Why it matters: This article highlights a case of fraud where an employee of NASA’s Jet Propulsion Laboratory (JPL) used COVID relief funds intended for small businesses to finance an illegal cannabis operation. Such incidents of fraud in COVID relief funding have become common, leading to the establishment of the COVID-19 Fraud Enforcement Task Force to combat these abuses.
What they are saying: The Justice Department announced that the JPL employee, Armen Hovanesian, agreed to plead guilty to wire fraud for fraudulently obtaining loans from the Small Business Administration’s Economic Injury Disaster Loan Program (EIDL). Hovanesian admitted to making false statements in the loan applications and using the funds for personal use instead of COVID relief.
The big picture: COVID relief programs, including the EIDL and the Paycheck Protection Program (PPP), have been vulnerable to fraud. Many individuals have taken advantage of these programs to fund lavish lifestyles and buy expensive items. The structure of these programs made it easy for fraudsters to exploit them, and minimal checks were in place to ensure the funds reached the intended recipients.
What to watch: The case of Hovanesian serves as a reminder of the need for stricter monitoring and enforcement in COVID relief programs. The COVID-19 Fraud Enforcement Task Force’s efforts to charge individuals involved in fraudulent activities related to relief funding should serve as a deterrent and help protect funds for those in genuine need.
My take: It is disheartening to see individuals taking advantage of funds meant to provide relief during a global crisis. The case highlights the importance of accountability, transparency, and effective oversight in distributing and utilizing public funds. Efforts should be made to strengthen controls and ensure that financial assistance reaches the intended recipients, helping communities genuinely impacted by the pandemic.
