Chairwoman Hassan, Ranking Member Romney, and Members of the Subcommittee:
Thank you for inviting me to testify today on the ongoing oversight work of the Pandemic Response Accountability Committee (PRAC). At the outset of my testimony, I would like to recognize this Committee’s and the Subcommittee’s leadership for the critical role you played in creating the PRAC as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in March 2020. It has been my honor to serve as Chair of the PRAC since April 2020. Thanks to your support for our efforts, we are promoting transparency, supporting and coordinating independent oversight of pandemic relief spending, and using data and advanced analytics to hold accountable those who have stolen from and defrauded pandemic relief programs. I had the pleasure of testifying about the PRAC’s achievements in fulfilling our objectives before the full Committee in March 2022, and I look forward to sharing our progress to date.
About the PRAC
The PRAC is housed within the Council of the Inspectors General on Integrity and Efficiency (CIGIE) and is comprised of 20 federal Inspectors General that work collaboratively to oversee the more than $5 trillion in federal pandemic relief emergency spending. Our primary mission is to work with Offices of Inspector General (OIGs) to ensure that taxpayer money is being used effectively and efficiently to address the pandemic-related public health and economic needs funded through the various COVID-19 relief and response bills.
To facilitate our mission, we
- promote transparency by publicly reporting accessible and comprehensive pandemic relief
- collaborate across the oversight community to identify cross-cutting issues and program risks;
- prevent and detect fraud, waste, abuse, and mismanagement of relief spending through leading- edge data insights and analytic tools; and
- hold wrongdoers accountable by marshaling the investigative and analytic resources of the
My testimony today highlights the PRAC’s achievements since March 2020 in fulfilling these objectives, particularly how we created the Pandemic Analytics Center of Excellence (PACE) which uses data intelligence to fight pandemic relief fraud and is a model for effective, coordinated government oversight. I will also discuss the lessons learned from our efforts, and the legislative actions that will assist the oversight community’s efforts to prevent, detect, and mitigate fraud, waste, abuse, and improper payments in the future—most importantly, by establishing a permanent data analytics hub for the OIG community.
At the outset, it’s important to emphasize the whole-of-government oversight effort required to oversee spending of this magnitude. With the PRAC’s five-year appropriation of $120 million, we have been tasked with overseeing the more than $5 trillion in pandemic relief funding—a sum that exceeds the federal government’s total spending in 2019 for discretionary, mandatory, and interest on the debt. It is also more than six times greater than the $800 billion stimulus package passed in 2009 in the wake of the financial crisis.
The only way to effectively oversee $5 trillion in relief spending is with data. At the PRAC, we have been using advanced data science to further our oversight mission.
Today, federal Inspectors General are charged with overseeing over 500 pandemic relief programs across more than 40 agencies. Just one of those programs alone—the Paycheck Protection Program (PPP) —has distributed approximately $800 billion in funding, or roughly the same amount as the entire American Recovery and Reinvestment Act of 2009. Moreover, in the program’s first 14 days in April 2020 alone, about 1.7 million PPP loans were issued with disbursements of upwards of $343 billion.
These loans were approved with few, if any, controls to check if the applicant was legitimate and qualified for aid. Effective and coordinated independent oversight has been central to improving how federal agencies are operating their pandemic relief programs, as well as addressing and combating fraud, waste, abuse, and mismanagement involving these funds. Through this work, oversight entities like the PRAC, OIGs, the Government Accountability Office (GAO), and our state and local oversight partners have played a critical role in the success of our national recovery efforts.
Using Advanced Data Analytics to Better Target Investigations and Hold Wrongdoers Accountable
To lead oversight of the 2009 stimulus package, Congress created the Recovery and Accountability Transparency Board—affectionately known as the RAT Board—and appropriated more than $175 million to it over the course of its almost seven-year existence.1 The RAT Board, led by then-U.S. Department of the Interior Inspector General Earl Devaney and comprised of about a dozen Inspectors General, was widely praised for its effective oversight efforts. Those included the RAT Board’s development of the Recovery Operations Center (ROC), a first-ever Inspector General community-wide data analytics effort. Unfortunately, despite the ROC’s successes, the strong support it received from Comptroller General Gene Dodaro, and the significant financial investment in it by Congress, when the RAT Board sunset in 2015, the ROC was not extended by Congress and it ceased operations as well. As a result, when the COVID-19 pandemic hit in March 2020, the PRAC was without a data analytics tool, and Congress had to appropriate approximately $40 million for the PRAC to develop the PACE and operate it through September 2025.
