Transcripts For CSPAN Senate Judiciary Committee Hearing On Exploitation Of Coronavirus Pandemic 20240712

Good morning Lindsey Graham good morning everybody. Thank you very much for attending the hearing and im sure we will have more come in throughout the morning. We have four witnesses. Nito. Raig carpe ournal. The assistant director of criminal investigative division. Fbi. Assistant director of the office of investigations of the lighted states secret service. So we talked about this before. Fraud related to the cares act. Scams out there against seniors selling masks the does work. Playing on young peoples fears. And partially you try to do some good the country, people take advantage of it. And we are going to hear from her folks today but what is going on out there and so it is about how to make sure it stops if we can. In phase four will be coming. Theres a need my view for phase four. I would like to learn as much as we can about the paycheck Protection Program. And supplement unEmployment Benefits. How those programs are sometimes being abused. In generally about what people are doing out there to scam americans particularly are seniors. And that is the purpose of the hearing. Now i will turn it over. I will put my statement in the record so you can proceed. Thank you. Lets start with mr. Hughes. Good morning mr. Chairman. Ranking member and members of the committee. Thank you for inviting me to discuss federal Law Enforcement efforts to deter and prosecute those who violate federal law by exploiting the covid19 epidemic. Before he focused on the dumping of the day on take a moment with the tragic killing of george floyd. As i previously said, video images of the Police Misconduct are incredibly disturbing. The department is conducting a parallel and independent investigation into this incident and collaboration with the fbi to determine whether federal civil rights were violated. We intend to conduct that investigation as swiftly as possible. We know that George Floyd Death was not the first of its kind. And concerns reach far beyond the specific incidents. The outrage of his death is real legitimate and deeply rooted why the vast majority of Police Officers do the job honorably and in accordance with the law, we have seen incidents like this one. America takes great pride in the role of law be a bedrock visible as a nations leading federal Law Enforcement agency, the department of justice is committed to doing it as part for justice for mr. Floyd in his loved ones. And confidence in Law Enforcement for americans. None of these issues are important to you and they are important to us. We need to have discussions on the subject in the days ahead pretty but are subject today is the pandemic and the related economic disruption in this bill exploit those tremendously challenging times. Not withstanding the operational challenges in the print entered pandemic, its critical that the department is vigilant, testing and investigating and ongoing as related to the crisis praise become a priority for us. Weve been receiving reports from individuals reporting those who are exploiting americans and Government Programs designed to assist americans that have been hard hit. The return the publics concern about the foster sheet utilize. [inaudible]. And from there personally identifiably information. Other fraudsters have gotten into the personal protective equipment tried looking to defraud and price gouge of providers, First Responders, and other essential workers who have no choice but to make astronomical prices for protective equipment that their Health Depends on. Processing themes that are providing financial help as to whether they disrupt the economy. In particular, fraudsters are targeting the Payroll Protection Program, the Economic Impact payment from our infant program and statement Employment Benefits program. The pandemic is also changed the cyber threat landscape. Our predators on the internet see widespread closing schools, stayathome orders, and relies on internet platforms that the primary means of communication as an opportunity to pray on children. Cyber criminals also see widespread work from home of them in the american businesses as an opportunity to attack and infiltrate citizens Computer Networks to disable systems, or steal or hold hostage valuable data. Im sure you will agree, it is reprehensible that anybody would use this crisis as an opportunity to profit another persons expense or otherwise fraud. The department of justice will not tolerate in our results demonstrated by our effort to coordinate the offices and components, collaborated with other agencies. We are already bringing cases of fraud in two disrupt their schemes. We will be doing so in the foreseeable future. I think you again for the invitation i look forward to questions. [inaudible]. Good morning. I am craig and the United States attorney for the district of jersey. I was appointed by the attorney general. We are grateful for the privilege of appearing before you today to discuss the departments efforts. Those for their financial gain seek to exploit the covid19 act pandemic. The attorney general and the deputed attorney general relating those efforts in order to help those in that attack. We want to thank the committee for his attention to these issues into the good work to the department of justice to protect in the security of our nation. During this unprecedented crisis. Hoover answered questions about price gouging however, i would like to take a moment to acknowledge the tragic death of george floyd. At the hands of the minneapolis police. I am proud of the people of new jersey who raised their voices in peaceful protests. Seeking justice and reform the name of mr. Floyd. In the other victims like here and appreciate their call for change in new jersey, live witness productive and Law Enforcement partnerships in places like new york. These partnerships have learned crime, and restorative trust. Only in new jerseys are part of these efforts we recognize that we must and will do more. Then he turned to the reason im here today. Missing a broad range of misconduct through the past two months. But our core philosophy is not Pretty Department will investigate and prosecute those who treat or seek to treat covid19. As an opportunity to defraud the public and government. The department has received many reports of individuals and businesses using the crisis to seek when phil process at the expense of Public Safety in the health and welfare of american people. These reports range from the sale of covid19 online. A and economic program. The department is aggressively investigating those reports, already commenced prosecution. In the departments attorney work sidebyside with apartness at the in the nicest secret service as well as other federal state and local Agency Partners make no mistake, the fight against covid19, is a fight to save precious lives everyday. Our medical professionals and First Responders with their own lives at risk to stand between the virus and each of us. The personal protective equipment that they were is the only shield they have of protecting themselves that they bravely go facetoface with the virus. Ellipsis sure heroes do not follow victims to disease