Trillions in Pandemic Response Funds Are at Risk Unless Whistleblowers Come Forward

As President Trump and his followers continue to dismantle the oversight mechanisms in our government, it has become more imperative for conscientious employees in all areas touched by federal taxpayer funding to report suspected wrongdoing. Trump’s latest victims in the effort to destroy executive branch oversight include:

• Michael Atkinson, Intelligence Community Inspector General;
• Steve Linick, State Department Inspector General;
• Christi Grimm, Principal Deputy Inspector General Health and Human Services;
• Glenn Fine, Acting Inspector General for the Department of Defense; and
• Geoffrey Berman, United States Attorney for the Southern District of New York.

The undermining of critical oversight of taxpayer dollars ignores painful lessons learned from prior crises. In the wake of the 2008 financial crisis, Congress provided for more than $440 billion in “TARP” funds to save our spiraling financial system. To ensure that taxpayers’ steep investment would not be misappropriated Congress wisely created the Special Inspector General for TARP (SIGTARP). A decade later, SIGTARP is still active and working overtime. As of April 30, 2020, SIGTARP’s investigations had resulted in the recovery of more than $11 billion in waste and fraud, and the conviction of over 384 fraudsters (including 94 bankers and 79 co-conspirators).^[1] Among other things, SIGTARP uncovered more than $11 million wasted by state agencies on parties, lavish dinners, catered BBQs, gifts, boondoggle conferences, a Mercedes Benz, and more.^[2] TARP’s mere $440 billion is a fraction of the CARES Act’s $1.9 trillion in pandemic relief funding. 

Trump’s actions and statements directly contrast with the views of leading whistleblower and oversight advocate Senator Charles Grassley (R-Iowa). In 2018, Grassley summarized his perspective on oversight.

If a federal worker had no rights to communicate directly to Congress, would fraud and corruption grow in the federal bureaucracy?

My answer to that question is absolutely yes.

More than 100 years ago, Congress enacted protections for federal workers so they could speak up to Congress. The Lloyd-La Follette Act of 1912 guaranteed the right of federal employees to directly share information with Congress. And that it “may not be interfered with or denied.”

We need all the eyes and ears we can get to hold government accountable.^[3]

The President’s unlawful interference with executive branch oversight mechanisms and the amounts of federal funds being allocated to fight the impacts of the pandemic are a perfect storm for the proliferation of fraud. The amount of taxpayer money at stake is unusually high. The CARES Act allocated $1.9 trillion for pandemic relief. Prior bills committed to spending $483 billion for paycheck protection and healthcare enhancement; $7.8 billion for coronavirus preparedness and response; and another $3.4 billion was allocated under the Families First Coronavirus Response Act.^[4] More funding may be on the way as Congress tries to relieve and mitigate the suffering being experienced throughout the nation.^[5] To put the amount of spending in perspective, in fiscal year 2019, the net spending for the entire United States government was about $4.4 trillion.^[6]

Even if Congress and the PRAC do their utmost to oversee how these trillions in pandemic relief are spent, they will be hard pressed to undercover more than a small fraction of the fraud that is likely to be committed by recipients of these funds. That’s where whistleblowers come in.

Employees and contractors working in industries that have received pandemic relief funds should be aware of whether the funds are being properly spent. For example, paycheck protection program (PPP) funds are intended to keep employees on the payroll. If employers apply for and receive PPP funds and then fail to keep employees on their payrolls there may be cause for concern about fraud.

Employees or contractors concerned about fraud should consult legal counsel before reporting fraud or speaking out. Potential whistleblowers need legal advice because employers may retaliate against even well-intentioned employees. Employees who want to report suspected fraud or illegality have rights^[7], if retaliation occurs. The key is having an experienced lawyer to provide counsel and to help navigate the legal system.

If an employee identifies a significant fraud scheme, s/he may be entitled to an award for sharing that information with government agencies. The federal False Claims Act provides whistleblowing employees with a share of the federal funds recovered ranging from 15% – 30% of the amount recovered.^[8] Additionally, the U.S. Securities and Exchange Commission (SEC), Commodities and Futures Trading Commission (CFTC), and Internal Revenue Service (IRS) offer awards for information that leads to significant fines and penalties.^[9] Many states also have their own False Claims Act laws that are designed to reward whistleblowers with information that protects state funds from fraud.

Where is the pandemic relief funding going?^[10]

• Airline industry: $78.1 billion
• Small businesses: $686 billion
• Farming industry: $9.5 billion
• Financial institutions: $60 billion (includes paycheck protection funding)
• Global assistance: $1.5 billion
• Higher education: $14.1 billion
• Hospitals and health care providers: $176 billion

What should employees, contractors, accountants, business managers, bookkeepers, lawyers, billing specialists, technicians, engineers, doctors, nurses, project managers, and others be on the lookout for? Examples include: 

• False claims to the government regarding the efficacy of drugs that might be used to treat or provide a vaccine for COVID-19;
• False certifications or claims regarding research concerning COVID-19;
• False certifications to the government regarding meeting the specifications required to manufacture or refurbish ventilators and other medical equipment;
• Fraudulent or misleading statements on applications for loans, grants, or other pandemic relief funding such as the paycheck protection program; and
• Billing Medicare, Medicaid and/or other government agencies or government funded projects for COVID-19 related services that were not provided or that were provided in a materially substandard manner.

Employees can make a big difference and help combat fraud by seeking legal counsel and safely reporting suspected wrongdoing involving pandemic relief funds.

For a free consultation, contact Mehri & Skalet. Your communications are confidential and protected by law.

Richard Condit is a whistleblower attorney in Washington, DC.
Cleveland Lawrence III is a whistleblower attorney in Washington, DC.

^[1] See, SIGTARP Semiannual Report to Congress Oct 2019-March 2020: https://www.sigtarp.gov/Quarterly%20Reports/April_30_2020_Report_to_Congress.pdf

^[2] Id.

^[3] Senator Grassley Discusses History of Oversight: The Lloyd-La Follette Act https://www.grassley.senate.gov/news/news-releases/grassley-discusses-history-oversight-lloyd-la-follette-act

^[4] See, Pandemic Response Accountability Committee, Track the Money https://pandemic.oversight.gov/track-the-money

^[5] United Federation of Teachers summary of the Heroes Act https://www.uft.org/get-involved/uft-campaigns/pass-federal-heroes-act 

^[6] See, e.g., https://www.cbo.gov/system/files/2019-11/55824-CBO-MBR-FY19.pdf

^[7] See, Mehri & Skalet summary of whistleblower rights programs: https://findjustice.com/practice-areas/whistleblower-rights/

^[8] See, Department of Justice primer (Section d. Award to the Relator). https://www.justice.gov/sites/default/files/civil/legacy/2011/04/22/C-FRAUDS_FCA_Primer.pdf 

^[9] See, Mehri & Skalet overviews of SEC, CFTC, and IRS programs. SEC and CFTC programs.

^[10] See, Pandemic Response Accountability Committee, Track the Money https://pandemic.oversight.gov/track-the-money.