benefits of
using automation and data analytics in reducing the risk of improper payments of government funds.
We believe it is imperative that executive departments and agencies incorporate the lessons learned
from previous rounds of COVID-19 stimulus. That is why, in September 2021, we issued a report
entitled Lessons Learned in Oversight of Pandemic Relief Funds, highlighting several of the challenges
we identified in the operation of some of the largest pandemic relief programs, such as the Paycheck
Protection Program and Unemployment Insurance, that were prone to fraud, waste, and abuse due to
their size and scope. For example, we saw potential fraud because of self-certification in relief
programs run by the Small Business Administration and the Department of Labor. And, just last week,
we published an update to this report identifying five additional lessons learned in our oversight of
American Rescue Plan programs.
What are the 10 lessons we’ve learned from oversight of pandemic response programs?
1. Agencies shouldn’t solely rely on individuals attesting that they are eligible for benefits
2. Underserved communities should be prioritized for funding
3. Agencies should use existing data to verify eligibility, like the “Do Not Pay” system
4. Relief guidance needs to be accurate and issued quickly
5. Programs must fully disclosure to the public who received relief funds
6. Allocate Funding Based on Need
7. New Programs Need More Outreach to Increase Public Awareness and Participation
8. Watchdogs Need Access to Data to Find Fraud
9. Collaboration is Critical to Oversee Pandemic Relief Programs
10. Better Reporting is Needed to Track Pandemic Relief Spending
These lessons need be heeded as policymakers respond to recent natural disasters with new relief
funding.
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The PRAC Is Using Advanced Data Analytics to Drive Investigations and Hold
Wrongdoers Accountable
The only way to effectively oversee $5 trillion in relief spending is with data. At the PRAC, we have been
using advanced data science to advance our oversight mission in a manner never before undertaken
by the Inspector General community. Using funding provided by Congress in the American Rescue Plan,
the PRAC created the Pandemic Analytics Center of Excellence (PACE) to deliver world-class analytic,
audit, and investigative support to the oversight community. The PACE applies the best practices from
the ROC, which as previously mentioned was created by the RAT Board to support OIGs in oversight of
the American Recovery and Reinvestment Act of 2009. With the ROC, we learned that OIGs stand a
better chance of identifying fraud and improper payments by combining data sets and using tools like
link analysis, text mining, and anomaly detection.
We have built a data analytics center that, to date, has more than 20 datasets, providing access to
more than 150 million records from public, non-public, and commercial data sources, each of which
has specific rules governing their use. Some of these datasets can be shared across the OIG
community. For example, we are sharing SBA nonpublic loan level datasets withe 37 OIGs and law
enforcement agencies. Further, thanks to the hiring authority provided to the PRAC in the CARES Act,
we have been able to attract and hire some of the top data science talent from across the country. Not
only has this aided the PRAC, but our highly successful Data Science Fellows program has detailed 18
data scientists to OIGs to facilitate and support their pandemic-related data analytics efforts.
The sophisticated work of the PRAC’s data scientists and our data analytics platform have been
instrumental in advancing our efforts to identify improper payments and fraudulent activity in pandemic
programs. Among other things, our data scientists are developing robotic processes for automating
some of the tasks associated with monitoring pandemic relief spending. They identify flags and
anomalies, sending those to our investigators for a closer look. They also develop risk models to help
Inspectors General identify high-risk recipients of pandemic funds. For example, one risk model helped
the Small Business Administration (SBA) OIG to triage the enormous increase in hotline complaints it
experienced after the start of the pandemic. Prior to March 2020, the SBA OIG’s hotline typically
received fewer than 1,000 complaints per year. That rate increased to 6,000 complaints per week
during the early months of the pandemic. Using the PRAC-designed risk model, SBA OIG investigators
are better equipped to assess which of these complaints to pursue, saving them valuable time and
resources.
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In another example, the executive director of a public housing authority in two Midwest counties
contacted SBA OIG when they began receiving anonymous calls after the award list of PPP loan
recipients was made available online. The housing authority sought the OIG’s assistance to match all
participant names with PPP and Economic Injury Disaster Loan (EIDL) data. Given prosecution
thresholds and large caseloads, the SBA OIG was unable to provide this assistance and referred the
matter to the PACE. We obtained recipient data from the housing authority and conducted analysis
with public USASpending data, non-public PPP/EIDL data, and other data sources using a Structured
Query Language (SQL) waterfall matching process. Matches were made on name, address, emails,
phone numbers, bank accounts, and social security numbers. With this technique, the PACE’s data
scientists ultimately found that approximately 10 percent of participants may have obtained PPP or
EIDL loans that were inconsistent with income eligibility requirements. The SBA placed holds on names
the PACE flagged in their loan forgiveness system and the local housing authority is now able to use
this information in their annual income verification process.
Advanced analytics tools like these are helping our partners search multiple data sources to root out
issues like identity theft, multi-dipping, and fraud across pandemic relief programs. This kind of work
has advanced numerous investigations and, to date, our data analytics team has used the PACE to
complete 158 investigative requests for the federal oversight community. Notably, the work of the
PRAC and its partner Inspectors General have already led to more than 1,200 indictments and
complaints, more than 950 arrests, and more than 450 convictions.
