Taxpayers unlikely to get all money back from pandemic-era fraud

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(The Center Square) – With cases of the taxpayer-funded pandemic-era Paycheck Protection Program fraud mounting, there’s little expectation taxpayers will get made whole.

The federal government approved trillions of dollars during the COVID-19 pandemic in aid for the public and private sectors after governors in most of the country, including Illinois, sustained emergency orders limiting economic activity. While such disaster proclamations have since sunset, the fraud continues to surface.

In one instance, the Illinois Office of Executive Inspector General referred 177 state employees to law enforcement for providing false information on PPP applications for a total of around $4.5 million in alleged fraud. Other stories include employees of Chicago and Cook County government involved in fraud.

Last week, a federal grand jury indicted 19 central Illinois United States Postal Service workers for wire fraud.

“Each of the individuals have either already been arraigned or have been issued a summons to appear in federal court in Springfield or Urbana for arraignment,” said the office of the U.S. Attorney’s Office for the Central District of Illinois.

If convicted, the current and former USPS employees could get a maximum of 30 years in prison. The ages of the postal workers charged range from 25 to 47.

Now in private practice, former federal prosecutor Christine Adams notes the young age in other cases.

“They don’t quite have the judgment they ought to have and are still developing it, submitting false loan applications because their peers are also doing it,” Adams told The Center Square.

Whether taxpayers can expect getting the money back depends.

“When they received the money, they just spent it … cars, trips, luxury items, people like that you’re not going to be able to recover any funds from because they spent all the funds,” Adams said. “But if there’s individuals who still have some monies or some access to monies, and the government goes after them, the government can recover some of the money.”

The U.S. Government Accountability Office last week estimated unemployment fraud during the pandemic cost taxpayers up to $135 billion or about 11% to 15% of the total amount of unemployment insurance benefits paid during the pandemic.

Adams said the government should learn from the issues that have cropped up within some taxpayer-funded pandemic programs.

“People needed relief quickly,” Adams said of the pandemic-era economic contractions. “Businesses needed relief quickly. Employees that wanted to keep their jobs needed relief quickly. But the question really is did it have to be this quick.”

Adams notes a government watchdog found grant administrators did not use do-not-pay Treasury Department lists that could have provided more oversight on outgoing tax dollars.

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