print and also has a chart did not bring it home to their families. In the broader communities. Price gouging in particular have frontline healthcare officials and the public from requiring this poisoning to protect themselves from contracting the virus. [inaudible]. Retail consumers have been taught deputed by individuals of critical medical materials of a getrichquick. It is disrupted our chain, the markets, and the safety of our communities. In response, the attorney general and Deputy Attorney General Assembly a task force to combat and prevent hoarding and price gouging. This comprised of over 100 federal prosecutors that are experienced, 93 u. S. Attorneys offices and department in the washington. The Task Force Part primary mission is to identify and investigate and prosecute the legal hoarding and press gouging. Such as facemasks and essential to spreading of the virus print they do so in the Current Public Health rises. The decision to bring charges are intended to have the publics response. The task force is focusing on profiteering. Some cell scarce materials for prices far exceeding their normal cost pretty and counterfeit and effective medical supplies brought in fr from, they are entering our stream of commerce and creating safety habit hazards. And we are using all of our tools toy defy these products. [inaudible]. The departments efforts are ongoing. But theyve already yielded substantial results. Just as we, the task force commenced the departments first criminal prosecution since the bar manufacturer presenting defective misbranded mass into the United States during the pandemic. Instead of protecting our medical professionals of these materials when i silently them in harms way. Weve also seen these materials and work with Agency Departments to distribute them. Thus in the frontlines fight the covid19. Thank you again for inviting us to address these important topics and we look forward to answering your questions. Good morning. My name is calvin and i am the assistant director of the fbis criminal investigative division. Thank you for the opportunity to prepare before you today. Head of the fbi criminal investigation, oversee the fbis financial crimes and fraud against the Government Programs. My role as a director of the date criminal division, also oversee civil rights, and hate crime investigations. I believe it is important that i pick a moment to address the recent event this member nations attention. Before i focus on the issues surrounding on todays hearing. I along with my colleagues at the fbi, of our sincerest condolences to the family and friends of george floyd. If you civil rights programs is long and proud history protecting the rights of the american people. The primary federal Agency Responsible civil rights investigations, heres the fbi are committed to utilizing a full investigative intelligence capabilities to address violations of federal civil rights law. An pursuit of justice, we have conducting a thorough investigation into the actions that led to George Floyds death. Fbi recognized rights of the citizens to exercise their First Amendment rights and we will continue to protect our citizens and their ability to exercise those rights and violets. Now i will get to the topic at hand. These are unprecedented times for most of americans. And covid19, people are understandably worried about their health and livelihood. Although we are coming together in various meetings and throughout the country, unfortunately there are individuals who to exploit our fears. And they are trying to sell fake covid19 chairs vaccines. And also Companies Reportedly working on vaccines. These are some of the earliest covid19s fraud schemes that the fbi identified. The attorney general issued a memorandum on march 16th of this year directing the attorney to prioritize covid19 related fraud investigations. In the fbi was ready. Within days, all 56 till offices began working a wide range of investigations related to covid19 fraud schemes. As we begin our investigations, we saw a number of different criminal schemes. We saw subjects courting personal protective equipment ppe, and attempting to sell it an exorbitant isis. We also saw people selling counterfeit ppe. The fbi works closely with the department of justice and a nut other Law Enforcement partners to conduct investigations. The cares act was designed to provide economic assistance to families, American Workers and Small Businesses. However, individual still seek to steal money from the people it was designed help. We began to see fraud towards their efforts exporting the various programs to relieve the economic effects of covid19. To effectively target the threats, the fbi informed a Payroll Protection Program by working group and coordination with the department of justice. A small distance the administration of inspector general. Through this effort, 116 investigations have been initiated in over 126 civilians, has been identified. Were also beginning to seek healthcare fraud. Missing a joint billing for services not received. In charges for unnecessary procedures in france related. In addition to fraud schemes, resting crimes targeting our children. School closures have been increasing the presence of children online. In addition, social distancing, restrictions and isolation of children at home, therefore criminal actors with an opportunity to exploit vulnerable children. We are proactively encountering the threat with an active investigation for a also working to educate the public regarding the warning signs, dangers of online sexual exploitation. Although these threats are numerous and evolving rapidly, the fbi has and will continue to meet to be vigilant in directing in these Crimes Involving individuals who commit these crimes, accountable. We rely heavily on Public Education and awareness. In the general public as anywhere, fraudulent schemes and activities, the better situated to report that bridge for that reason, im incredibly appreciative of the opportunity to speak with you today. I think a chairman and Ranking Member for bringing the attention to these issues. I am happy to answer any questions you might have. Thank you. Thank you. Before i begin, but my colleagues talk about to express the frustration the tragic events of the recent weeks. Having served in government only 29 years, nothing troubles me more than Police Misconduct. We need a Central Trust for the Law Enforcement to protect and serve our communities. All enforcement must be held to the highest standards. Racism and discrimination in any form, is unacceptable. The secret service is committed in a deep, ensuring that all americans are afforded the constitutional rights. Equal treatment under the law and the freedom of speech is. Those rights are unavailable. Returning to the subject of this hearing. Thank you all for inviting me to speak about the covid19 related crime and the work of the nine season to serve the accountability. As early as february of this year, the secret service identified individuals and groups seeking to export the pandemic quickly took action to build the capacity and strategies necessary to combat training we anticipated would be some criminal activity. [inaudible]. From the terrorist attacks of 911 