Biden urges Congress to approve $1.6B to fight COVID aid fraud

The White House on Thursday called on Congress to dedicate $1.6 billion toward addressing fraud within coronavirus pandemic relief programs, pushing for money to help victims and strengthen prosecutors targeting fraudsters.

President Biden will use his upcoming proposal, expected to be released next week, to ask Congress to allocate the money toward combating fraud, White House officials said.

Biden will ask for $600 million to be used to better fund investigations and prosecution of those engaged in “major or systemic pandemic fraud,” targeting offenders who have stolen the largest amount of funds. The money would be used to hire more prosecutors and investigators for those cases.

The president will seek another $600 million to invest in fraud prevention and identity theft prevention. The money would be used to strengthen those tools and educate the public on how to stop fraud and identity theft attempts. 

Biden also plans to ask Congress to allocate $400 million to assist victims of identity theft, including those who are dealing with damaged credit scores and tax liability.

White House officials praised the benefits of pandemic programs to aid small businesses and help them keep employees on the payroll when the coronavirus caused many shops and restaurants to temporarily close their doors in 2020. But they were also abused by fraudsters, officials said.

“On the whole, those programs did enormous good,” Gene Sperling, the White House’s American Rescue Plan coordinator, said on a call with reporters. “There were also cases where guardrails were unnecessarily lowered, which led to unnecessary and massive fraud.”

Sperling argued that approving Biden’s requests to combat and prosecute pandemic program fraud would be an investment to recoup stolen government funds.

Congress voted on a bipartisan basis throughout 2020 to fund and reauthorize pandemic aid for businesses in the U.S. and to assist unemployed Americans. But those programs were abused.

The Washington Post reported that the nation’s unemployment insurance program was overwhelmed by applications, leading to roughly $191 billion in wasteful payments that likely included a significant amount of fraud.

A government watchdog in January separately estimated that the Small Business Administration, which was tasked with managing roughly $1 trillion in assistance for small businesses, awarded more than $5 billion to businesses that appeared to use illegitimate Social Security numbers in applying for aid.