Chairman Clyburn’s Opening Statement at Hearing on “Examining Federal Efforts to Prevent, Detect, and Prosecute Pandemic Relief Fraud to Safeguard Funds for All Eligible Americans”

Washington, D.C. (June 14, 2022) – Below is Select Subcommittee on the Coronavirus Crisis Chairman James E. Clyburn's opening statement, as delivered, for today's hearing with federal officials on "Examining Federal Efforts to Prevent, Detect, and Prosecute Pandemic Relief Fraud to Safeguard Funds for All Eligible Americans."

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Opening Statement
Chairman James E. Clyburn
Select Subcommittee on the Coronavirus Crisis
Hearing on "Examining Federal Efforts to Prevent, Detect, and Prosecute Pandemic Relief Fraud to Safeguard Funds for All Eligible Americans"
June 14, 2022

The coronavirus crisis caused significant economic suffering as millions of Americans lost their jobs and businesses struggled to keep their doors open.

Congress took decisive action to ease this pain, appropriating unprecedented relief for small businesses and workers who lost their jobs, first through the CARES Act and later, under President Biden, through the American Rescue Plan. These laws funded the Small Business Administration's Paycheck Protection Program, or PPP, and Economic Injury Disaster Loan program, or EIDL, as well as expanded Unemployment Insurance.

Unfortunately, criminals and criminal organizations took advantage of Americans' suffering during this crisis and committed substantial fraud against these critical pandemic relief programs, stealing billions of dollars in aid.

These acts of fraud are not victimless crimes. This fraud exhausted funds badly needed by eligible Americans, particularly funds allocated to support small businesses that are crucial to making the American economy thrive.

In some cases, pandemic relief fraud involved identity theft that prevented innocent people from accessing unemployment insurance when they lost their jobs and were in desperate need of assistance. In other cases, pandemic fraud put identity theft victims' credit at risk as fraudulent relief loans were taken out in their names.

The Trump Administration contributed to this problem by failing to put basic fraud controls in place to protect these vital relief programs and American taxpayers from fraud.

Today, the Select Subcommittee released a report showing that, under the Trump Administration, SBA failed to implement basic safeguards to prevent fraud against the EIDL program.

The Trump Administration even directed loan officers to approve EIDL loan applications when there were clear indications that the applicants were engaged in identity theft. This both depleted funds from a critical relief program and put Americans at increased risk of suffering the consequences of identity theft.

The SBA Office of Inspector General similarly found that, during the Trump Administration, SBA failed to use sufficient controls to prevent PPP fraud and, I'm quoting here, "lowered the guardrails" in the EIDL program, significantly increasing fraud vulnerabilities.

We look forward to hearing from SBA Inspector General Ware today about his office's efforts to address the fraud that occurred because of these failures, including his office's work to recoup taxpayer dollars lost to fraud.

The Biden Administration has taken action to reverse the damage caused by the prior administration and to prevent future fraud.

In the EIDL program, the Biden Administration implemented measures to identify potential fraud, directed loan officers to address indications of fraud before approving loans, and took additional steps to make sure applications were legitimate.

Further, through the American Rescue Plan, Congress made critical investments in fraud prevention and accountability, including providing more than $200 million in funding for watchdogs to investigate fraud, waste, and abuse, as well as $2 billion to support states' modernization of unemployment insurance systems to reduce fraud vulnerabilities. The Biden Administration has begun using these funds to support state efforts to make unemployment insurance systems both more accessible to eligible recipients and less susceptible to fraud.

This funding is also supporting the work of the Pandemic Response Accountability Committee, or PRAC, chaired by Inspector General Michael Horowitz. The PRAC is coordinating efforts to combat and investigate fraud across the federal government. We will hear about those important efforts from Inspector General Horowitz today.

As the Biden Administration works to prevent and detect fraud, they have also taken action to hold perpetrators of fraud accountable. As he committed to do in this year's State of the Union, President Biden directed the Department of Justice to appoint a Chief Prosecutor to lead efforts to investigate pandemic relief fraud. Kevin Chambers, who was named to this role in March, is here with us today. Data the Department provided to the Select Subcommittee show that it has already charged nearly 1,500 people with alleged fraud against pandemic relief programs. We look forward to hearing from Mr. Chambers about the Department of Justice's efforts.

There is more that must be done to bring perpetrators of fraud to justice and to protect future emergency programs.

We should consider whether to extend statutes of limitations to allow investigators more time to uncover pandemic relief fraud. And we should continue efforts to protect relief funds by fulfilling the Biden Administration's request for more funds to protect and strengthen state unemployment insurance systems.

I would like to thank our witnesses for being with us today. I look forward to hearing more about the Administration's efforts to hold perpetrators of fraud accountable and what else we can do to protect vital relief programs going forward.

I now recognize the Ranking Member Scalise for his opening statement.