Local cases contribute to billions in COVID relief fraud

Credit: DaytonDailyNews

Combined ShapeCaption

Credit: DaytonDailyNews

‘Crucial to improve the safeguards,’ Portman spokesperson says.

Editor’s note: This story is part of a Dayton Daily News investigative project titled Billions in COVID aid: Where it’s going. Go here for more on this project, including searchable databases showing how your community spent CARES Act funds and now much it is getting in American Rescue Plan funds.

As local leaders debate how best to spend hundreds of millions of dollars governments received from the American Rescue Plan, concerns are mounting about historic volumes of fraud in COVID relief funds already spent.

One program rife with fraud concerns is the Payroll Protection Program. More than $27 billion went straight to Ohio businesses to help them keep workers on payroll through the PPP. That includes nearly 16,000 loans totaling $1.3 billion in Montgomery County, of which $1.1 billion has been forgiven.

ExploreHere’s how local governments spent millions in CARES Act funds; Search by community

Some reports estimate $80 billion of the $800 billion program was lost to fraud.

Nadine Consuelo Jackson sought loans worth $1.3 million and $1.2 million, claiming to have 73 employees at a Dayton-based private investigation and security company called Extract LLC, when in fact she had few to no other employees. She was sentenced last year to 24 months in prison and ordered to pay restitution after pleading guilty to wire fraud.

In February, Jon Alan Bader of Dayton was given two years of probation and ordered to pay restitution after being charged with fraudulently receiving more than $120,000 in PPP funds. Court records say Bader registered a business to apply for PPP funds in June 2020, after the PPP eligibility cutoff, and spent the relief money on food deliveries, retail stores and travel to Florida.

Local use of CARES Act money has also come under scrutiny. Federal investigators last year launched an investigation after a Dayton Daily News investigation revealed that a local landlord received rental assistance funds through a program administered by Montgomery County CARES Act program using CARES Act funds but allegedly didn’t pass the benefit along to residents.

ExploreMore than $700M in American Rescue Plan funds going to local governments: See how much your community is getting

Another COVID relief program plagued with fraud issues is unemployment after federal lawmakers expanded eligibility during the pandemic. As of early February, Ohio Department of Job and Family Services identified roughly $5.8 billion in fraud and nonfraud overpayments in the state’s unemployment system. The state paid out more than $24 billion in unemployment during the pandemic.

It’s unclear what parts of the state are seeing the most fraud or overpayments. ODJFS officials say the system Ohio uses to manage its multi-billion dollar unemployment system isn’t able to produce a report breaking down suspected fraud and overpayments by county.

Federal lawmakers are increasing scrutiny of these and other COVID relief programs. U.S. Sen. Rob Portman of Ohio is ranking Republican on a committee that recently heard reports from watchdogs at numerous federal agencies who revealed historic levels of oversight concerns.

“(The committee) has learned that individual criminals and transnational criminal organizations have stolen billions of taxpayer dollars meant to help American families,” Portman spokesperson Mollie Timmons told the Dayton Daily News. “Many of these criminals are overseas — from China, Nigeria, Russia and elsewhere. While we certainly have additional needs from the pandemic, it is crucial to improve the safeguards in place at the state and federal levels to prevent further fraud.”

About the Author