'Biggest fraud in a generation': Justice Department says $80 billion in PPP funds stolen

As much as $80 billion - about 10 percent - of the $800 billion disbursed through the Paycheck Protection Program (PPP), intended to help Americans impacted by the coronavirus pandemic, may have been stolen in what the Justice Department says is the largest fraud in U.S. history.

While the prevalence of COVID relief fraud previously has been reported, the enormous scope only now is becoming clear. “Nothing like this has ever happened before,” said Matthew Schneider, a former U.S. attorney from Michigan who is now with Honigman LLP. “It is the biggest fraud in a generation.”

Justice Department Inspector General Michael Horowitz, who oversees Covid relief spending, told "NBC Nightly News" anchor Lester Holt in an exclusive interview that COVID-19 relief programs were structured in ways that made them ripe for plunder.

“The Small Business Administration, in sending that money out, basically said to people, ‘Apply and sign and tell us that you're really entitled to the money,’” said Horowitz, the chair of the Pandemic Response Accountability Committee. “And, of course, for fraudsters, that's an invitation. … What didn't happen was even minimal checks to make sure that the money was getting to the right people at the right time.”

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The Biden administration imposed new verification rules last year that administration officials say appear to have made a difference in curbing fraud. But they acknowledge that programs in 2020 sacrificed security for speed.

Because of the lax oversight, fraudsters used PPP money to buy mansions, luxury automobiles, private jet flights and expensive vacations. Most of the losses are considered unrecoverable.

“I think there's going to be a percentage that we probably will never catch,” he said. “But we're working as hard as we can to catch as many as we can.”

Across the country, only 178 people have been convicted so far in PPP fraud cases, according to the Justice Department. Many more prosecutions are coming, but even if the numbers reach 2,000 — or 20,000 — it will be only a small fraction of the fraud.