A Step in the Right Direction: U.S. State of the Union Pledges More Investment in Anti-Fraud Resources

FROM THE PRESIDENT AND CEO
Bruce Dorris, J.D., CFE, CPA

After the past two years of navigating the COVID-19 pandemic, there’s no denying that we’ve seen an increase in fraud. It’s not only anti-fraud professionals who’ve noticed the rise — new stories about fraudsters taking advantage of businesses and governments seem to multiply every day. One way to staunch this continued flow of fraud is dedicating more resources to anti-fraud measures and sending an unambiguous message to fraudsters that they will face real consequences for their crimes.

That’s why I was encouraged to hear a promise for more oversight and enforcement in U.S. President Joe Biden’s State of the Union address Tuesday night. “The watchdogs have been welcomed back,” said President Biden. “We’re going after the criminals who stole billions in relief money meant for small businesses and millions of Americans.” He subsequently announced that the Justice Department will name a chief prosecutor for pandemic fraud.

Not only is discussing fraud on a national stage an important step in combatting it, increasing resources to those investigating and prosecuting it is paramount. The U.S. government approved nearly $6 trillion for aid packages to help keep unemployed citizens and small businesses afloat in the wake of the pandemic. With so much money accessible, and the need for it to be distributed quickly, it has proven a fertile ground for fraudsters — in December 2021 the U.S. Secret Service estimated that nearly $100 billion had been lost to fraud.

Oversight offices were forced to adapt at a breakneck speed and handle an unprecedented volume of requests for funds. Hannibal “Mike” Ware, CFE, the Inspector General for the U.S. Small Business Administration (SBA) and the Chair of the ACFE Board of Regents, outlined the challenges his office faced in a report to the SBA in October 2020. “On March 31, 2020, more than 680,000 applications came in, the highest number of loan applications SBA has ever received on [one] day,” the report said. “By April 10, 2020, SBA had received more than 4.5 million loan applications, well above the average of 65,000 per year before the pandemic.”

It hasn’t only been just the sheer volume of applications that government watchdogs have reviewed that’s proved challenging. The CARES Act allowed applicants to request the SBA pay out an advance grant of up to $10,000 within three days of receiving an application. Even without the mountains of applications to go through, it would be unfeasible to thoroughly investigate an applicant within three days. Government agencies were tasked with the impossible.

The more organizations invest in controls, the more likely they are to prevent and detect fraud — and oversight offices are no different. Certified Fraud Examiners dedicate their careers to fighting fraud, and this allocation of resources publicly acknowledges their vital role. This pledge that the government will not only support the continued efforts of diligent anti-fraud professionals, but also bring fraudsters to swift justice, sets a strong tone that fraud will not be tolerated.

SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners