$10.6 million to a business with one employee. $7.6 million for a venture capital firm with a falsified payroll. And $341,205 to a cohort of inmates incarcerated in Virginia who filed fake unemployment claims. All told, a small federal agency housed in a six-story building in Virginia has uncovered tens of millions of dollars in pandemic funding fraud and has since recovered more money than it costs to run its investigations. But the agency, the Special Inspector General for Pandemic Recovery (SIGPR), is set to shut down by a previous legislative mandate exactly when hundreds of millions of dollars in pandemic loans will come due, meaning it will be able to identify further massive fraud right as it loses its remit to pursue it. 

Multiple congressional offices contacted for this article would not commit to pushing through legislation this Congress to renew the agency, with one congressional staffer calling it “too small [a] ball” of a legislative priority to spend political capital on but lamenting the inaction as a “real missed opportunity” to save taxpayer money.

The Special Inspector General for Pandemic Recovery, created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020 to investigate potential misuses of funds issued by the Department of the Treasury, will close in 2025 after five years of operation as required by the legislation that created the organization. 

Back in March 2020, the CARES Act was the first package of federal stimulus and emergency loan programs passed by Congress to keep people and the economy afloat. CARES created the Main Street Lending Program, which offered loans to small- and medium-sized businesses, and the Direct Loan Program (DLP) under the Treasury, for loans to airlines, air cargo companies, and companies critical to national security. Other significant programs included the Economic Injury Disaster Loan Program (EIDLP), the Federal Pandemic Unemployment Compensation (FPUC), and the Paycheck Protection Program (PPP), all created by CARES to help struggling employers and employees amidst the lack of face-to-face consumption.

Congress anticipated in 2020 the new avenues for fraud created by the CARES Act, which prioritized, at times, sending money to struggling businesses over precision. Regular bureaucratic hurdles for federal funds were set aside so businesses could receive urgent and much-needed support. Thus, Congress allocated $25 million to establish SIGPR, giving the agency a staff of several dozen and five years to investigate pandemic-related fraud. In the last half-decade, a total of $56 million has been appropriated to SIGPR, which currently has a staff of 32, including 11 special agents, 3 prosecutors, 2 analysts, and a forensic accountant. Congress gave SIGPR relatively unique hiring authorities to allow the agency to employ formerly retired law enforcement investigators, thus bringing onboard staff much quicker than traditional Inspectors General offices which require months of additional fraud prevention training for new hires. 

This story is based on dozens of interviews with individuals who have worked closely with SIGPR, congressional staffers, and government officials tasked with regulating the U.S. financial system. As part of this reporting, Court Watch also reviewed more than forty criminal and seizure cases brought in part by SIGPR’s investigations, hours upon hours of congressional hearings, and thousands of pages of court records. 

In a previously unreported case that Court Watch uncovered while reviewing federal court filings for this article, an investigation by SIGPR, the Secret Service, and the US Postal Inspection Service led to the seizure of $18,000,000 from accounts with Fidelity and JP Morgan Chase. Many of the accounts had received loans after prosecutors say unknown individuals impersonated account owners to submit false PPP claims on their behalf, and then stole the fraudulent loan payment later. Among the Fidelity accounts, court records indicate that the stolen accounts were repeatedly accessed from computers with IP addresses located outside the U.S. 

Other accounts ensnared in the $18 million seizure appear to belong to people who directly submitted fraudulent claims for pandemic loans. In one instance, prosecutors allege that a man incarcerated for life in North Carolina for second degree murder requested for JP Morgan Chase to remove restrictions on his account so that he could pay his employees. Both this case and others that Court Watch reviewed highlight a trend of, what one investigator described as, “double and triple dippers” of individuals who commit fraud on multiple fronts of COVID loans.

Now that the agency’s appropriations and authorities are set to expire in less than eight months, the SIGPR has already begun reducing its operations. However, the investigating office appears due to sunset just as the scope of pandemic fraud comes into full view and as criminal probes continue. Main Street Lending Program-issued loans for small and medium-sized businesses set up a payment plan of 15% in the third and fourth years, with a bulk payment of 70% due in the fifth year, 2025. So, SIGPR will close just as the Treasury determines the sum of defaulted loans.

“I’m also concerned about the pending expiration of the Treasury Department’s Special Inspector General for Pandemic Recovery,” Senator Mitt Romney (R-UT) said in a 2023 hearing featuring SIGPR. He continued, “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.” 