and the hurricane activity, criminals throughout the history have used public emergencies as opportunities to defraud the public. However, the covid19 pandemic scopes a level we have not seen before. Citizens, stressed businesses, its government stimulus programs. Since we released our first on march 4th, we observed a significant criminals teams. Inaudible. We seen a surge of crimes targeting various Economic Relief programs such as those provided by the cares act pretty this fraud has been a core focus on the investigative work and expect our efforts will continue for years. The secret service in addition to the commission is responsible for the initiation of a real violations of u. S. Law, pertaining to the u. S. Financial system. This is the director of the office of investigations and field offices of secret service, includes financial crimes tax forces which connect cyber and financial crimes invitations for immediate investigative focus, the secret service is to distract in short criminal activity. To hinder response to the pandemic. By assisting organizations at risk of fraud. About working to recover any things stolen from americans. We will ensure longterm, that those affected are arrested and successfully prosecuted. Those who have committed fraud. We have been initiated over 100 criminal investigations. And prevented proximally 1 billion in fraud loss. Among other Law Enforcement actions, the secret service hasnt successfully disrupted related scams. Anna listed sales of covid19 fraud online. We will also release regular threats intelligence crystals and orders. To defend themselves in the latest criminal threats. However, pronouncing these results by ourselves. Much of our success, are with the partnership so have built in the range of government partners pretty particular we work closely with the various agencies one department of treasury, cybersecurity and the structure Security Agency ands Homeland Security as well as various offices of that partner and smog and of course my calling to the right, the department of justice, there covid19 task force in the federal bureau of education and all of these essential partners. Im committed to ensuring that we are doing our part. On behalf of the american people, activities pointing this pandemic. I look forward to answering your questions and we can Work Together to address this threats. [inaudible]. Thank you. All start with the secret service pretty can you give me some examples of how people are taking advantage of this Protection Program. We primarily right now focus commit to the employment. Particularly its stolen identity. Criminals are utilizing stolen pi things that they have acquired. Heavy on the dark web, network intrusion. They are using those stolen information to apply Social Security benefits. About 29 states across the country that weve seen. Some very complex fraud present a valid and current availability than losses happen to occur. Is anything the committee can do. Do you have all of the tools you need pretty. We have the tools right now. For this particular. Do you have the resources pretty. We have the resources on partnerships that we created the menu from the departments labor as well as. The answer is yes right. Yes. Mr. Chivers. I appreciate what yall are doing at the fbi. When it comes to consumer fraud, one of these things that you are sing most of them. Your microphone police. [inaudible]. The consumer fraud, initially private assistan citizens were d through number schemes. Many of them were counterfeit covid19 vaccines, and as i mentioned him in the opening also investment opportunities. So we see is a wide range of citizens being targeted for a number of means pretty. Is a problem Getting Better or worse or about the same. I think covid19 that shined light of the opportunity for them to take advantage of a specific type of scheme. So what we see is the number of individuals through unsolicited phone calls and emails. So theres a wide range. And what we asked the public to do is make reports. And that gives us greater visibility in the nature of threats pretty. Is there anything the committee can do pretty to have the tools you need to deal the problem. We do sir. Tell us about the fraudulent tales going on out there. Whats going on in terms of the overseeing. It. With regard to price gouging is that initially what we had was fraud relating just like in the prices of materials. In this country essentially had a slight chain the second consisted of six major suppliers of these masks. And they were products sold at relatively cheap prices. To our First Responders and are medical professionals there easy to obtain them something when they were taken for granted as part of our system. Just like any scenario, where we have a national crisis, theres always going to be a dark underbelly that rises to the top and tries to profit illicitly from the fears of folks are most impacted by the pandemic. And what happened here was when the market came in, in mass quantities these materials. They held onto them through the raise the prices than they did price gouging. He went from being 50 or 60 cents apiece selling for 7 or 8. We have done is weve got the word out about the indications this protection act. It makes it illegal to do that. The price gouging. And weve opened up a series of investigations. So weve been getting out there to try and find the stockpiles if they exist. Get the material back into the supply chain. You have the tools you need to continue down this path. We do sir. He gives us the ability to bring this conduct to life and remedy it. About the paycheck Protection Program. What kinds of problems of using their. What we have seen our fraudulent filings from individuals who are either exaggerating the number of employees that they may have. Or perhaps they dont have any employees. So what they are doing is taking advantage. How do you find out about these cases. Part of it is outreach with the baking sector and the private sector. There are the things we do is we form relationships with these institutions and provided them with training. Having an idea of what to look for granted some of the fraud indicators. Part of it is in a relationship about the other part of the relationship is with the Small Business administrations and the inspector general. And in coordination, we are also receiving information that helps us open cases. [inaudible]. Are looking out of a score. If you could get back to the committee. If theres anything you dont have in terms of being able to deal with us, let us know. If you need more stuff the snow. But generally speaking, how do we stand with the resources and tools necessary to oversee these programs. I think the answer is yes, and tara graham we really appreciate the support. Its been a number of legislative proposals this but in this discussion one of which is increasing deterrence by increasing sentencing guidelines for fraud committed prayed and during national emergencies, we look forward to discussing the list of things you think would help. In my 26 years on this committee mr. Chairman, i have never seen anything quite like this. If i understand it, the federal trade commission as reported that as of june 7, consumers have lost nearly 8 