Brian Miller can see the fraud coming.
Businesses that took advantage of the pandemic-era Main Street Lending Program have balloon payments due in early 2025 that consist of 70% of the principal of their loans. That is also just when, under current law, Mr. Miller — the special inspector general for pandemic recovery, or SIGPR — is slated to shut down his job sniffing out fraud in the lending program.
He has already started to shed staff as employees look for new work.
“Without an extension, SIGPR is winding down, currently losing high-quality staff and will be shut down at a point where we expect an avalanche of fraud,” Mr. Miller said. “This means throwing in the towel when you are about to knock out the opponent.”
Congress is about to face major decisions on how seriously to pursue fraudsters who stole hundreds of billions of dollars in federal pandemic relief and whether it wants to arm agencies to prevent a repeat.
The coronavirus is now about 4 years old, and some of the special tools and investigators Washington created to police the trillions of dollars in relief will shut down unless Congress renews their lease on life.
SIGPR is one of those, but it’s not the only one.
The Pandemic Analytic Center of Excellence, a unit set up to crunch data and try to spot patterns of fraud, is also slated to expire in early 2025.
The five-year statute of limitations on unemployment benefit fraud means some people who stole from the government’s generous support program will be free from legal jeopardy.
“It would be unwise to have these authorities expire at that time,” Sen. Mitt Romney, Utah Republican, said this month at a hearing of the Senate Homeland Security and Governmental Affairs Committee.
Experts laid out how much work is left to do.
Hannibal “Mike” Ware, inspector general at the Small Business Administration, said his office’s fraud hotline has received 270,000 calls, leading to 104,000 “actionable” leads. He said that is more than 100 years of casework at current resource levels.
Congress has passed legislation increasing the statute of limitations from five to 10 years for prosecuting fraud connected to the Paycheck Protection Program and the Economic Injury Disaster Loan program. That means Mr. Ware and his team have until at least 2030 to bring cases.
Mr. Ware said he won’t be able to take full advantage of the extra time without more funding from Congress.
“Quite simply, more resources to my office means more investigative capacity and more wrongdoers brought to justice,” Mr. Ware told senators.
Losing the Pandemic Analytic Center of Excellence would also be a mistake, said Michael Horowitz, head of the Pandemic Response Accountability Committee. He said a similar data center was established for the Recovery Act, President Obama’s response to the Great Recession, but it was allowed to expire in 2015.
Congress had to invest $40 million to re-create the center at the start of the pandemic.
Had the Pandemic Analytic Center of Excellence been operating at the start of the pandemic, it could have flagged fraud patterns upfront and prevented the government from cutting checks for bogus claims, Mr. Horowitz said. In one project, a comparison of Social Security numbers used in pandemic loan applications identified 69,000 questionable numbers tied to $5.4 billion in payouts.
Mr. Horowitz said a permanent analytic center could help all the inspectors general with regular anti-fraud duties.
Mr. Miller said allowing more time would pay off for taxpayers.
The Main Street Lending Program covered more than 2,400 borrowers and shelled out $17.5 billion in loans. SIGPR investigators are pursuing cases totaling $565 million in potential fraud, and the 2025 balloon payments will expose more.
SIGPR won repayment of $21 million in loans just by sending letters letting borrowers know investigators were looking into their cases.
Mr. Miller said he expects a significant number of defaults in 2025, when the balloon payments are due. Not all cases will indicate fraud, but defaulting is a red flag that must be investigated.
The problem is that he will be shutting down his anti-fraud office unless Congress acts.
“By the terms of our authorizing statute SIGPR is scheduled to sunset in March 2025, just at the time when SIGPR is needed most,” he told senators on the hearing.
He asked lawmakers for an extension to 2030 and got a good reception from the committee.
Sen. Joni Ernst, Iowa Republican, had already introduced legislation to grant him an extension.
She also wants to overturn a Justice Department opinion prohibiting SIGPR from investigating pandemic relief fraud other than the Main Street Lending Program.
“I would like to see SIGPR powerfully in the fight on small-business fraud,” the senator told Mr. Miller at the hearing.
Before the Justice Department kneecapped SIGPR, fraud investigators were handling a case against the mayor of Stonecrest, Georgia. Jason Lary bilked his city out of hundreds of thousands of dollars in federal pandemic relief. In some cases, he awarded money to churches and businesses but demanded kickbacks.
After SIGPR lost jurisdiction, the FBI rode the case home. Prosecutors won a nearly five-year prison sentence against Lary.
Congress has extended the statute of limitations for fraud in the two major pandemic business loan programs, the Paycheck Protection Program and the Economic Injury Disaster Loan plan, from five to 10 years.
The unemployment benefits fraud extension is proving trickier.
President Biden and House Republicans back the idea, but it has become tied up in a broader debate about how strenuously the government should pursue the cases.
Some Democrats fear that focusing on the fraud could sour the public on benefit programs more broadly. They have been mounting a campaign to sell the public on the value of the unemployment benefits, fraud and all.