COVID-19 fraud is one big reason why the public don't trust their government

Recently, a government report revealed that COVID-19 relief efforts led to possibly the largest fraud in the history of America.

The Washington Post reported that unemployment benefits of an estimated $163 billion were paid to undeserving individuals due to either error or fraud.

In the Economic Injury Disaster Loan program, around $58 billion was paid to companies that shared the same addresses, phone numbers, bank accounts, or other data as other applicants — a clear indication of fraud.

Why did this happen?

The first reason is antiquated computer systems.

The federal and state governments have separate databases to store the same information and isolated systems to perform the same function.  At times, departments within both state and federal governments have separate databases for the same data.  The systems do not always share information with each other.

The outcome is data redundancy, data inconsistency, and no proper tracking.

The second reason is the lack of coordination between state and federal governments, as well as indifference to taxpayer funds.

For instance, an expanded unemployment benefit gave workers an extra $600 per week in federal jobless funds on top of what they received from their state.  The program was funded by the federal government but administered by states, which often had loose rules around qualifying. 

The antiquated computer systems, a lack of coordination, and a causal attitude towards taxpayers' funds resulted in the following:

The third reason was the pervasiveness of fraud.

Quite often, to receive the benefits, the applicants weren't required to provide proof that their income had suffered due to COVID-19.  Instead, they had to swear it was true.  This obviously was an opportunity for fraudsters.  Even fictitious farms received welfare money.

The antiquated system was also exploited by identity thieves and scam artists, while those in need were probably left in the rain.

For instance, a mother-daughter duo in Westchester County, N.Y., were accused of running the equivalent of a consultancy service where they helped others falsify the existence of a business to claim loans from the Economic Injury Disaster program.  The government charged both with wire fraud.  They have pleaded not guilty.

The New York Times reported that the volume of fraud in federal pandemic programs is such that even after two years of work and hundreds of prosecutions, they have merely scratched the surface.

It was reported that currently, 500 people are working on pandemic-fraud cases across the offices of 21 inspectors general, plus investigators from the FBI, the Secret Service, the Postal Inspection Service, and the Internal Revenue Service.

The federal government has already charged 1,500 people with defrauding pandemic-aid programs, and more than 450 people have been convicted so far.

The inspector general's office at the Labor Department has 39,000 investigations in progress.

The NYT reported that the Small Business Administration sent its inspector general two million loan applications to check for potential identity theft.

At the Labor Department, the inspector general's office has 39,000 cases of suspected unemployment fraud, a 1,000-percent increase from pre-pandemic levels.

The Justice Department has charged multiple fraud causes of $1 billion overall so far and is investigating other cases of $6 billion overall.

But prosecutors face a great disadvantage because the investigations take months, and prosecutions often take years.  Officials already concede that the sheer volume of cases means that some small-dollar thefts may never be prosecuted.

The question remains: if the government was unable to properly track funds dispatched within its own country, what about monies sent to foreign countries?

The U.S. has committed approximately $10.6 billion in the form of aid and assistance to Ukraine since the beginning of the conflict.  But unlike the investigations about COVID-19 fraud, there will be none in Ukraine.  The Ukrainian government officials and businesses have a reputation for corruption.  How much of the relief money actually reached Ukrainians in peril?  We will never, ever know.  In fact, demands for transparency and tracking of the funds were purposefully rejected.

It is commendable that the government is holding COVID-19 fraudsters accountable, but what about the powerful who used questionable methods to enrich themselves?

What about government officials writing op-eds advocating war while sitting on the board of weapons manufacturers?  What about politicians receiving handsome speaking fees and million-dollar contracts after retirement?  What about politicians who use campaign funds to pay handsome salaries to family members?

What about Hillary Clinton accepting donations from private individuals and even foreign governments for the Clinton Foundation while she was touring the world as secretary of state?  What about the donations drying up after she lost the 2016 election to Donald Trump?  What about politicians passing favorable policies for a certain sector of business and receiving employment in the same sector after retirement?

None of these will ever be investigated or punished because they belong to the ruling class.

This lack of regard for public money and the two-tiered system for accountability is why public trust in government has eroded.

Graphic credit: Nick Youngson, CC BY-SA 3.0.

If you experience technical problems, please write to