What we have sought to do at the PRAC is to build upon the prior outstanding work of the RAT Board while developing a new model for conducting oversight in a crisis. The PACE, established with funding from the American Rescue Plan, is a model that should be retained and replicated. Drawing on the existing capabilities of the oversight community, the PACE applies best practices from the ROC’s operations, which taught the federal government that OIGs stand a better chance of identifying fraud and improper payments by combining data sets and using tools like link analysis, text mining, and anomaly detection.
We have built a data analytics center that, to date, has more than 59 data sets, with more than 1.6 billion records from public, non-public, and commercial data sources, each of which has specific rules governing their use. Some of these data sets are shared across the OIG community. For example, we are sharing Small Business Administration (SBA) nonpublic loan level data sets with 44 OIGs and law enforcement agencies as part of our effort to combat fraud detected in the PPP and COVID-19 Economic Injury Disaster Loan (COVID-19 EIDL) program. Further, thanks to the hiring authority provided to the PRAC in the CARES Act, we have been able to attract top data science talent from across the country. Not only has this aided the PRAC, but our highly successful Data Science Fellows program has detailed 27 data scientists to 14 OIGs to facilitate and support their pandemic-related data analytics efforts.
The sophisticated work of the PRAC’s data scientists and our data analytics platform have been instrumental in advancing our efforts to identify improper payments and fraudulent activity in pandemic programs. In January 2023, the PRAC issued a Fraud Alert after our data scientists used the PACE to identify over 69,000 questionable Social Security Numbers (SSNs) that had been used to obtain $5.4 billion in PPP and EIDL loans and grants. PACE data scientists identified this potential fraud and identity theft by analyzing over 33 million COVID-19 EIDL and PPP loan applications to identify a targeted selection of questionable SSNs included in those applications. Then, with the legal authorities that
Congress provided to the PRAC, we obtained the Social Security Administration’s (SSA) assistance to verify the name, date of birth (DOB), and SSN that were included in the COVID-19 EIDL and PPP applications identified by the PACE—in other words, did the name, DOB, and SSN provided by the applicant match the name, DOB, and SSN in SSA’s records? Through this verification process, we determined that 69,000 questionable SSNs were used to obtain $5.4 billion in pandemic loans and that another 175,000 questionable SSNs were used in applications that were not paid or approved.
Had the PRAC had this analytic platform available to us at the outset of the pandemic, we could have worked with the SBA OIG and SBA to flag these suspicious applications before money was distributed, likely saving the taxpayers hundreds of millions – if not over a billion – dollars.
In May 2023, the PRAC issued an update to the Fraud Alert, in which PRAC data scientists, using the
Treasury Department’s limited Death Master File, identified an additional $38 million in potentially improper or fraudulent PPP and COVID-19 EIDL loans obtained using the SSNs of deceased individuals. However, this figure likely would have increased if we had access to the full SSA Death Master File. Our experience and insights highlight the value of expanding data sharing agreements to better detect and prevent fraud to protect the American public and taxpayer dollars.
Our data scientists are also developing automated robotic processes for some of the tasks associated with monitoring pandemic relief spending. These help identify flags and anomalies which are sent to our investigators for a closer look. We also develop risk models to help Inspectors General identify high- risk recipients of pandemic funds. The sophisticated work of the PRAC’s data scientists and our data analytics platform have been instrumental in advancing our efforts to identify improper payments and fraudulent activity in pandemic programs.
Providing Investigative Support to Law Enforcement and OIG Partners Using Advances in Analytic and Forensic Technologies
The PACE also has been a critical asset used by law enforcement to root out issues like identity theft, multi-dipping, and fraud. As of September 2023, the PACE has provided investigative support to more than 40 federal law enforcement and OIG partners on over 600 pandemic-related investigations with nearly 7,600 subjects and an estimated fraud loss of $1.77 billion.
