Key Takeaways:
– Two men bilked the federal government’s pandemic-relief programs of over $1 million using stolen identities. Both of them are now serving prison sentences
– Pandemic Response Accountability Committee (PRAC) was established to track fraud related to pandemic relief funds. As of January 2023, they identified $5.4 billion in pandemic fraud
– Since 2003, the government estimates improper payments exceeding $2.7 trillion
– PRAC might close next year if Congress does not renew its funding soon
– Waste or fraud associated with the Department of Housing and Urban Development’s rental assistance programs are not included in the total figure of improper payments
Pandemic Relief Fraud Unraveled
Bad actors exploiting the pandemic relief funds have hit the radar of the Pandemic Response Accountability Committee (PRAC). In a recent case, Adedayo Ilori, 43, and Chris Recamier, 59, were sentenced to a total of 34 years in prison. They defrauded the government’s pandemic relief programs of over $1 million. The duo purchased luxury goods, real estate, and invested in cryptocurrencies using these funds.
Efficiency of the PRAC
PRAC was born out of the CARES Act to check fraud related to pandemic relief funds. It operated mainly under the radar and recently made news due to its success in busting fraudulent cases. As per reports from January 2023, this watchdog has unveiled an estimated $5.4 billion in pandemic fraud.
Climbing Improper Payments
During the past three years, there has been a substantial increase in improper payments made by the government. As per OpenTheBooks.com, nearly 6% of the total federal spending during President Biden’s term has gone repotedly to incorrect recipients, for wrong reasons or in incorrect amounts. This audit watchdog revealed that, during this period, at least $764 billion was misallotted.
The improper payments during the Trump and Obama administrations were at $673 billion and between $453 and $512 billion respectively. Since the government commenced efforts to track these payments in 2003, improper payments amount to more than $2.7 trillion.
The Potential Shutdown of PRAC
Despite PRAC’s visible success in preventing fraudulent transactions, it might face closure next year. If Congress does not renew its funding on time, the crucial institution that checks massive improper payments could be lost. PRAC has identified 135 times more improper payments than its total expenditure.
Sizing Up Stress Points
While PRAC is instrumental in uncovering fraud, it does not have the capacity to track all areas of potential wastage. For instance, the Department of Housing and Urban Development’s rental assistance programs, which make up 68% of HUD’s annual budget, are out of reach. This gap is due to poor reporting by states that distribute aid in tandem with the federal agency.
These figures paint a picture of a systemic problem that transcends individual administrations. The accountability deficit is an issue that requires strategic efforts. To that end, PRAC and other inspectors general are urging Congress to broaden the application of fraud-prevention and detection tools.
What Deficiencies are We Witnessing?
As per Government Accountability Office, Uncle Sam allegedly loses between $233 billion and $521 billion annually due to fraud. However, not all improper payments are as a result of fraudulent activities. Some are traditional errors. For example, in fiscal year 2023, around $300 million was spent on claims made on behalf of deceased individuals due to outdated Medicare records.
Calling for Chainge
Moving forward, experts and watchdogs propose that there is a need for a more data-driven approach to prevent and handle fraud. The government should leverage data-matching among agencies to identify potential fraudulent activities. Collaboration and information sharing between agencies can forestall any attempts at fraudulent behavior. To keep up the momentum of its good work, the PRAC strongly needs continued funding and collaboration across federal departments. It will also need to adopt data-driven, innovative solutions to detect and prevent fraud. For now, we wait to see if Congress will renew its funding in time.