Green Dot helps Secret Service recover $286M in stolen COVID relief

Dive Brief:

The U.S. Secret Service recovered $286 million in fraudulently obtained COVID-19 relief loans, which scammers gained by creating more than 15,000 Green Dot accounts, the agency announced Friday.
The Secret Service said it worked with the digital bank to identify the fraudulent accounts and return the Economic Injury Disaster Loan (EIDL) funds to the Small Business Administration.
The announcement marks the second time the agency has worked with Green Dot to identify and recover fraudulent pandemic loans. The Secret Service announced in December it recovered more than $400 million in stolen COVID-19 relief funds with the help of the digital bank and payments firm PayPal.

Dive Insight:

Scammers used fake IDs and fabricated or stolen employment information to create the Green Dot accounts, which were used to obtain the funds, the Secret Service said.

“The Secret Service is dedicated to safeguarding the integrity of the nation’s financial systems against fraud and holding those responsible to account for their criminal activity,” said David Smith, assistant director of the agency’s office of investigations. “By aiding in the return of nearly $2.3 billion in stolen funds over the last 30 months, our workforce has demonstrated a clear and firm commitment to the vitality of American businesses across the country.”

Roy Dotson, lead investigator for the Secret Service, said fraudsters have targeted both traditional and nontraditional financial institutions to exploit government relief programs.

“Fraudsters in general are always looking for ways and techniques to better do their crimes, and modern conveniences are just one of those things they use. So currently, cryptocurrency is a big thing, fintechs, third-party payment systems,” he told CNBC. “But there’s not an institution, even our traditional financial institutions, that weren’t targeted during the pandemic.”

The Secret Service is working to identify all parties involved in the COVID relief scheme, Dotson said Friday at a news conference announcing the returned funds.

“This is not going to be a quick fix. As we talked about today, 15,325 accounts at one financial institution — this is one case, so you can just think of the potential number of suspects and how many investigations that could come out of those,” he said, according to CNBC. “And with all of our federal, state and local partners working this and having the same mission. It’s going to be a long process.”

Since 2020, the Secret Service has seized over $1.4 billion in fraudulently obtained funds and assisted in returning approximately $2.3 billion to state unemployment insurance programs, the agency said Friday.

The Secret Service has initiated more than 3,850 pandemic-related fraud investigations and investigative inquiries, the agency added.