We also have used our CARES Act authority to create new models of coordination among federal Inspectors General. In January 2021, the PRAC and our OIG partners launched the PRAC Fraud Task Force, a collection of over 50 agents from 16 member OIGs, to: enhance our ability to coordinate investigations; exchange information about fraud schemes that we have identified; and share resources that enable agents to support investigations across the Inspector General community. The PRAC Fraud Task Force and our law enforcement partners are boosted by the innovative capabilities of the PACE, which uses advanced analytic tools that incorporate multiple pandemic program data sources to uncover suspicious network activity and identify anomalies that may indicate potential fraud.
Additionally, we created a hotline that has received over 9,000 complaints from the public that have been routed to the appropriate agencies for follow-up action where applicable. We rely on information from whistleblowers and citizen watchdogs to help us prevent and detect wrongdoing and recover funds for taxpayers.
Thanks to the coordinated efforts of the PRAC Fraud Task Force, our law enforcement partners, and the
U.S. Attorney’s Office, we can leverage PACE analytic tools to help recover stolen pandemic relief funds and ensure that those who stole them are held accountable, as seen in the below case examples:
- In the largest PRAC Fraud Task Force investigation to date, 14 people were charged with defrauding PPP of $53 million. Using a group of affiliated recycling companies, the defendants allegedly submitted at least 29 fraudulent PPP loan applications to financial institutions that included inflated payroll expenses, doctored bank statements, and false tax forms. The defendants then created a false paper trail to simulate payroll expenses by funneling the funds through a series of bank accounts. This case also relied on critical data analysis provided by the PACE. Investigative partners included: SIGPR; FDIC OIG
- In New York, a judge delivered a 25-year sentence to a recidivist fraudster who stole over $1 million in pandemic relief funds. He and his co-conspirator, who received a nine-year sentence, used stolen identities, sham tax records, and corporate documents to successfully obtain the PPP and COVID-19 EIDL funds. The pair submitted a total of 14 fraudulent loans attempting to obtain over $10 million. Investigative partners included: DOJ OIG
A Los Angeles man was indicted on allegations that he fraudulently obtained over $3 million in pandemic relief by setting up four shell companies to collect the funds. He also allegedly used several aliases in order to perpetuate the purported fraudulent scheme. Investigative partners included: DOJ OIG
Six Oklahoma residents were charged in a $1 million PPP fraud scheme. It is alleged that the group created fake businesses and fake identities to obtain the fraudulent loans and deposit them into their own bank accounts. Investigative partners included: SSA OIG; SBA OIG; USAID OIG; HUD OIG; IRS
We also participate, along with 30 partner agencies, in the whole-of-government effort coordinated by the U.S. Department of Justice’s (DOJ) COVID-19 Fraud Enforcement Task Force. As of August 2023, the efforts of the task force resulted in criminal charges against more than 3,200 defendants with losses estimated at $1.7 billion, the seizure of more than $1.4 billion in relief funds, and civil investigations into more than 3,000 individuals and entities for alleged misconduct of pandemic relief loans totaling more than $7 billion. The PRAC is also a member of DOJ’s International Organized Crime Intelligence and Operations Center (IOC-2) and Organized Crime and Drug Enforcement Task Force Fusion Center, which enables the PRAC to engage in case deconfliction and share and receive investigative intelligence. Since summer 2021, the PRAC has detailed an investigative analyst to IOC-2 to work on the National Unemployment Insurance Fraud Task Force. Because they are often large, complex, and transnational, many cases are being worked by COVID Strike Force Teams in California, Colorado, Florida, Maryland, and New Jersey. The COVID Strike Force teams also rely heavily on the PACE advanced analytics in support of their investigations.
Pandemic fraud is a problem that affects programs across agencies, so it requires a coordinated whole- of-government effort to address it. We continue to work with federal prosecutors to ensure that those who steal from these important programs are held fully accountable.
Promoting Transparency, Collaboration, and Accountability
One of our foundational responsibilities at the PRAC is to provide transparency to the public about pandemic-related spending. The PRAC promotes transparency through our website, PandemicOversight.gov, which features interactive dashboards organizing 34 million rows of data and providing timely information and relevant insights that allow the public to make sense of the more than $5 trillion in pandemic relief spending. For example, we added program funding data pages that provide detailed views of over 500 federal pandemic relief programs, such as the U.S. Department of Education’s Education Stabilization Fund, SBA’s Restaurant Revitalization Fund, and the U.S.
