Shutdown of Key Pandemic Loan Fraud Agency Could Let $499 Million in Stolen Funds Slip Away
In a troubling development, the U.S. Special Inspector General for Pandemic Recovery (SIGPR) is on the brink of closing, leaving nearly half a billion dollars in pandemic loan fraud investigations unresolved. The agency, which has been instrumental in identifying and recovering fraudulent pandemic relief funds, will be disbanded by 2025 unless Congress acts to renew its mandate.
“When SIGPR was created to investigate CARES Act fraud, no one understood the magnitude of the pandemic relief money that would be stolen. Now that we know how extensive the fraud was, it makes no sense to shut down the very office that was set up to address it,” Brian Miller, the head of SIGPR, stated, urging Congress to extend SIGPR’s tenure.
SIGPR was established under the CARES Act in 2020, a legislative response to the economic devastation wrought by the COVID-19 pandemic. The act aimed to provide financial support to struggling businesses and individuals, allocating over $2 trillion in relief funds. Recognizing the potential for fraud in the rapid disbursement of these funds, Congress allocated $25 million to create SIGPR, tasking it with overseeing the proper use of pandemic relief money and investigating fraud.
Over the past five years, SIGPR has opened 76 cases, resulting in 42 indictments, 33 arrests, and the recovery of $60.3 million—surpassing its allocated budget of $56 million.
Among SIGPR’s notable successes is a significant investigation that led to the seizure of $18 million from accounts at Fidelity and JP Morgan Chase. These accounts had received fraudulent loans through the Paycheck Protection Program (PPP) after individuals impersonated account owners to submit false claims. The fraudulent transactions were traced to computers with IP addresses outside the United States, illustrating the international nature of the fraud schemes.
In another case, a man incarcerated for life in North Carolina for second-degree murder requested JP Morgan Chase to remove restrictions on his account to pay his “employees.”
Extension in limbo
Despite its successes, SIGPR faces an uncertain future. The agency’s mandate is set to expire in 2025, just as the scope of pandemic-related fraud becomes fully apparent. The Main Street Lending Program, another initiative under the CARES Act, has reported substantial loan losses, with defaults totaling $788 million as of April—a $620 million increase in just ten months. These losses are expected to rise further as SIGPR’s operations wind down.
U.S. Senator Mitt Romney has voiced his support for extending SIGPR’s mandate. “Considering this timeline also coincides with the maturing of loans under the Treasury Department’s Main Street Lending Program, it’d be unwise to have these authorities expire at that time,” Romney stated during a 2023 hearing.
However, despite bipartisan recognition of SIGPR’s importance, no significant legislative action has been taken to secure its future.
In a piece by Seamus Hughes and Peter Beck, a staffer from one congressional office described it as “too small [a] ball of a legislative priority to spend political capital on” but lamented the inaction as a “real missed opportunity” to save taxpayer money.
SIGPR’s closure would leave a critical gap in the fight against financial fraud. Erek Barron, the U.S. Attorney for the District of Maryland, emphasized the agency’s significance.
“Our partnership with SIGPR enhances our ability to hold accountable those who wrongfully took funds meant to help people suffering from the COVID-19 pandemic,” Barron said.
Growing financial losses and pending investigations
The Federal Reserve has raised alarms about the escalating losses in the Main Street Lending Program. As of April, loan losses totaled $788 million, with significant defaults anticipated in the coming months. The program’s payment structure includes a bulk payment of 70% due in the fifth year, 2025—the same year SIGPR is set to shut down.
Additionally, nine loans totaling $40 million are already in default, and another $212 million in loans will mature after SIGPR’s closure. According to SIGPR, no other agency has the mandate or capacity to investigate these fraud cases comprehensively.
The impending closure has also created uncertainty among SIGPR’s staff. While the agency has retained most of its investigators, there is widespread concern about a potential mass exodus of experienced personnel. One prosecutor has already left, and many support staff have moved to other employment, spreading their responsibilities among the remaining team.
Currently, SIGPR has 30 active investigative cases involving $499 million in potential CARES Act fraud. If the agency disbands, these investigations will likely be abandoned, leaving nearly half a billion dollars in stolen taxpayer money unrecovered.
In public reports, SIGPR has warned that its shutdown jeopardizes dozens of active investigations. “Other Inspectors General would likely not have the manpower to work these cases,” a government official familiar with SIGPR’s operations said.
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