The $840 billion stimulus plan was designed to be a shot in the arm for the economy and to help create jobs. To the extent that the money was misspent, its benefit was diminished -- so the increase in the federal deficit and national debt yielded less value than intended.
The government’s chief spending watchdogs have already secured nearly 600 convictions and judgments against people and companies accused of misusing stimulus funds and have a whopping 1,900 investigations currently open into possible wrongdoing, officials say.
The wave of scrutiny more than three years after the American Recovery and Reinvestment Act was passed by Congress early in the Obama administration means the question of how money was managed early in the program is certain to extend well into the next year as many of the current investigations come to conclusion.
The Recovery Board charged with coordinating efforts among than inspectors generals at more than two dozen federal agencies that distributed stimulus money posted an item on its official blog last month claiming the total amount of money lost to fraud from the $840 billion stimulus program was a miniscule $11.1 million so far.
Vice President Joe Biden even made reference to the figure as he defended the stimulus program from attacks from Republican Rep. Paul Ryan during the vice presidential debate last Thursday. But that number only identifies money that is considered lost to fraud and does not include funds still under investigation or those recommended for reimbursement after audits identified misspending, officials said.
And a senior official familiar with the ongoing investigations by inspectors generals at federal agencies told the Washington Guardian the government expects the loss figure to balloon in coming months.
“These cases often take months or years, and we’ve got hundreds open right now across the government so that number is going to go up, probably by a large amount over the next 18 months,” the official said, speaking only on condition of anonymity because the official was not authorized to speak to the media.
Since the blog post a month ago that released the $11 million figure, several inspectors generals have announced new convictions, prosecutions or audits, a sign that some of the investigations are growing near decisions and actions.
For instance, the Energy Department inspector general reported last week it discovered the California energy commission collected two duplicate payments under a stimulus program that costs taxpayers $678,000 and and it recommended the money be repaid.
The Health and Human Services inspector general reported recently that a Louisiana group that received stimulus funds for Head Start programs for children had inappropriately spent nearly $1.2 million in federal funds to construct a new building that wasn’t approved by federal officials. The group is contesting the finding.
The Energy Department inspector general also warns in its most recent semiannual report that the Western Area Power Administration, which received $3.25 billion in borrowing authority to help build transmission lines under the stimulus law, is at risk of losing significant money on a transmission project for wind power in Montana that it funded.
“WAPA has significant financial exposure on the project ... encountering significant delays and cost overruns,” the IG warned.
And a former superintendent of a Montana construction company was charged last month with making false statements regarding the quality of work his firm performed on federal bridge project in Idaho that was funded with $21.6 million in stimulus money. The company used “nonconforming anchor bolts” for parts of the construction, and tried to conceal it. The bolts had to be fixed, delaying the project.
The Recovery Board’s blog last month hinted at the scope of some of the alleged fraud currently being investigated by inspectors general at various agencies. "The 29 IGs with Recovery oversight responsibility have more than 1,900 investigations under way; convictions and judgments total 598," it noted.
Many of the problems were uncovered by a special group of analysts charged specifically to look for irregularities in the massive stimulus program.
For instance, the analysts discovered that veterans seeking stimulus related benefits had claimed more than 16,000 dependents with Social Security numbers matching those of dead people, the blog noted
Separately, the same analysts found ore than 150 potential shell companies may have improperly received Recovery funds set aside for the Service-Disabled Veteran-Owned Small Business program.
And the analysts had identified more than 400 Recovery Act recipients of funds from 15 federal agencies had previously been terminated for default, most getting the money after falsely certifying they had not been terminated for default.
"We are continually helping agencies review sensitive procurement issues, including some with criminal potential sent to us by the Department of Justice and others in law enforcement," the Recovery Board said in its blog post.
The American Recovery and Reinvestment Act was a law passed by Congress in 2009 that President Obama encouraged in hopes of jumpstarting a stagnant economy by spending $840 billion on projects designed to put people back to work.
Inspectors general are the independent watchdogs inside federal agencies charged with rooting out waste, fraud, abuse and corruption in government spending programs.