Department of Health and Human Services’ Low-Income Home Energy Assistance. These pages contain spending data, program descriptions and objectives, and links to the program’s website. Information is power, and through our transparency efforts we are empowering American taxpayers to dig into the data to examine how pandemic relief dollars have been put to work in their communities.
The PRAC also promotes transparency by providing the public with access to nearly 700 pandemic oversight reports issued to date by federal Inspectors General as well as reports issued by GAO. In addition, as part of our close working relationship with our state and local partners, the PRAC is posting to our website their pandemic-related oversight reports, so the public has access to oversight information at all levels of government. Over 300 state and local auditor reports are already on our website covering programs in 36 different states and the District of Columbia.
In addition, our website hosts oversight reports that the PRAC itself has issued. For example, it includes a June 2022 report we issued on identity fraud reduction and redress, which highlighted the substantial amount of pandemic-related fraud that was the result of identity theft and the government’s decentralized approach to supporting the victims of identity fraud. A follow-up report that we commissioned the MITRE Corporation to conduct, and that we released in September of this year, can also be found on our website. That report reimagines the government’s approach to supporting identity fraud victims, by placing them at the center of the redress process and highlights how identity fraud victims often feel they are not treated like victims of a crime.
We have further advanced accountability by reimagining how we engage with agencies before they distribute funding for new or existing programs. Working with leadership in the Office of Management and Budget (OMB) and the American Rescue Plan (ARP) implementation team led by Gene Sperling, we developed a model whereby agency leadership presents its program implementation plans, payment integrity risks, and reporting and performance mechanisms to the agency’s OIG, the PRAC, the ARP implementation team, and OMB leadership. This model allows for the presentation and consideration of antifraud controls before a program is implemented and before money goes out the door. In December 2021, OMB Memorandum M-22-04 highlighted the importance of this approach:
“Agencies have been encouraged to proactively engage with their IGs in the design of new or expanded ARP programs. The White House ARP Implementation Coordinator, working with OMB, developed a new process bringing together the agency, their Inspector General, the PRAC, OMB, and the ARP Implementation team to collectively review and assess program design, financial controls, and reporting measures prior to the release of funds from programs that were newly created, received substantial funding increases, or required significant changes to program design.”
In April 2022, OMB Memorandum M-22-12 directed agencies to oversee infrastructure spending with the same collaborative approach we have used for pandemic spending.
This process of engagement by senior Executive Branch and agency officials with Inspectors General and the PRAC has become a model for how to manage large-scale emergency spending initiatives and balance the need for robust independent oversight with timely program implementation.
The PRAC and its members have three legislative priorities. First, it is critical that Congress consider legislation to sustain the PACE beyond the PRAC’s scheduled sunset date of September 30, 2025, so that the Inspector General community has an effective analytics platform to oversee all federal spending. In my view, it would be a wasted opportunity and a potentially enormous waste of funds to allow this fraud fighting tool to expire, as happened with the ROC, and then have it need to be re- created at further taxpayer expense in response to the next natural disaster or financial calamity. More critically, with or without another economic or other crisis, authorizing a permanent data analytics tool for the Inspector General community will allow us to adapt this tool to fight fraud in all government spending, not just spending that is linked to the pandemic recovery. To be clear: the ongoing role of the PACE (or its successor), while critical, will be for the purpose of providing advanced data analytics services to OIGs to aid their program integrity, fraud prevention, and recovery efforts. The community does not need—and this proposal would not create—a “super IG” that would duplicate the audit, investigative, and oversight responsibilities and efforts of OIGs; rather, what OIGs, the government, and taxpayers need is the continued benefit from the analytical support role provided by the PACE on an ongoing, permanent basis.
