Dive Brief:

• Criminals have swindled nearly $100 billion through fraudulent COVID-19 relief applications since the start of the pandemic in the U.S., the Secret Service said Tuesday in a press release.
• Investigations by the Secret Service into unemployment insurance and Small Business Administration (SBA) loan and grant programs have recovered $2.3 billion in stolen funds so far. Roughly 100 people have been arrested in connection to such crimes, the agency said.
• Tuesday's release dovetails with the Secret Service's appointment of Assistant Special Agent in Charge (ASAIC) Roy Dotson as national pandemic fraud recovery coordinator.

Dive Insight:

“The Secret Service currently has more than 900 active criminal investigations into fraud specific to pandemic-related relief funds,” Dotson said in Tuesday's release.

Individuals and organized criminal networks glommed onto about $100 billion worth of funding the government made available through the Coronavirus Aid, Relief and Economic Security (CARES) Act. In particular, fraudsters targeted the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).

The SBA’s inspector general found last month that the EIDL program, for instance, disbursed nearly $3.7 billion to ineligible recipients after the agency failed to check borrowers' identifying details against the Treasury Department’s "Do Not Pay" (DNP) database.

That followed an October SBA IG report that concluded the agency paid $4.5 billion more than it should have when it disbursed EIDL grants to small businesses amid the start of the pandemic last year.

The SBA failed to establish a proper internal control environment by not requiring sole proprietors or independent contractors to disclose employer identification numbers (EINs) when applying for the grants, and asked for Social Security numbers instead, the October report found.

“The Secret Service has seen a huge uptick in electronic crime in furtherance of these fraud cases,” said Dotson, who is leading several fraud-related cryptocurrency investigations, according to the press release.

Although the agency is traditionally associated with protecting government officials, the Secret Service has a long history of financial and cyber crime investigations. 

The agency has recovered hundreds of millions of dollars in fraudulent funds through a coordinated recovery effort with Green Dot Corporation and PayPal.

CNBC reported criminals sent $400 million in now-recovered fraudulent funds to the two fintechs.

Green Dot “does proactively bring fraud cases to the attention of the Secret Service as well as other government agencies and industry peers and partners with them to address, mitigate and resolve them," a company spokesperson told the network. "Fraud prevention is paramount and we work around the clock and invest heavily to identify, block and address fraudulent activity as part of our commitment to protecting our customers.”