Last month, Robert and Rhonda Notgrass, formerly of Washington, West Virginia, were each sentenced in federal court in Charleston to five years probation for unlawfully obtaining nearly $27,000 in unemployment benefits. The couple got the money from Workforce West Virginia through a Covid relief program designed to help those who lost their jobs during the pandemic.
The Notgrass case was just one miniscule example of the widespread fraud, theft and waste in federal programs that occurred during the pandemic. As the Associated Press reported, “All of it led to the greatest grift in U.S. history, with thieves plundering billions of dollars in federal Covid-19 relief aid intended to combat the worst pandemic in a century and to stabilize an economy in free fall.”
The AP analysis concluded that as much $400 billion of the $4.2 trillion in Covid relief money was stolen or wasted. It happened because so much money was pushed out so fast that there was not enough time or even the ability to ensure that it was going to the people and businesses that qualified.
“The grift was just way too easy,” the AP reported experts and watchdogs have concluded.
I know from working with West Virginia’s unemployment office during the pandemic that employees there did the best they could considering the circumstances. The number of claims increased tenfold, and the pressure was on to get the money out quickly.
Other relief programs operated similarly, as the spigots of federal dollars were turned all the way on. “Never has so much federal emergency aid been injected into the U.S. economy so quickly,” the AP reported.
The Small Business Administration relaxed its criteria for loans. “Prospective borrowers were allowed to ‘self-certify’ that their loan applications were true,” According to the AP. That was helpful for small businesses facing a severe downturn, but also an invitation for scofflaws to take advantage of the laxity.
These programs, which received bipartisan approval from Congress and spanned Republican and Democratic administrations, helped prevent an economic collapse. But now, in hindsight, some are questioning whether the government could have been more careful.
Michael Horowitz, the U.S. Justice Department inspector general who chairs the federal Pandemic Response Accountability Committee, told Congress the haste was costly.
“If you open up the bank window and say, give me your application and just promise me you really are who you say you are, you attract a lot of fraudsters and that’s what happened here,” according to the AP report.
State and federal agencies are trying to recover some of the billions lost. That is a long and difficult process, but federal investigators in West Virginia are chipping away at it. Just yesterday, the U.S. Attorney’s Office in the Northern District reported that James Nolte, 52, of Clarksburg, pleaded guilty to improperly securing $646,000 in Paycheck Protection Program loans. He faces up to 20 years in prison. The plea agreement requires Nolte to forfeit money and property totaling more than $684,154 to cover the illicit loans, processing fees and interest on the loan. In the Notgrass case, the couple paid back the $26,917 they unlawfully obtained.
There is some comfort in the swindlers being held accountable, but there will have to be tens of thousands of prosecutions like these for the government to recover even a fraction of what was plundered.