million. Due to coronavirus related to fraud. In this includes offers for axing the test kits, cures, air filters and were falsely advertised. Its been an acceptable price gouging basic items. Like hand sanitizer. Sophisticated schemes targeting state government. Understand washington say for example, criminal use stolen personal information while fraudulent unemployment names. It is on the non. And then you have, the nigerian fraud ring known as scattered canary. They use personal information likely from consumer databases. That was primarily done. Its bizarre. Why is this so unique to have all of this. What is there in this program that attracts the taxes kind of broad effort. Fraud effort. I think theres a he things going on here. When you have a pandemic which is rightfully a major concern and basically every americans life is affected. Is a lot of unknown still about covid19. He also have an economic destruction which rightfully sparks serious response from the federal government in the way of Economic Relief. So those two events its time you tenuously created a situation where the consumers out there, they are anxious about their own health. They are so broad a base in your comments. Nothing is specific. You a specific. Apparently washington say, was able to recover 300 million that had paid for fraudulent crimes related to once again. What other big fraud it cases are out there. And what is done to stop it. We are doing several things. First is that we have hundreds of investigations open all of the department of justice. We are working with every single Law Enforcement agency. In the executive branch we are pursuing separate courses, investigations, monitoring the trends. Talk to me for a minute about scattered canary. This nigerian fraud ring. So senator, im unable to discuss specifics of any particular matter or potential target. But i will say is not especially with respect to unappointed benefits fraud, their strong indication that some of the perpetrators are overseas entities or organizations and that they are using and putting mules and standard mechanisms to transfer money outside the country. The nigerian fraud ring thomas is scattered canary of our enduring fraud ring. Im not personal knowledgeable as to the organization. Happy to take questions. Does anybody know about this. Yes senator bernie and no specific information to confirm those particular activities. Summa could you tell us what you know pretty. What you know is that product as you stated senator, it was essentially stolen credit already in public. Our weather is particular off of the dark web in these particular crimes. Then they are utilized to file fraudulent insurance unemployment claims. That money has been gone through money mules as has already been said. Have they been fraudulently obtained hundreds of millions of dollars in unemployment events. Melissa gentlemen answer the question just know. I cannot answer to the exact amount. I can tell you that the secret Service Based on things that we published, in the late may, the information we received back from over 100 Financial Institutions, the mitigated the loss of about 500 million in payments. So thats information we received from the Financial Institutions. How did Washington State covered the 300 million that it and paid in fraudulent claims related to one of these skeins. Can anybody answer that question. I dont think we have that information and are under tips. We can take it back and discuss it with her colleagues. I have been prepared for a while. I have never seen anything like it. It is filled with riddles and fraud. Put 3 trillion out there, people will take advantage of its. I will share your frustration. We would like to know what can we do. What is going on and he was doing and how widespread is this pretty. That is right. And could any of you gentlemen summarize what is going on and what it will take to stop it read. Thats an incredibly broad question. Were talking with cares act fraud, theres targeting the Payroll Protection Program by fraudsters misrepresenting their Small Business or the characteristics of their Small Business or misrepresenting Small Business. There are fraudsters who are using pii that theyve accumulated their pots on the internet to apply for unemployment benefit programs that are statesponsored there are number schemes relating Economic Impact payments. Again relying on by supply for these payments or to defraud subpoenas of those payments. To have those over to the fraudsters. Let me ask you this. The ftc, reported as of june 7, consumers have lost nearly 48 million due to coronavirus related to fraud. That includes scams for vaccines, discus, marble cures, air filters, that were falsely advertised. They are capable of moving covid19 from the air in peoples homes. So there all these fraudulent Business Practices out there. What is being done to stop them to arrest and convict predict. We are vigorously investigating and using the pool so we have both criminal and civil. When you bring a prosecution, you have hours to be your go to play or a break in trials guilty. The social side you have such as this allow you to make the fraudster for it illgotten gains in order to disrupt we have sent you its allows us ultimately an injection. The quicker solution to stopping some of the seams. Many are involved in on line websites which is the major marketing mechanism in some these fraudsters. Information of happy for me, ive never had before me and 20 years. In honor, if its worth continuing. How to stop it. Maybe i can help to respond. And you indicate to us on many cases have been brought and convictions of change. We received thousands of referrals plymouth out there. Right away, right when the pandemic came to date, attorney general election good leadership in forming to task force. One relating to general fraud and related covid19 and the other mike has worked relating to the hoarding price gouging which was we had to set a very quickly to try to get valuable ppe to the individuals who needed it as quickly as possible. Those programs have approximately hundred profiteers each of them. They are focusing on the covid19 related crimes. It takes some time to work with a whitecollar case. In has to be done overtly. It is know what to do anything to disrupt the network of criminals before we can get a hold for the money is in detroit pretty specially for the oversea cases. Working expeditiously. I can tell you narrow hundreds of investigations in my task force alone. And thousands nationally relat related. We have also formed a partnerships without state attorney general to share information, and whitecollar cases like this. It is critical to be able to get to the money. Because at the end of the day thats what this is about. Willing to prevent individuals, prevent Government Programs from the same in this is already happen, we need to cooperate with Law Enforcement to work with Financial Institutions to trace those transactions. I know it can be frustrating at times. But one of the reasons we can get into specifics is because our network operates to the ability to state covert. And upon this money and before we go into the court and go public we have everything locked down. Love around t i have heard tt the