The Secret Service said Friday that it has recovered $286 million in Covid relief funds that were meant for small businesses but were siphoned off by fraudsters using thousands of stolen or fake identities.
The conspirators used fake identities to apply for Covid relief funds known as Economic Injury Disaster Loans (EIDL), and created 15,000 accounts at Green Dot Bank, an online institution in Texas, to try to access the money using debit cards. Green Dot notified the Secret Service when it discovered suspicious accounts, and the EIDL money was returned to the Small Business Administration, which had administered the relief funds.
Assistant Special Agent in Charge Roy Dotson, the lead pandemic fraud investigator for the Secret Service, said at a news conference Friday that there are "many actors" and a "myriad of potential suspects behind the fraud," and believes there could be domestic and international co-conspirators.
"This is not going to be a quick fix," said Dotson, speaking of the broad sweep of Covid relief fraud. "This is one case. ...It’s going to be a long process."
As federal and state governments raced to get money out the door to keep the economy afloat, many safeguards were overlooked. Estimates of the total amount of fraudulently obtained federal, state and local Covid relief money start at about $100 billion and top $500 billion. Experts say will likely take years to account for the full scope of the fraud.
The SBA's Office of Inspector General said on Friday that it had identified an estimated $87 billion in potential fraud in the EIDL program — more than 20 percent of the $390 billion disbursed. NBC News reported that as much as $80 billion of the $800 billion handed out in another Covid relief plan known as the Paycheck Protection Program, or PPP, might have been stolen. Fraudsters may have taken as much $400 billion from the $900 billion Covid unemployment relief program, NBC News reported last year.
The vast majority of the funds is unlikely to ever be recovered, as they were stolen by overseas actors, investigators say.
The Secret Service and the SBA’s Office of Inspector General have seized more than $1 billion stolen through the EIDL program, according to the Secret Service.
“Modern-day conveniences and advances which we all use, like online banking, third-party payment systems and cryptocurrencies,” said Dotson, “have afforded fraudsters the ability to expedite their criminal activity. Cyber criminals are always fine-tuning their tactics, techniques and procedures to be in the best position to exploit an opportunity, such as a pandemic, or natural disaster.”
The Secret Service, in addition to protecting the U.S. president and other high-profile elected officials, is responsible for investigating counterfeit money and financial fraud.
The investigation of the Green Dot accounts was initiated by the Secret Service’s Orlando, Florida, field office. According to Dotson, the Secret Service was contacted by the bank in the summer of 2020 about suspected fraud and the seizures were executed in October 2020.
Green Dot did not immediately respond to a request for comment.