By Andrea L. Moseley

As I have explained in previous blogs, there is a complex oversight structure created by the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) to address fraud related to pandemic relief funds. Multiple offices within the executive branch are tasked with investigating and potentially prosecuting these cases. These familiar Offices of Inspector General (OIG) such as, the Small Business Administration, the Treasury Department and the Department of Justice (DoJ) are some of the leading investigative agencies focused on the mission of eradicating pandemic fund fraud.

For a comprehensive guide to oig investigations click here

Notwithstanding the availability of these pre-existing investigative bodies, the sudden and unprecedented roll out of pandemic relief funds that was necessitated by the global pandemic called for additional oversight. As a result, we know that a Special Inspector General Office for Pandemic Recovery (SIGPR) was created. On June 2, 2020, SIGPR Brian D. Miller was confirmed by the Senate. Since June, SIGPR has been busy assembling its internal structure, organizing the new office, all during a pandemic. Now, SIGPR is publicly moving from the configuration stage to fully operational. This is evidenced by SIGPR Miller’s strident statement that his office now “operational and formidably aggressive.” There is no room for misunderstanding the tone of that message.

Recently, SIGPR released its quarterly report to Congress, full text found here. In this report, SIGPR Miller made note of the challenges that all Special IGs face. He pointed out that Special IGs are asked to “parachute” into an existing agency to execute a specific mission with at limited budget and limited time. In his introductory comments, he stated that Special IGs are at an institutional disadvantage and that is why his goal from the beginning has been to partner with other OIGs and law enforcement agencies.

The concept of a Special IG is not unprecedented—nor are its challenges.” -SIGPR Brian D. Miller

This recent SIGPR report to Congress reveals some key information that white collar defense attorneys and their clients need to consider. SIGPR’s self-avowed partnership-driven approach to investigations gives us insight into which individuals and businesses are most likely to draw government scrutiny as a result of participation in a pandemic relief program. In the report, SIGPR announced some interesting statistics:

  • They uncovered and developed new investigative leads relating to suspected fraud under various CARES Act programs through internal proactive efforts, and referred 69 leads to law enforcement partners, including fellow inspectors general.
  • They initiated five new preliminary investigations, four of which were generated internally by proactive efforts, with three of the five currently being worked with U.S. Attorneys’ Offices.
  • They received and vetted 27 complaints, two of which were referred to law enforcement partners and one of which was opened internally.
  • They developed “risk scores” for a Main Street Lending Program dataset, which identified potential leads for further review and/or referral.

In addition to this data, the report spends considerable time analyzing the concept of “multiple-dipping.” Herein lies a beacon for white collar defense practices guiding us on what to expect from pandemic relief fraud investigations as a result of SIGPR’s partnership-based approach.

multiple dipping is where an entity obtains funding from two or more CARES Act programs.

SIGPR admits that the creation of multiple programs resulting in multiple forms of financial support to one entity may be sound policy, but SIGPR admonishes that it also increases the risk of fraud and abuse. SIGPR has announced that it will continue to monitor closely this area of risk.

What is this multiple dipping warning from sigpr about?

Even in its initial report to Congress, SIGPR cautioned that the existence of multiple programs resulting in multiple forms of financial support to a single individual or entity creates an increased risk of fraud and abuse. Now SIGPR has reiterated and forewarned that no individual or entity may receive money from the federal government twice for the same purpose.

SIGPR gave an example for this principle which was in part derived from guidance given by the Office of Management and Budget (OMB) to assist recipients of certain federal grants in June of last year. OMB guidance explained how certain grantees were allowed “to continue to charge salaries and benefits to active Federal awards,” even while those grantees were forced to suspend project activity. But according to SIGPR, the guidance specifically warned that “payroll costs paid with the Paycheck Protection Program (PPP) loans or any other federal CARES Act programs must not be also charged to current federal awards as it would result in the Federal Government paying for the same expenditures twice.”

SIGPR published a handy chart beginning on page seven of the report that summarizes the rules relating to multiple streams of federal funding. This summary is a useful tool in analyzing what is and what is not so-called “multiple-dipping.” Some rules unambiguously bar certain forms of this multiple-dipping. These judgment calls will likely be straightforward.

However, other rules that do not bar specific instances of multiple-dipping raise greater uncertainty. For example, can a loan applicant receive millions of dollars under other CARES Act programs and reasonably certify that the entity has a lack of access to adequate capital on an application for another assistance program? These unchartered areas with no precedent and no clear answers will present a host of challenges.

SIGPRs commitment to working in close partnership with other OIG offices combined with the added emphasis on investigating individuals and entities who receive multiple streams of federal monies is a sure sign of what is to come. SIGPR is working tightly with executive agencies to provide oversight on whether an individual or a business has violated rules by participating in a programs that fall outside of SIGPRs jurisdiction and those individuals and businesses should be prepared for scrutiny.

As white collar practitioners, we need to make certain we identify and provide additional analysis to our clients who are recipients of multiple streams of pandemic related funding. Many instances of so-called “multiple-dipping” may have been entirely made in good faith during this unprecedented time. As we begin to turn the corner on the coronavirus, government hindsight may become unfortunate for our clients who meant well but had no consistent guidance in the midst of chaotic financial decision making. SIGPR has stated clearly that it is spending considerable energy on combining forces with Treasury, the SBA, DoJ and others to cross check multiple funding sources and analyze whether folks are multiple-dipping. This is a fair warning that we need analyze the implication of our clients’ multiple streams of funding through the lens of SIGPRs newly articulated no “multiple-dipping” principle.