We are also using our CARES Act authority to create new models of coordination among the federal
Inspectors General. In January 2021, the PRAC and our OIG partners launched the PRAC Fraud Task
Force to enable us to better coordinate investigations, to exchange information about fraud schemes
that we have identified, and to share resources to enable agents to support investigations across the
Inspector General community. For example, through the PRAC’s Fraud Task Force more than 40
experienced investigators from 13 OIGs have been working together to investigate small business loan
fraud cases. We created a hotline that has received more than 4,000 complaints that have been
routed to the appropriate agencies for follow-up action where applicable. Additionally, the PRAC Fraud
Task Force has uncovered fraud schemes that have provided valuable leads for the entire Inspector
General community, including scams used to buy luxury cars, real estate, and cryptocurrency. Fraud in
the Paycheck Protection Program, the Unemployment Insurance program, and Economic Injury Disaster
Loan grants continue to trend among our most prevalent investigations in addition to investigations
involving testing supplies, treatments, and vaccines.
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We also participate, along with 30 partner agencies, in the whole-of-government effort embodied in the
Department of Justice’s COVID-19 Fraud Enforcement Task Force. The PRAC is also a member of DOJ’s
International Organized Crime Intelligence and Operations Center (IOC-2) and Organized Crime and
Drug Enforcement Task Force Fusion Center, which enables PRAC to engage in case deconfliction and
share and receive investigative intelligence. Pandemic fraud is a problem that affects programs across
agencies, so it requires a coordinated all-of-government effort to address it. We look forward to
continuing to work with federal prosecutors to ensure that those who steal from these important
programs are held fully accountable.
Key to the PRAC’s role in supporting OIGs, we have undertaken several initiatives to share information
and connect stakeholders with an equity in pandemic fraud. In December 2021, the PRAC engaged
with DOJ, the Secret Service, and other law enforcement partners on a forfeiture project to survey
financial institutions who may hold suspected pandemic fraud proceeds. The PRAC created a web-
based survey to financial institutions with a link where the institutions can voluntarily report frozen
pandemic funds. The PRAC is collecting this information and working with partners on any potential
further action.
Legislative Priorities
Taken together, these efforts emphasize the important benefits of cross-OIG collaboration. They also
demonstrate our commitment at the PRAC to using all the tools that we have available to hold
wrongdoers accountable—including criminal, civil, and administrative actions. However, the PRAC’s and
the IG community’s efforts to fight fraud in pandemic-related spending would be further enhanced by
Congress’ passage of three pieces of pending legislation.
First, the Administrative False Claims Act of 2021, S.2429, which is pending on the Senate floor. The
bill would help us recover all fraudulently diverted tax dollars for the taxpayers by raising the
jurisdictional limit for administrative recoveries of “smaller” false or fraudulent claims against the
government from $150,000 to $1,000,000. To date, the PRAC is aware of over one million awards,
totaling about $362 billion, that ranged from $150,000 to $1,000,000. While the scope of the fraud
for these “smaller” awards has not yet been fully determined, the legislation would ensure that we
could pursue them regardless of the dollar amounts involved. I am hopeful that the Senate will pass
this legislation, and that the House will consider similar legislation.
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In addition, the PRAC, IG community, and law enforcement partners’ efforts to fight fraud in small
business loan programs would be enhanced by the extension of the statute of limitations for PPP and
EIDL loan fraud in H.R. 7352 and H.R. 7334, respectively. These bipartisan bills both passed the House
on June 8, 2022 and would establish a 10-year statute of limitations for all forms of PPP loan fraud and
all COVID EIDL loan fraud. The 10-year statute of limitations is consistent with that for bank fraud,
which has been charged in most cases of alleged PPP fraud for loans issued by traditional banks.
However, many loans in small business pandemic relief programs were issued by nonbank financial
technology companies, or fintechs. Fraud cases involving fintech companies are prosecuted as wire
fraud, which has a statute of limitations of five years. The oversight community is actively pursuing
investigations into PPP and EIDL loan fraud, with more than 650 ongoing investigations. OIG
investigations have resulted in more than 700 indictments in cases of PPP and/or EIDL loan fraud, with
total charged losses of more than $1.2 billion. The extension of limitations in H.R. 7352 and H.R. 7334
would allow our investigators the time necessary to fully pursue those who defrauded aid programs
intended to assist small business owners and their employees during an acute national crisis. As PRAC
Chair, I welcome last week’s passage of this legislation in the House and look forward to the Senate
considering similar legislation.
The PRAC’s Priorities in the Year Ahead
Through our investigative and oversight work, the PRAC has identified the need to prevent and detect
identity theft in pandemic benefit programs as a key priority. Indeed, identity theft has been endemic in
the fraud cases we have seen, and it often results in three victims:
• First, the tax-paying public at large because federal benefits intended to provide relief
from the health and economic impacts of the pandemic are diverted to the pockets of
bad actors.
