FOUNDATION FOR ECONOMIC EDUCATION – The federal government broke the bank on “COVID-19” relief spending, shelling out an astounding $42,000 per federal taxpayer that went in large part to unrelated partisan priorities and politicians’ pet projects.
Now, it turns out millions also went to scammers running fake churches who allegedly defrauded the stimulus grant program for struggling businesses and nonprofits.
“Six people allegedly defrauded government coronavirus relief programs of $3.3 million last year by claiming to run churches that care for the needy,” Fox Business reports.
“Terrence Pounds, Charles Tiller, Terri Davis, Randolph Nunn, Samira Abdul-Karim and Quwan Simmons were all charged with wire fraud and conspiracy to commit wire fraud on Tuesday.”
In one example, the scammers allegedly filed claims supposedly representing “Truth Ministries Global Inc.”
“We feed the less fortunate and underprivileged, we visit the prisons, we have 24 hours per day and 7 days per week phone line open for prayers and counseling,” they reportedly wrote. “We have church services twice per week.”
The scammers allegedly took the money for this “church” and spent it on a new BMW.
“These six individuals allegedly defrauded United States taxpayers by engaging in this scheme,” an FBI agent said. “The [stimulus legislation] was designed to help struggling Americans, not for greedy fraudsters to line their pockets.”
The FBI is right that Congress may have intended for the stimulus money to help struggling Americans, not fraudsters, but they’re wrong about its design. In reality, the poorly-written, rushed legislation proved rife with fraud from the start.
“The federal government is swamped with reports of potential fraud in the [stimulus loan program],” the Wall Street Journal reported. “Evidence is growing that many others took advantage of the program’s open-door design. Banks and the government allowed companies to self-certify that they needed the funds, with little vetting.”
A federal watchdog within the Small Business Administration said there were “strong indicators of widespread potential abuse and fraud in the [loan program].”
“The watchdog counted tens of thousands of companies that received… loans for which they appear to have been ineligible,” the Journal’s report continues. “[And] tens of thousands of organizations also appear to have received more money than they should have based on their headcounts and compensation rates.”
And that’s just one part of the stimulus!
The expanded unemployment benefits, too, have proven rife with fraud and abuse. Consider high-profile examples of scammers like Rapper “Nuke Bizzle,” who was arrested for stealing millions in fraudulent unemployment and then publicly rapping about it. But for every “Nuke Bizzle,” countless other fraudsters got away scot-free.
All in all, “unemployment fraud” (fraud from just one part of the legislation) ranks as the fourth-biggest expense of the entire federal stimulus effort, according to the American Enterprise Institute. The federal government lost $1,400 per federal taxpayer in unemployment fraud and ended up losing 5 times more to scammers than it spent on vaccine development.
Let that sink in.
So, the latest revelation of fake churches scamming millions is just one small drop in the ocean of waste and dysfunction sometimes called the COVID stimulus. While indeed frustrating, this shouldn’t actually be surprising.
Well, as Nobel-prize-winning economist Milton Friedman famously explained, when it comes to government spending, fraud and inefficiency are baked into the cake.
The economist explained that there are different types of spending. You can spend your money on yourself, your money on someone else, or someone else’s money on yourself. Either way, you’re incentivized toward frugality and efficiency. However, there’s one other type of spending.
“I can spend somebody else’s money on somebody else,” Friedman concluded. “And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.”
Like this story? Click here to sign up for the FEE Daily and get free-market news and analysis like this from Policy Correspondent Brad Polumbo in your inbox every weekday.