The PACE plays a critical role in performing antifraud analytics that bolster oversight of federal pandemic relief and help OIGs protect taxpayer funds. As I noted earlier in my testimony, such a platform previously existed when Congress appropriated a significant amount of money to the RAT Board in 2009 to develop and operate the ROC, a highly effective and widely praised tool that was critical in advancing program integrity and rooting out waste, fraud, and abuse. Indeed, the GAO issued a report in 2015 describing the important role the ROC played in ensuring federal spending accountability. Nonetheless, the absence of Administration and Congressional action meant that the ROC ceased to exist on September 30, 2015, when the RAT Board sunset.
As a result, when the pandemic hit in March 2020, no data analytics platform was available to the PRAC to assist us in our oversight work and to support OIGs in the critical first year of the pandemic when federal programs were disbursing hundreds of billions of dollars in pandemic relief funds. In 2021, Congress appropriated $40 million that allowed the PRAC to build the PACE from the ground up, leveraging leading practices and lessons learned from the ROC. You have seen the important results that this data analytics platform continues to provide. The PRAC spends about $16 million annually to operate and sustain the PACE, and the return for the public on this investment could not be clearer. The PRAC’s January Fraud Alert alone identified potentially $5.4 billion in fraud, which is 360 times the annual cost of operating the PACE. And, as noted, the PRAC’s partnership and support for the DOJ COVID-19 Fraud Enforcement Task Force has resulted in criminal charges against more than 3,200 defendants with losses estimated at $1.7 billion, the seizure of more than $1.4 billion in relief funds, and civil investigations into more than 3,000 individuals and entities for alleged misconduct of pandemic relief loans totaling more than $7 billion.
A sustained data analytics capability would benefit all OIGs and would provide partners:
- access to federal spending data sets for OIGs who have their own data analytics capabilities;
- a self-service analytics research platform for OIG auditors and investigators;
- audit research and investigative tips and leads, particularly focused on fraud risks that cut across agency and program boundaries;
- law enforcement intelligence capabilities, including open, deep, and dark web data analysis;
- CIGIE-wide investigative deconfliction and coordination; and
- analytic solutions such as risk models, robotic process automation, code, artificial intelligence, and antifraud technical assistance.
As we move beyond the pandemic, the focus of the PACE should be broadened to prevent and detect fraud and improper payments, beyond the pandemic-era spending programs. We believe the broadened approach should also allow agencies, in coordination with their OIG, to utilize the data analytics tool to screen applicants for benefit programs by conducting pre-award and pre-payment checks that will ensure funding goes to the individuals they were intended to help. Prevention on the front end will reduce the volume of funds disbursed using a "pay and chase" model—a problematic and ineffective approach that makes it difficult for agencies to recover improper or fraudulent funds. The sustainment and expansion of the PACE and its capabilities will ultimately ensure that our federal government is equipped with resources to face avoidable oversight risks when our country encounters its next crisis that requires emergency relief funding and effective oversight of that funding or those associated with the annual federal government appropriated funding and spending.
Second, Congress should extend the statute of limitations for pandemic-related Unemployment Insurance (UI) fraud from 5 to 10 years. The 117th Congress enhanced the PRAC, Inspectors General community, and law enforcement partners’ efforts to fight fraud in small business loan programs with its passage of H.R. 7352 and H.R. 7334. These bipartisan bills, signed into law in August 2022, established a 10-year statute of limitations for all forms of PPP loan fraud and all COVID-19 EIDL fraud. The extension of the statute of limitations for fraud in these two programs was necessary given the scope of the fraud identified to date to allow our investigators the time necessary to fully pursue those who defrauded these aid programs.
In May 2023, the House of Representatives passed legislation that would extend the statute of limitations for pandemic-related UI fraud from five to 10 years. We strongly support an extension of the statute of limitations for these crimes in order to help ensure that investigators and prosecutors have time to effectively pursue and hold accountable those groups and individuals that targeted and defrauded the UI program, and to ensure that they do not escape justice. I am hopeful that the Senate will support extending the statute of limitations.
