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Our job is to oversee pandemic relief funding to fight fraud, waste, and abuse in federal programs.
We recently helped one of our partners identify schemes that relate to the highest number of bribery charges the U.S. Department of Justice (DOJ) has issued in a single day. The case also demonstrated how the PRAC’s collaboration with Offices of Inspectors General (OIGs) can help protect both pandemic and non-pandemic programs.
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The programs
The U.S. Department of Housing and Urban Development (HUD) administers the Community Development Block Grant (CDBG) Program and the Emergency Solutions Grant (ESG) Program. While CDBG supports community development activities to build stronger and more resilient communities, ESG is designed to assist people with quickly regaining stability in permanent housing after experiencing a housing crisis and/or homelessness. Both are ongoing programs that predate the COVID-19 pandemic.
To help HUD respond to the pandemic’s widespread effects on communities and housing, the CARES Act provided both programs a total $9 billion in addition to their annual appropriations—CDBG received $5 billion more, ESG received $4 billion. The increase was massive: The ESG program’s $4 billion alone was equal to its previous 14 years’ funding combined.
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The problem
The pandemic’s devastatingly rapid onset required equally rapid distribution of federal assistance—more than $1.6 trillion in just the first year. Unfortunately, the fast pace led to weakening, bypassing, or sometimes completely stopping many controls designed to prevent fraud. In addition, specifically regarding HUD, the pandemic environment made on-site monitoring by agency officials more difficult. Fraudsters thus saw a target-rich environment, evidenced by a substantial increase in the number of attempts to bilk government programs throughout the pandemic.
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The partnership solution
Together with HUD’s OIG, we generated a list of more than 90 different types of potential fraud schemes previously unknown to HUD. We recommended adding the list to HUD’s fraud risk-assessment process so that the agency could be alert to indicators of any of the potential schemes. Moreover, and perhaps most significantly, we also realized that some of the schemes could be targeted at any federal funding program, not just pandemic-related ones.
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Fraud schemes in play
The New York City Housing Authority (NYCHA) is the largest public housing authority in the country, providing housing to 1 in 17 New Yorkers in 335 developments across the city. A multi-agency investigation into complaints against the NYCHA revealed 70 employees had engaged in some of the 90 different types of fraud schemes the PRAC and HUD OIG previously identified to HUD.
As a result of the investigation, which spanned more than a year, DOJ charged 70 current and former NYCHA employees with bribery and extortion—the most such charges the DOJ has ever issued in a single day.
"Our collaboration with the PRAC brought together HUD OIG’s subject matter experts with the PRAC’s pandemic oversight specialists to create a series of reports that identified fraud schemes that HUD could use in its efforts to prevent fraud,” commented Inspector General Rae Oliver Davis. “As of November 2024, 58 of the NYCHA employees have pleaded guilty and two have been convicted after a trial. Their conduct demonstrates just how important it is to protect federal funds from fraud and the benefits these audits can have on maturing HUD’s antifraud programs."
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The way forward
The PRAC continues to show the value of a permanent entity within the oversight community focused on preventing fraud and improper payments to ensure that taxpayer dollars go to those who need them most. More specifically, this successful collaboration with HUD OIG and other partners in pandemic oversight can prove invaluable beyond pandemic funds to strengthen federal programs—not only during national emergencies, but all the time. As the PRAC approaches its mandated sunset in September 2025, the government risks losing this essential tool that helps protect taxpayer funds.
As Michael E. Horowitz, PRAC Chair and DOJ Inspector General, told a U.S. House of Representatives subcommittee recently in referring to the NYCHA case, “This demonstrates how the collaboration between the PRAC and its member OIGs can be beneficial to oversight of both pandemic and non-pandemic programs.”
Read the HUD OIG and PRAC reports on fraud schemes: Fraud Risk Inventory for the CDBG and ESG CARES Act Funds | Office of Inspector General, Department of Housing and Urban Development and Fraud Risk Inventory for the Tenant- and Project-Based Rental Assistance, HOME, and Operating Fund Programs’ CARES and ARP Act Funds | Office of Inspector General, Department of Housing and Urban Development.
Read the DOJ press release on this case: Southern District of New York | 70 Current And Former NYCHA Employees Charged With Bribery And Extortion Offenses | United States Department of Justice
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