However, that was nearly a year ago, and there has been no movement from Congress to introduce standalone legislation that extends SIGPR’s tenure. In response to an inquiry, Romney’s staff highlighted a recent Committee passage of the Government Spending Oversight Act which would extend and expand some of the COVID fraud investigative bodies such as the Pandemic Response Accountability Committee. A Romney spokesperson noted on Tuesday that the Senator “has been outwardly supportive of extending SIGPR and welcomes the Banking Committee moving quickly before its authorities expire.”

Senate Banking Committee Chairman Sherrod Brown (D-OH) , which has jurisdictional congressional oversight of SIGPR, did not respond to a request for comment. A spokesman for Ranking Member Tim Scott (R-SC) stated that the Senator “has continued to call out waste, fraud, and abuse of taxpayer dollars and pushed to hold bad actors accountable – while ensuring government programs are operating efficiently and effectively. The Ranking Member will continue to evaluate SIGPR’s work as its authorities are set to expire.”

Multiple Court Watch interviews with Republican and Democratic congressional staffers found that there was no apparent opposition on both sides to extending SIGPR another five years; however, no congressional office would commit to putting in the legislative work to make that a reality as larger policy issues outside of SIGPR take priority in the final months of this congressional term quickly approaches. 

While Congress considers SIGPR’s future, the agency’s quarterly reports raise alarms as the Federal Reserve totaled Main Street Lending Program loan losses at $788 million in April, a dramatic $620 million increase in the last ten months even before the 70% bulk payments are due. The losses will almost certainly grow, but without SIGPR around to investigate. 

In response to inquiries about its status from Court Watch, Special Inspector Brian Miller, who runs the SIGPR stated, “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. Right now, the Federal Reserve is claiming nearly a billion dollars in losses from the MSLP [Main Street Lending Program] program alone.”

Miller continued, “With SIGPR’s open investigations totaling tens of millions of dollars, and its proven track record of identifying CARES Act fraud, this is no time to shut SIGPR down.  We urge Congress to extend SIGPR for another five years so we can continue to fight to bring to justice the crooks who stole taxpayer money.”

In public reports, SIGPR warned the impending shutdown jeopardizes dozens of active investigations. That concern was a reoccuring theme in multiple interviews as part of reporting this story. “Other Inspectors General would likely not have the manpower to work these cases,” a government official familiar with SIGPR told Court Watch.

Among DLP loans to commercial airlines, air cargo companies, and national security-related businesses, the Treasury reported that nine loans totaling $40 million are in default as of April. Twenty loans worth more than $212 million will mature in October and November 2025, after SIGPR closes. According to a SIGPR letter written to Congress, no other agency exists whose purview includes investigating fraud in pandemic loans issued by the Treasury. 

Since 2020, the agency has opened 76 cases, leading to 42 indictments, 33 arrests, and the recovery of $60.3 million, surpassing SIGPR’s allocated budget. (This year marked a significant milestone for SIGPR as it recovered more fraud money than Congress appropriated for the office since its inception.)

The agency has also developed relationships with U.S. Attorney’s offices around the country. Two years ago, it signed a Memorandum of Understanding with the U.S. Attorney’s Office for the District of Maryland to work cases together. “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,” Erek Barron, the U.S. Attorney for the District of Maryland, told Court Watch on Tuesday.  

SIGPR also assists fraud investigations involving other programs under the CARES Act. The Government Accountability Office estimated that over $100 billion of emergency unemployment insurance loans were obtained fraudulently. Meanwhile, the Small Business Administration calculated that total fraud under the PPP and the EIDLP programs was worth twice as much, at $200 billion. Working with other agencies, SIGPR has helped recover $18 million in fraudulent PPP loans. SIGPR says it developed 90% of its investigations from within, rather than relying on tips. 

Despite the pending shutdown, none of the special agents tasked with investigating fraud for SIGPR have departed but, according to multiple sources on Capitol Hill and within the U.S. Government who spoke to Court Watch on the condition of anonymity to discuss the matter freely, there is widespread concern that a mass staff exodus is forthcoming. One of its prosecutors has debarked, given its uncertain future. Many of the support staff have moved to other employment, and their responsibilities have been spread among the remaining team. 

There are currently nearly 30 active investigative cases that amount to $499 million in potential CARES Act fraud. The investigations will likely close without prosecution if SIGPR is disbanded and with it, nearly half a billion dollars of stolen taxpayer money.

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Source: Court Watch