resources that you need, and you have the that you need. I hope that thats right. Time will tell. Thats true, that is very nice. Start out with a complement to the Justice Department and something similar related to the pandemic. In the things that might not be related but i want to, met people that are doing the jobs. I voice felt theres enough publication in a culture and history. Also, the department of justice announced that what they refer to as civil investigative demand of the four largest meatpackers in the nation. They have about 80 percent of the Banking Industry is water industry in the country as a whole. Theres plenty of reason to believe that there might not be things are there in a month ago the price of beef went down about 60 percent rated the price to the consumer when up about 2d march 31st 2 that attorney. Done that for about 20 years. Both parties pretty hard to getting any results whatsoever. So can imagine how surprised i am but thankful for this administration taking are making those moves to make sure that the marketplaces working in that industry because farmers are very depressed by some of the things that are happening in that industry. His only go to april 7, senator, chart sent a letter expressing are concerned about price gouging in hoarding of the essential medical supplies. Mr. Information from the departments implementation of the president s executive order. Not received a response. Im hopeful we will get that soon. It is important that congress has this data. We appreciate when agencies are equipped quick to share information with us. Our request for that information. For example the secret service has been very good about giving us uptodate on the covid19 related fraud efforts. Encourage the Justice Department and the va to follow that example. To anyone of the three from the Justice Department can respond. Opinion tell me when we will get a response or april 7th letter. I do not know the answer to that question. But i can say when we receive letters, they are reviewed and work start some replies promptly. If they have to go through one process. Just an, i mean, than what we would all like. We have your letter and i understand is being worked on. I can check on at this hearing as to the status. Also did anybody the Justice Department and are the fbi witnesses. I am interested in the difficulties or obstacles have you encountered when investigating in these cases. Thank you senator reid said critically, thankfully because the indication of this act, is given us the tools we need to investigate and prosecute price gouging. An of the act is what made with the intent to sell materials that are designated of health and Human Services. That that act we wouldnt be able to operate. The challenges that we have are the same challenges you have in any sort of a Disaster Relief related fraud situation. We based in new jersey, after hurricane sandy. And as senator graham correctly stated, when you put the money out into because you have to take care of society, take care of those who are desperately in need of it pretty cockroaches are going to compounded of the dark and come into the light. Theres always somebody on the underbelly who come out. Were using the traditional tools and partners rule out those frauds. It takes time. Because there is a delay in the exposure. Follow the trend in the money. With regard to price gouging when you think we should very aggressive stance pretty we brought our first prosecution within a week of invitation and defense production act. Johnson on march 23rd to march d materials and on april 1st we arrested the first person selling exponentially ppe. When assaulting a fellow general officer because individual hot he told him that he had covid19 to back them away from him. We were able to recover close to a million pieces of ppe. And then redistributed them within 48 hours. I dont know which one of you can answer this. But i believe chinas decision to halt exports, the store hospitals including health and safety of our workers a serious risk. Its a reasonable to believe that the increase in bank supplies, when a direct result of chinas decision on whether the exports to the medical supplies and if not why not. Whichever one of you can answer that. We cannot talk about any of our investigations the nonpublic. What i can tell you on friday, filed a criminal complaint against the Chinese Companies for the importation of fraudulent him 95 respirators. We alleged that the chinese coming sent to the United States on health insurance. They reported to fbn 19 respirators. Sublicensing pontiff and materials and make them the most attracted to the medical professionals. What medical professionals i sent you need that 95 percent filtration to protect our doctors, nurses, First Responders from interacting directly with the virus. These materials were imported with intent to sell into the medical professionals. When we seem to them, didnt look as though they were authentic materials. I work with the fbi and fbi unaccustomed border patrol, then the materials tested. And they failed and do intend to continue to investigate and importation of fraudulent materials. I think you can play to see additional cases coming into the future. 3 trillion on the table and then watched the cockroaches come in. Youve identified six prosecutions. The ppe act so far. Fourmac million loans have been issued so far. You just Getting Started. It strikes me that unless you big powerful statement early on, some of the adolescent efforts being made to quantify for ppe loans, are just going to continue apace. I will address the ppe. So with that program, there are a number of ways that we have referral cases and potential prosecute. If you will tell you that we have field offices around the country in the complaint is walk in saying that that they are aware with wrongfu second sourct we share among federal agencies predict acting kid in the more specifics on thats pretty. You collected and get your least is important but not critical to answering my questions. Is this pace of six prosecutions for several months and four and a half million loans, indicate just Getting Started and it with us in base that you think will warrant not to cheat the government pretty. Think were just Getting Started for the foreseeable future we will be bringing these cases, the limitation times are between five and ten years. And we are engaging extensively to ensure that the public understands the serious consequences of exploiting this program. Do this more publicly, call attention to it. This exportation, in your testimony, is almost laughable. I can assure you there are plenty of investigations going on. Is just silly efforts to exploit the government in belief that its an easy thing to do. Invent companies and payrolls. Seems to me to be fairly traceable. Let me go to another aspect i want to hear this. When i got raped a few years ago but major corporations in the United States he told me that. Massive, in this country the tonic form made exclusively by one company were being sold in volumes on the internet by people who were not date and identified. There were only made by one company. We had to be the change of congress are more. There would be over hundreds, it was not just