On July 30, 2021, the Special Inspector General for Pandemic Recover (“SIGPR”), Brian D. Miller, submitted his quarterly report to Congress. SIGPR was created as an independent watchdog of the Department of the Treasury under the CARES Act. It is tasked with investigating fraud and abuse of federal stimulus funds in response to COVID-19, and works in collaboration with law enforcement and U.S. Attorney’s Offices throughout the country. These investigative efforts have resulted in civil and criminal enforcement actions against recipients of federal funding throughout the country, and such enforcement action investigations are sure to continue. The quarterly report showed that the federal government has been active in investigating fraud and abuse related to stimulus funds, and its call for additional funding signals an increase in future enforcement against recipients of federal stimulus funds.
The report highlighted a number of developments with the SIGPR. From April to June 2021, SIGPR had worked on 20 preliminary inquiries and investigations, 16 of which were initiated by SIGPR’s own proactive efforts. It also received and investigated 620 hotline complaints and referred 201 complaints to other agencies for further review. SIGPR also announced an audit of the Main Street Lending Program and continued its audit of the Direct Loan Program.
SIGPR also created a voluntary Self-Disclosure website for recipients of federal stimulus to report fraud, waste, and abuse. While it may seem counterintuitive for recipients to report themselves for suspected misconduct, SIGPR’s report reiterated the Department of Justice’s policy of giving those who self-disclose misconduct credit for potentially reducing liability for the such misconduct, including reduced liability under the civil False Claims Act.
SIGPR concluded its quarterly report by requesting Congress to expand its jurisdiction. This request included expanding its jurisdiction over all pandemic-related federal programs managed by the Treasury Department in order to broaden the scope and information it can access. SIGPR called for this expansion in order to access additional information from the Main Street Lending Program, including enhanced access to borrower and lender information.
SIGPR’s quarterly report serves as the government’s most recent warning that businesses that have received federal funding in response to COVID-19 (including payroll support under the Paycheck Protection Program) may be audited in the near future. To prepare for such an audit, recipients should consider conducting proactive diligence now to ensure that they are still in compliance with the requirements associated with those funds, and that they were in compliance when any COVID-related funds were originally received. Due diligence into compliance with federal funding requirements will enable recipients to detect and prevent problems. In the event there has been a mis-step by the recipient along the way, it will allow companies sufficient time to make informed decisions including whether to take corrective action and self-refer to the government, if necessary. Recipients that discover any non-compliance should take voluntary corrective action now to correct it before they are audited or investigated by SIGPR and other regulatory and enforcement agencies that could lead to more severe consequences.