Secret Service Pandemic Fraud Recovery Effort Working To Retrieve Nearly $100 Billion in Stolen Funds

Computer hacker stealing information with laptop.
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Criminals have stolen almost $100 billion in COVID-19 benefits, the Secret Service said. While fraud related to personal protective equipment was of primary concern to law enforcement early in the pandemic, the release of federal funding through the Coronavirus Aid, Relief and Economic Security Act has attracted the attention of individuals and organized criminal networks worldwide, according to a statement.

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“The exploitation of pandemic-related relief is an investigative priority for the Secret Service and its partners,” according to the statement.

The Secret Service has named Assistant Special Agent in Charge Roy Dotson of the Jacksonville, Fla. field office as the National Pandemic Fraud Recovery Coordinator.

The Secret Service said it will coordinate with financial institutions and money services businesses, United States attorney offices and other federal agencies regarding large-scale seizures of illicitly obtained pandemic relief funds. This includes funds from unemployment insurance, U.S. Small Business Administration loan and grant programs and other benefit programs.

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The investigations into UI and SBA loan fraud have so far resulted in the seizure of more than $1.2 billion and the return of more than $2.3 billion of fraudulently obtained funds via automated clearing house reversals. In addition, they have led to the arrest of 100 individuals responsible for UI and SBA loan fraud, according to the statement. The government has disbursed $3.5 trillion in COVID relief money since early 2020, when the pandemic began, CNBC reported.

“The Secret Service currently has more than 900 active criminal investigations into fraud specific to pandemic-related relief funds,” Dotson said in the Secret Service statement. “That’s a combination of pandemic benefits and all the other benefits programs too. Every state has been hit, some harder than others. The Secret Service is hitting the ground running, trying to recover everything we can, including funds stolen from both federal and state programs.”

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Dotson is also spearheading cryptocurrency investigations involving the use of unsuspecting victims as money mules to move stolen funds from one account to another within the cyber arena.

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“The Secret Service has seen a huge uptick in electronic crime in furtherance of these fraud cases,” Dotson added in the statement. “Criminals will often ask potential victims to open an account and move money for them for some reason as part of a ruse.” Fraudsters, for example, prey on people by engaging them online as part of a romance scam, phony job opportunity or other scheme, and then asking for financial favors. “Targeted individuals are often asked to open bank accounts and accept large sum deposits,” Dotson said. “As a result, people are becoming unwitting mules for stolen money.”

CNBC reports that among the recovered funds were hundreds of millions of dollars sent to Green Dot and PayPal, according to a Secret Service spokesperson.

“After the Secret Service alerted the private sector early on about the emerging fraud, numerous financial institutions proactively identified, investigated, and safeguarded against suspected fraudulent pandemic relief funds,” the spokesperson told CNBC. “These private institutions then reached out to the Secret Service for further assistance. In coordination with companies like Green Dot Corporation and PayPal, the Secret Service was able to seize over $400 million in fraudulent funds.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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