a casual sale. And when these companys would after this ring, their stuff told by amazon, facebook and ebay who said no obligation to disclose the names of our sellers. No obligation. He made reference to profitsharing online. Like amazon and facebook. March 25th from a group of 34 attorney general wrote those three companies cures them to do more of price gouging on their platforms. That would allow customers to report is gouging. When comes to those who are using the internet to sell misrepresented qualities. I can tell you from day one of the task force, engage private corporations including online retailers to talk to them about what their policies were and how to identify those instances. And sought to create a referral relationship. Without getting into specifics until you have been cooperating. And weve received referrals pretty. So now theyre disclosing sellers in the are violating her blade to violate the law. I feel refrain about this. But we have engaged and we are working with them on referrals. For years retail theft, it doesnt matter who selling what even if its clearly stolen goods. If youre telling me when breakthrough your money comes to this enemy, and National Emergency to those who misrepresent products on the internet, the cooperation of these cell places on these marketplaces, i think we need to know one way or the other. s at the end of this is the big why some of these people in the past many can tell you to the s sen. Graham i think it is a good question. Help, that he is talking about, is it a problem . Problem . In my experience the department of justice can use process and send a subpoena. We have mechanisms when justified where we see indications of fraud or indications that thereve been wrongful conduct this is a new development and i will tell you phone depot came to me and said the stolen goods with our band made only by us sold in volume and if they wont tell us who sold it. If thats changed, this is a breakthrough. I agree you. Thank you mr. Chairman and john clement for the work that you are doing. Thats something im focused a lot on the subcommittee. This isnt something new to the response. I literally saw a viking helmet that was marked as one of the most protective if you bought it specialized it did the job. I thought somebody put their foot on the helmet and a crushed before the senate committee. There are a lot of counterfeit products coming from china that are a threat to the Public Health and now its in response to the pandemic. A couple of questions, you talked about the ppe and bn 95 masks. The other equipment is something weve got to focus on but i am also worried about counterfeit medications for my potential when we have breakthroughs they may fit the bill but not being distributed according to the licenses. The same could hold true of test kits and some of the other materials we are putting together for the response. Can you tell me a little bit about how we are focusing on the. But we suggest briefly the pharmaceuticals and testing to help spur innovation in the medical device and pharmaceutical space the types of crime we are focusing on are the clearly fraudulent conduct for medications. We are trying to disrupt those quickly while a criminal investigation is still going. Some of the cases we brought so far involved the ozone gas as a treatment and unregistered pesticides and other treatments that are sold and marketed. Do we have other jurisdictions with a similar threat in terms of counterfeit products . The case i was referring to her domestic cases we have numerous investigations and we have seen trends that there is the importation of materials that are either counterfeit, misbranded were just completely cultural and. Primarily from china . We have one we can talk about where we have filed a criminal case against the Chinese Company that we believe intentionally sent fraudulent materials. Each company is a government owned enterprise. I believe that is the case. I want to move onto Something Else and keep to my time to read that ihave a Committee Markup ie to move to. But i want to make sure i get this right. I butcher the names repeatedly. First off, i want to thank you for the work you did and i didnt listedidget to listen toy in the office, but can you tell me about other things i was talking about, can you see any patterns specifically from the foreign jurisdictions. They are focused on the importation. We are primarily looking for price gouging and counterfeit ppe. So during the course of the investigation, we may discover that the ppe that dc is either substandard or counterfeit and we could address it after that. So, we were with not just our federal partners state and local to develop the investigations. Again about what we have seen some of it has been counterfeit. I want to keep close to time. This is just a request. You dont have to respond but i want to thank senator blumenthal and sass who joined on a letter to the fbi to give us a briefi briefing. I dont know if youve seen the letter but i think that it would be helpful for us to figure out particularly with the chinese affiliated hackers into some of the threats we may have their. But i know that there are a number of other senators that would like to get together and get a briefing of the committee on that and the threats we should be updated on. If we can get that done sooner rather than later and i would like them to be represented in that meeting. Thank you. Senator white house. Thank you mr. Chairman. If you could boil down the volume, thats more like it. I want to ask about Unemployment Insurance but before i do, i have to react to your statement about the policy for answering letters. I dont know what is going on over at the department, but i detect a policy of not answering questions from the record for the committee come and not answering letters for the committee. When we had mr. Rosenstein in the hot seat a few days ago, i pointed out that in 17 hearings with the department of justice witnesses, not one question for the record was answered afterwards, not one. That is not a coincidence. That is a policy. When we get questions for the record inserted is because it is a nomination hearing. And the nominee doesnt go forward until they are answered. Outside of that, the policy seems to be we, the department of justice, dont answer Committee Questions for the record. I have a similar problem with letters, so i dont believe what he said about there being a responsible policy for getting the letters answered. We have letter after letter to the doj and fbi that have gone completely unanswered. We finally got a letter of the antitrust Division Recently by putting a hold on a piece of legislation that the division wanted. The answer that we got from the division was able off. It was a nonsense answer. It didnt answer the actual questions. I would ask you to take back to the department what is going on. This is a bipartisan concern. The letter that was raised was from chairman grassley. We are going to get into this further. But somewhere there is a policy, and i want to weed it out because it is a wrong policy. On Unemployment Insurance, a in your testimony you dont even mention it as one of the topic areas. He mentioned briefly Unemployment