Additionally, we are grateful for the Senate’s support of S. 659, which passed by unanimous consent to amend the Program Fraud Civil Remedies Act, 31 U.S.C. 3801 et seq.; Pub. L. 114-74, to raise the jurisdictional limit for administrative recoveries of “smaller” false or fraudulent claims from $150,000 to $1,000,000. The Congressional Budget Office determined that passage of this legislation would actually save taxpayers approximately $149 million over 10 years because of the amount of the financial recoveries that would result from it. To date, the PRAC is aware of at least one million pandemic awards, totaling about $362 billion, that ranged from $150,000 to $1,000,000. While the scope of the fraud for these “smaller” awards has not yet been fully determined, increasing the jurisdictional amount for administrative recoveries would ensure that we could pursue them more effectively and efficiently. I am hopeful that the House of Representatives will take up and pass this legislation.
Priorities in the Year Ahead
The PRAC has several important priorities in the year ahead, with perhaps our biggest being to continue to ensure accountability for those who engaged in fraud and other wrongdoing in obtaining pandemic funds. Through the work of the PACE, we will lean into ongoing data-driven reviews of pandemic spending and programs. Understanding how we prepare for future emergencies, and safeguard annual federal spending, is more important than ever to protect American livelihoods and taxpayer dollars. Our data scientists and investigators continue to rise to the challenge of addressing the high volume of potential fraud in pandemic programs by:
- transforming data and other critical information into meaningful insights for other oversight offices, congressional stakeholders, and the public;
- leveraging data across agencies to produce observations that can help improve program integrity;
- using an innovative, in-house process and methodology to reconcile and resolve entity variations and their attributes;
- underscoring the need for greater information sharing across the federal government to better verify program eligibility before approving applications for government benefits rather than attempting to claw back funds after benefits are paid; and
- encouraging the timely access to a consent-based verification system that would improve federal program integrity, protect taxpayer funds from fraud and improper payments, better ensure benefits are paid only to those who are truly eligible, and reduce the incidence of identity fraud, thereby helping protect victims of identity theft.
The PACE’s ability to serve as a repository of data sets from across federal programs and the analytical capabilities it possesses provides a significant value for the broader oversight community beyond pandemic-related insights. The PRAC is committed to finding opportunities to ensure that the PACE and its analytic tools can continue to serve the federal oversight community beyond our sunset on September 30, 2025. As such, we are collaborating with the CIGIE Data Analytics Working Group to create an Analytics Center Pilot, marking a critical step toward the sustainment of the PACE beyond the pandemic. Leveraging the data analytics capabilities of the PACE, this pilot will focus on the proactive use of data for prevention activities, providing participating OIGs with a central repository of PRAC- managed data sets, risk analytics to support audits and investigations, and business insights to conduct due diligence and proactive assessments.
The PRAC will also focus on highlighting the impact and importance of collective lessons learned and best practices. Last year, we updated our comprehensive list of lessons learned from the unprecedented pandemic-era spending to begin to answer two critical questions: Have the unprecedented levels of pandemic spending been effective? And if not, what needs to change? The full set of answers and lessons identified as we considered these questions are highlighted in the report, the most important of which is that self-certified information in loan and grant applications needs to be validated before payments are sent. In the next year, we will continue to assess these and related questions and produce products to provide answers, blueprints, and policy recommendations as our stakeholders – program administrators, policy makers, Congress, and the oversight community, including OIGs – work to enhance program and payment integrity on behalf of the U.S. taxpayers.
The PRAC looks forward to continuing to maximize our efforts to promote transparency and accountability, support and coordinate independent oversight of pandemic relief spending, transform oversight by using data and advanced analytics, and document lessons learned and best practices for use in the future.
The PRAC’s transparency mission and ability to track pandemic spending is unique across government while our other priorities address common challenges and risks across our member OIGs. With the support of Congress, what we have developed over the past three years is a new model for conducting oversight in a crisis, drawing on the existing capabilities of the oversight community and surging capacity where needed. We provide important shared services to the Inspector General community. We also work more closely than ever with our federal, state, and local partners by providing them with access to information and investigative resources through the PACE. We urge Congress to make the PACE permanent and to broaden its jurisdiction to all federal spending, so the oversight community can better prevent and detect fraud, waste, abuse, and improper payments.
Thank you for your continued strong support of the PRAC, the Inspector General community, and independent oversight. We look forward to continuing to work on behalf of taxpayers to ensure that federal pandemic programs are operating effectively and efficiently, and to prevent and detect waste, fraud, and abuse.
That concludes my prepared remarks, and I would be pleased to answer any questions from the Committee.