Blog Post

From the President: Record Relief Money and the Fight Against Fraud


Bruce Dorris, J.D., CFE, CPA

In some of the first COVID-19 articles we published nearly a year ago, we warned how the pandemic was creating the perfect storm for fraudulent activity to thrive. Sadly, those predictions have proven true as record amounts of COVID-relief money flood the economy.

To date, the U.S. Congress has approved over $5 trillion in aid packages to help the unemployed and businesses survive the economic impact of the pandemic. That’s the largest federal spending program in U.S. history and, as such, it’s become a veritable playground for fraudsters to ply their trade. It’s also the subject of our cover story for the current issue of Fraud Magazine.

Fraudsters have wasted little time in exploiting the situation, using taxpayers’ money to buy everything from Lamborghinis to luxury goods at Gucci and Dior. Our series of benchmarking reports in the wake of the pandemic demonstrate how fraud and new threats have increased across many industries this past year.

To understand how government agencies are combating fraud, we talked to Hannibal “Mike” Ware, CFE, the inspector general for the U.S. Small Business Administration (SBA) and ACFE Regent, as well as Linda Miller, deputy executive director at the Pandemic Response Accountability Committee.

Ware recalls how funds were disbursed at lightning speed in the early days of the pandemic. The SBA moved more loans in 14 days than it had in the last 14 years. But to do that, it dropped many safeguards that had been in place to prevent fraud.

Likewise, Miller has her own challenges. She describes her role in overseeing billions of federal aid dollars at the newly created government agency like “building the plane while flying it.”

Indeed, it’s hard to fight fraud on this scale when the tools you normally use are limited. Ware underscored many of these internal control problems in his report to the SBA last October. Oversight bodies are increasingly sharing information and best practices to combat these issues. Improving data analytics is also a top priority.

Improved controls and technology are critical, but one tried-and-tested tool — hotlines — has proven particularly effective. They remain the lifeblood for fraud detection as illustrated by the 100,000 complaints the SBA received in just six months last year.

We still have a long path in front of us. As Miller says, this may be the “largest fraud event in American history,” so CFEs will be busy for a while. But it’s encouraging to see fraud examiners like Ware and Miller lead the fight on a massive scale.

In the May/June cover story of Fraud Magazine, we talk to these two top professionals who are leading the government’s fight against pandemic-relief fraud and find out why CFEs are required more than ever.

Read the Story

SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners

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