Nearly a year after Judicial Watch launched an investigation into the theft of U.S. COVID relief funds by foreign hackers, the Secret Service confirms that cyber criminals connected to China’s government stole $20 million in benefits. This includes Small Business Administration (SBA) loans and unemployment insurance money in multiple states, according to a national news story that identifies the perpetrators as a APT41, a hacking group based in Chengdu. The report cites U.S. law enforcement officials and cybersecurity experts who believe the multi-million-dollar theft of government pandemic funds by the Chinese faction “may just be the tip of the iceberg.”
Back in February Judicial Watch filed a Freedom of Information Act (FOIA) request with the SBA as part of an ongoing investigation into the pervasive fraud associated with the government’s COVID-19 cash giveaway. Specifically, Judicial Watch requested memoranda, reports, email communications, investigative reports, and other communications or data concerning the following: COVID-19 Economic Injury Disaster Loan (EIDL) deposits originating from a foreign Internet Protocol (IP) address, account holders attempting to transfer funds to foreign accounts of any type and loans approved utilizing a fraudulent social security number. On February 23, the SBA acknowledged via electronic mail that it received Judicial Watch’s FOIA request and issued an official tracking number. So far no records have been provided to Judicial Watch and the SBA is in violation of the federal deadline—20 working days—to produce the information.
Most government agencies practice similar stonewalling tactics and Judicial Watch has repeatedly been forced to file lawsuits to compel the release of records. Our goal as a nonpartisan educational foundation is to promote transparency, accountability and integrity in government, politics, and the law. Pandemic relief has been a colossal multi-billion-dollar debacle rife with fraud and corruption. The problem is so bad that the Department of Justice (DOJ) created a COVID-19 Fraud Enforcement Task Force to “enhance efforts to combat and prevent pandemic-related fraud.” The special unit has been quite busy prosecuting a multitude of scams, false statements, and money laundering related to pandemic relief. Earlier this year House Republicans issued a report documenting 500 days of massive waste, fraud, and abuse in the American Rescue Plan. It includes more than $783 million in stimulus checks for convicted prisoners including the Boston Marathon bomber, $40 million to expand libraries in Delaware, $2 million for a Florida golf course and $16 million for electric vehicle charging stations in Maine and $20 million to modernize the state’s fish hatcheries. The list goes on and on.
The SBA got on Judicial Watch’s radar because it has disbursed approximately $390 billion to nearly four million small businesses and nonprofits under its COVID-19 EIDL. The program provides up to $2 million in financial assistance to help small businesses recover from the economic impacts of the pandemic. Like many of the other COVID relief initiatives, the government made it way too easy to obtain cash and failed miserably to implement adequate vetting protocols. Officials cited in the recent news article confirm that other federal investigations of pandemic fraud also seem to point back to foreign state-affiliated hackers. The Secret Service admits there are over 1,000 ongoing investigations involving transnational and domestic criminals defrauding public benefits programs and Chinese hackers are key among them. As if it were not serious enough that Chinese hacks are stealing American taxpayer funds, one senior Justice Department official points out the cybercrimes also have serious national security implications.
Besides the SBA’s EIDL, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed by Congress to provide over $2 trillion in “fast and direct economic aid” to Americans negatively impacted by the pandemic, also launched another fraud-infested initiative known as the Paycheck Protection Program (PPP). In addition to the DOJ’s special task force, federal prosecutors across the nation have charged dozens of individuals with crimes associated with PPP scams. A recent example includes a father and son convicted of illegally obtaining $1.7 in loans. A federal jury in North Carolina convicted the men of money laundering and other offenses with the father sentenced to four years in prison and the son three years. This month the top federal prosecutor in the Eastern District of Virginia revealed that in 2022 her office has charged more than 50 defendants in 26 cases of fraud schemes connected to COVID relief that defrauded the government out of nearly $125 million.