Special Inspector General for Pandemic Recovery seeks to expand oversight role

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Almost a year and a half after the adoption of the law on aid, relief and economic security against the coronavirus (the “CARES law”)1 On March 27, 2020, the Special Inspector General for Pandemic Recovery (“SIGPR”) stepped up and is investigating fraud related to the US government’s pandemic relief efforts. From implementing its own programs and using data analytics to forming new partnerships with other enforcement agencies, SIGPR continues its efforts despite the limitations placed on its jurisdiction. Indeed, in its latest Quarterly Report to Congress (the “Quarterly Report”) (available here), SIGPR calls for Congress to expand SIGPR’s oversight jurisdiction, emphasizes its growing efforts to investigate fraud related to disaster relief. pandemic and seek additional funding.

Section 4018 of the CARES Act established the SIGPR to “conduct, oversee and coordinate audits and investigations” of certain direct lender loans and other pandemic relief investments established under the CARES Act and managed by the Secretary of the Government. Treasure.2 SIGPR has been funded at $ 25 million over 5 years – or $ 5 million per year – to support these efforts. Since its last quarterly report of April 30, 2021 (available here), SIGPR has received almost double the hotline’s complaints – from 363 to 620 – and SIGPR’s referrals to other agencies have increased exponentially from 14 to 201 references. The SIGPR’s newly opened preliminary inquiries increased from four to twelve, its ongoing preliminary inquiries increased from two to eight, its newly initiated inquiries increased from three to seven, and its ongoing investigations decreased from six to 12. The report quarterly does not provide details of these inquiries and inquiries, but the jurisdiction of the SIGPR is limited to programs established under a specific section of the CARES Act known as the Coronavirus Economic Stabilization Act of 2020 (“CESA” ). These are loans to passenger air carriers, freight air carriers and related businesses; loans to businesses critical to national security; and loans and other investments under the Main Street Lending Program administered by the Federal Reserve.

The scope of the SIGPR’s competence has been the subject of some debate. SIGPR was of the view that its jurisdiction should be read extensively (available here), but on April 29, 2021, the Office of the Legal Adviser (“OLC”) of the Department of Justice (“DOJ”) issued an opinion ( available here) that SIGPR’s jurisdiction is limited to loan programs created under CESA, which is a clear indication that SIGPR does not exercise oversight over other CARES Act programs, such as the popular Paycheck Protection Program (“PPP”). In its recent report, SIGPR points out that the limitations of its jurisdiction have led SIGPR to end multiple audits and investigations and have forced SIGPR to transfer the information collected as part of a preliminary examination of the Coronavirus Relief Fund to Department of the Treasury Office of the Inspector General.

Yet reports of pandemic relief fraud continue to rise. Indeed, between April 2021 and June 2021, SIGPR received 620 hotline complaints related to potential fraud, waste, abuse and mismanagement of funding and programs of the CARES Act that were not within its jurisdiction, and he referred 201 of these complaints to other agencies.3 Other enforcement agencies, such as DOJ, continue to investigate fraud under other CARES Act programs,4 and, as we’ve already discussed here, SIGPR conducts investigations in partnership with U.S. prosecutors’ offices, the DOJ, and other federal law enforcement agencies. The report notes that SIGPR is continuing its work in these coordinated efforts. In addition, SIGPR is actively seeking to expand its reach independently of these partnerships. Immediately after the OLC’s April 2021 notice, SIGPR called on Congress to pass legislation “to clarify SIGPR’s mandate to oversee the Coronavirus Relief Fund, the Payroll Support Program, and ‘other pandemic-related programs managed by the Secretary of the Treasury “.5 The quarterly report reiterates the SIGPR’s request to extend its supervisory competence.

Yet even within the currently established limits of its jurisdiction, the SIGPR has numerous oversight initiatives. These include the audit of the management of the Treasury Department’s Direct Lending Program and the Federal Reserve’s Main Street Lending Program. SIGPR has engaged in a number of other activities, such as maintaining a whistleblower hotline, adding a “Self-Disclosure” page to its website through which program participants can report potential violations themselves and carry out investigative activities in its jurisdiction. SIGPR also wants increased access to information on borrowers and lenders, especially information related to the Main Street loan program, in order to better perform its reviews and audits. In addition, SIGPR focuses on using data analytics to expand its audit activities. SIGPR has already compiled nearly 70 million lines of data covering billions of dollars in CARES law funding, and SIGPR continues to seek ways to expand this data library. It also leverages data analysis to create and use interactive dashboards and visualizations to help the SIGPR identify program areas for audits and evaluations, and participates with intergovernmental agencies, committees and third-party vendors to learn more about tools, methodologies, and techniques. Additionally, as noted above, SIGPR has focused on building partnerships with other US government offices investigating pandemic relief fraud.

Finally, in its recent report, the SIGPR states that it cannot continue its efforts without additional funding. As noted above, SIGPR currently receives funding of $ 5 million per year, but SIGPR has requested a total of $ 25 million for fiscal year 2022 alone to support its mission. The SIGPR warns that without this additional funding, it will not be able to continue its monitoring efforts.

What it means for you

SIGPR’s ongoing initiatives and requests for additional funding and increased oversight responsibility all demonstrate that SIGPR’s enforcement efforts and its partnerships with other enforcement agencies are growing. In addition, the recent report indicates that efforts to fight pandemic relief fraud are escalating government-wide. The SIGPR is one of several US government enforcement agencies that focus on these issues. For example, the DOJ is pursuing pandemic fraud nationwide, along with U.S. prosecutors’ offices, as depicted in a constant stream of press releases.6 Additionally, in May 2021, the Deputy Attorney General held the first meeting of the COVID-19 Enforcement Task Force to discuss the government’s “priority goals”, which include “increased efforts to combat the fraud related to COVID-19 relief programs like the Paycheck Protection Program (‘PPP’), the Economic Disaster Loan Program (‘EIDL’), as well as Unemployment Insurance benefits.7

Thus, SIGPR, DOJ, and various enforcement agencies continue to closely scrutinize the receipt and use of CARES Act funds and programs, both independently and together. If Congress provides SIGPR with the requested funding or expands SIGPR’s jurisdiction, this would indicate a long-term commitment by Congress to focus on these efforts and expand the reach of SIGPR. Individuals and businesses that have received funds from the CARES Act must remain vigilant about compliance to ensure that spending of these funds complies with federal law. Accurate record keeping in accordance with program requirements is essential to demonstrate compliance to federal auditors and investigators. Those concerned about adhering to pandemic relief programs should contact legal counsel to address any concerns as soon as possible, before SIGPR, DOJ, and other government entities strike.

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