Insurance but described a simple fraud. I dont know that that is accurate, gentlemen. Just in rhode island, we have had 3,000 fraudulent Unemployment Insurance applications. Our u. S. Attorney is looking into after the Rhode Island State Police began an investigation because they seem to be coordinated. The damage could be in the billions of dollars. The ip information links the entities to the fraudulent claims and also fraudulent common claims in the state of massachusetts and connecticut and in the state of washington. I think you need to stick debate could take a step back to look at this as a very common scheme, very likely a foreign land common scheme. Intake a much harder look at this Unemployment Insurance fraud within you appear to be undertaking from your testimony here today. I think we are dealing with what may prove to be the crime of the decade if not the crime of the century in terms of the amount of money that was stolen through a common scheme run very likely by foreign crooks, and i would ask you all to take the message back that it would be really helpful if the department of justice and the fbi would support of the treasury supports and that the former chairman grassley and chairman graham support that will peel back the ability to hide behind shell corporations in america. Because what happens, as i think you know, is that they are through the schemes in the corporations. It is a part of the response. I think it is a better bet than not at the end of the day, those proceeds end up behind shell corporations where it is harder for you to root them out and run them down. I would be eager to have any response to the point of the Unemployment Insurance and what you are planning to do to ramp up the response to this. There was no real intent in not mentioning the Unemployment Insurance. With the limited amount of time i wanted to give an overview of. There is an organized effort in the country and outside of the country to export this program, versus just a handful of people miss identifying themselves. What do you see from the secret Service Point of view . I can assure you that the secret service is looking at the unemployment fraud as a massive amount of fraud. We do see it as an organized group and we do see connections when it comes to transnational criminal activity overseas. You should have said that. That feels better. Thank you. Now lets make sure that these agencies respond according to a and not mentioning it or calling it just simple fraud because it was potentially billions of dollars in fraud. Thank you mr. Chairman. Im also interested in further response to the questions and i will come back to that in just a second. In the controversy involving 37 planned appearance at office is receiving funds under the paycheck Protection Program by their ineligibility just a quick review of the facts. The act states nonprofits were eligible for the program only if they and their affiliate organizationended their affilian 550 is. Planned parenthood has 16,000 employees nationwide, which is 37 times the threshold and theres no doubt each of the 37 officers applied for the funds knew that they were affiliated because their own documents claim that they were affiliated by the most recent Financial Statement that describes it as one National Brand with 55 planned parenthood affiliates, 110 ancillary entities and i am quoting now, controlled by those planned parenthood affiliates. Despite knowing all of this, 37 separate and that hes applied for and received and are diverted with 80 million from actual Small Business during the global pandemic. So let me just ask you could you comment or reveal if an organization knows that it is ineligible for the program and faulted it for falsely received tens of millions of dollars in taxpayer money meant for somebody else, do we have a criminal conduct issue . Thank you, senator for the question. And again cummings you are right that i am unable to talk about specific examples however, the way the department is approaching the cases is the implication for these funds are pretty simple. The card you filled out is literally just two pages and theres a number of representations on that developed the number of employees do you have in the monthly payroll and the nature of the business and then theres a couple of certifications such as criminal charges and convictions over the last five years that i believe that is the timkind period. There is other information that those inputs were specifically designed to be objective measures that could be quickly looked up and scrutinized for the purposes of determining whether an applicant intentionally misrepresented something immaterial about their business that would allow us to proceed with charging and prosecuting swiftly. So this goes to each of our investigations and this is just an area that like unEmployment Benefits programs we are focusing the departments Law Enforcement and prosecutorial resources. The application is designed to be simple and designed to be very factual. Its not supposed to be a matter of interpretation. Do you comply or not comply, tell us what the facts are, do they meet the threshold or not, that is the basic design. Is not an application which receives a loss on the part of the lender from the beginning. Again so all of the misrepresentation and the burden of that is on the applicant. What about the executives or the other decisionmakers that may have known about it for signed off on the fraudulent application and when i said Organization Im not asking you to talk about any particular investigation to confirm or deny its existence, but in general, if you have an organization where you have top executives at sign off on this would there be a potential liability for them . The traditional legal standards that apply to the corporate liability and corporate actions apply with equal force in this with respect to prosecutions of this program. Thank you for that and i look forward to seeing the progress of your inquiry over time. Let me connect to the question senator whitehouse was asking and i will direct this to you if you have any sense of how much money has been lost through fraud in the Unemployment Insurance peace of care and has the doj had any success of recovering from the funds to pay . I dont have a specific amount of what has been lost. I can tell you i spoke previously from some of the Financial Institutions we are working with about 100 of them weve been told that it may have prevented about 500 million other fraud alone so that just kind of gives you the sense of a particular scope. There are cases where weve seen some success and we will continue to work diligently on these cases one, to identify, too, to refund and prosecute individuals for this activity. Anybody else have anything to add that . Snack to be the this is a big and growing focus for the department. We are coordinating in the district the u. S. Attorneys office and other jurisdictions including washington. We are coordinating closely with its quicdiscrete service, fbi ar Law Enforcement. We are also coordinating with Financial Industries as the assistant director noted some of the quickest tools are to get the Financial Institutions where the payments traveled to identify the activity