• Second, the individuals these programs are intended to help who are left unable to
obtain benefits because someone already fraudulently took out benefits in their
name.
• Third, the individuals whose identities were stolen and used to fraudulently obtain
benefits are left to deal with the ramifications of damaged credit and other issues.
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The PRAC created the Identity Fraud Reduction and Redress Working Group in July 2021 to address
these serious challenges. Through this group and related efforts, we are partnering with our member
Inspectors General to identity ways that the agencies we oversee can better protect the public from
identity fraud in pandemic relief programs by closing the gaps that allow scammers to exploit these
programs. For example, our December 2021 capping report Key Insights: State Pandemic
Unemployment Insurance Programs looked at 40 reports from 16 state auditors and described how
one of the new federal unemployment insurance programs did not require proof of income or identity,
making it difficult for state auditors to verify eligibility. We also found that multiple states paid benefits
to prisoners or to individuals that applied using stolen identities. Yesterday we issued Key Insights:
Identity Fraud Reduction and Redress in Pandemic Response Programs. In this report, the PRAC
reviewed 55 federal IG reports concerning identity fraud, 16 of which were related to the pandemic.
These 55 reports included a total of 191 recommendations, many of which related specifically to
identity fraud reduction and redress and could be applied across multiple agencies. Our review shows
that pandemic spending was particularly vulnerable to fraud schemes leveraging stolen or synthetic
identities for two major reasons:
1. Pandemic relief funds under several programs were widely available with minimal or no
documentation required.
2. Because many of the programs were created quickly, agencies did not take the time to
develop effective fraud controls.
Many of these insights, along with additional, pre-pandemic findings and recommendations from OIGs
in this area, provide broader considerations for agencies to better address identity fraud in their
programs.
The PRAC is also focused on adding to our body of work detailing the importance of antifraud controls.
In a recent report, we partnered with the U.S. Department of Housing and Urban Development (HUD)
OIG to document different fraud schemes and discovered insights that we are sharing with agencies
that are reviewing fraud cases in other pandemic relief programs. We also provided recommendations
to HUD on how to strengthen anti-fraud controls for two HUD programs, and systemically prevent these
fraud schemes—and others—from occurring. As a result of findings from this assessment, we partnered
a second time with HUD OIG to conduct a follow-on project to assess potential fraud risks in four
additional HUD programs that received significant supplemental funding from the American Rescue
Plan.
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Additionally, in January of this year, we issued a report entitled Small Business Administration
Paycheck Protection Program Phase III Fraud Controls that examined fraud controls added by the SBA
to the PPP in January 2021. Some of these controls were later used by the SBA to administer the
Restaurant Revitalization Fund (RRF) in May 2021. To determine the effectiveness of these additional
fraud controls, we looked at 66 prior prosecutions by the Department of Justice that involved PPP fraud
in 2020 to assess the impact these antifraud controls would have had on those schemes had they
been in place at that time. We found that while the new controls improved the SBA’s ability to detect
fraud schemes, the controls would not have detected some of the fraud in the prior 66 cases. Further,
we found that some of the same fraud schemes are going undetected despite the additional controls.
We concluded that the SBA’s updated controls for PPP would have significantly benefitted from a
formal fraud risk assessment before the program re-opened in January 2021. The PRAC worked with
OMB to conduct a review of SBA’s COVID EIDL program before the loan threshold was increased to $2
million. That review resulted in the addition of new controls, including additional safeguards to detect
against and handle suspicious IP addresses, additional program eligibility checks, and other
preventative measures.
In addition to these efforts, the PRAC and our member IGs are currently working on more than 200
pandemic oversight engagements that focus on emerging issues like public health and safety and how
to prevent and detect fraud in government programs. The PRAC also will continue to increase our
transparency efforts by shining an even brighter spotlight on the important oversight efforts underway
by state, local, and Tribal governments with the rollout of new content on PandemicOversight.gov to
include fresh interactive maps, tools, and data stories on pandemic relief trends and findings. And, of
course, we will continue to engage in community outreach and engagement events to gather
stakeholder perspectives and recommendations on the delivery of better government programs and
operations.
Finally, we will continue to work closely with our federal and state oversight partners, the Congress, the
Office of Management and Budget, and the agencies we oversee to identify lessons learned and
provide insights to inform critical decision-making related to the pandemic.
Conclusion
What the PRAC has developed over the past two years is a new model for conducting oversight in a
crisis. It is a model that draws on the existing capabilities of the oversight community and surges
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capacity where needed. We are providing important shared services to the Inspector General
community and working more closely than ever with our federal, state, and local partners and are
providing them with access to data, staff, and investigative resources. Our transparency mission and
tracking of pandemic spending is unique across government while our other priorities address common
challenges and risks across our member OIGs.
Thank you for your continued support for the PRAC, the Inspector General community, and
independent oversight. We look forward to continuing to work on behalf of the taxpayers to ensure
that federal pandemic programs are operating effectively and efficiently, and to prevent and detect
waste, fraud, and abuse.
That concludes my prepared remarks, and I would be pleased to answer any questions that the
Subcommittee may have.
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