and work with the state authorities to stop the payment especially when they are traveling overseas. My time is expired. Thank you all for your service and for being here. Thank you very much mr. Chairman and for holding this important hearing. I think what we do know from the pandemic is that this has brought out the best in so many people that put themselves at the front line also worse in terms of the kind of scams we are talking about today. Senator grassley already mentioned the letter back from april 7 and we are still waiting for an answer to that. We are concerned about what is happening and how many investigations have the task force opened. The investigations are ongoing. Blonde and central chicagos u. S. Chinese office and one for the east out of my office. Each has one representative at least come as obviously has some districts and other additional lawyers working on it and each of the Department Also has its own. Some of them are, for example. If we have this in writing we are just trying to push for some actual results. In addition to what you are doing, we have them Work Together on this but are you coordinating with them on the price gouging . We have encouraged all of the members to coordinate. I can tell you personally in new jersey we have been working with the attorney general and i know some other districts have done that as well and they had virtual daily contact about the referrals and weve worked on the cases and decide which cases it more with. Your testimony indicated that the department focuses on the sellers charging, but comes substantially higher prices and in cosponsoring the bill that would prohibit price gouging during a National Emergency and target price increases of more than 20 of the emergency services. The. With regards to the threshold i think that the targets lead you are talking about is the target range we are talking about. The price gouging laws usually is in the ten to 20 range and we are certainly looking for markups of that amount or greater. With senator leahy there is a concern about the discussion and the fact that we are seeing more and more during the pandemic. May 1 i sent a letter to the antitrust division with a number of other senators emphasizing the need for vigorous antitrust enforcement and it included a number of questions that we have received that response but we havent received anything from the antitrust division. When can we expect a response . The thank you for the questions, senator. I do not know the status of that particular letter i understand and agree that the subject of it is important. I do assur do a show assure yout of justice takes me seriously. And we understand that accommodation is important. Its important that we make this a major piece of the consumer work right now. To say lets merge, times are tough, when in fact what is happening is they are leafing out smaller and Smaller Companies and there will be less competition which is the whole reason we have antitrust law to begin with. Last thing i will ask on the record, because i know my time is expired, i will ask of you know senator moran and i just get on protecting seniors from scams and we also know [inaudible] thank you, senator klobuchar. I want to thank the witnesses for being there today. One of the first cases having to do with price gouging was outside chattanooga and running to get the price of online typing 70 per container. If you could talk to me about your participation with local and state officials and how you work with them. If you all could talk just a little bit about how you work with your state and local Law Enforcement partners. One of the fbi strengths is working with our federal and state partners and also working in the environment it has been very challenging. That it hasnt detoured our ability to coordinate with our state and local partners. There are a number of ways and one of the questions is how does the fbi received information relative to the scheme is. Obviously there is a wide range but with our state and local partners, we are receiving a lot of information relative to the fraud. So, because we operat because tk force environment in many of our offices there that is our Violent Task Force he would have pivoted to address a part of the schemes that we are seeing. It is just a continual practice of working very closely with our state and local partners in addressing whatever crimes are being committed in the jurisdictions when you are working to try to get the information for online fraud. Allied in this virtual space in order to get this information to shut these entities down and does big tech respond quickly to the request to shut down some of these entities and then to block them of their server system collects our focus is not the importation. We are primarily dealing with the front end as it pertains to voting and price gouging and in the interest occasion its coming across as it may be substandard for the counterfeit and as it pertains to working with our International Partners. Again a lot of these are emanated from all across the world that requires a Legal Service in order to receive information that may be relevant to the investigation. Id like to ask the two Justice Department we began the investigation some time ago asking questions of the major distributors involved in project air bridge in our inquiry has shown that there was cronyism and political favoritism that led to tragically misallocated supplies and government seizure of equipment. There was the incompetence that was exemplified in the program and have reallife consequences and clearly it was the kind of tech project that was the bridge to nowhere for the Health Care Providers and even possible corruption. Is there an ongoing inquiry into department of justice relating to the project . Will you commit to reviewing this and making it part of your investigation if there is one underway . Doing that would acknowledge the investigation and i am not at liberty to discuss the investigations in the department. You will at least read the results of the investigation, correct . Let me ask about the fake cures which are part of that i think 48 billiondollar total number it was an astonishing and appalling number if they lost close to 50 billion we need really aggressive and proactive Law Enforcement and i know you said its fair to me you have enough resources and authority but i think they are going to be looking for a result at some point. If there is enough authority and resources because there cant be too much when you are investigating this kind of fraud that directly impacts people. In a recent report of the center for science in Public Interest found that the dietary supplement with antiviral claims of making false and misleading statements. Do you have any such fake cures under the investigations . Senator, we have several investigations that relate to misbranded on mis marketed pharmaceuticals. Have you brought any action . We have come and w coming ant a number of injunctions to stop the marketing of such conduct and we filed the criminal complaints against the individuals who have been marketing. Can you provide the details for my office, please . Let me move on because my time is limited. In terms us on an appointment insurance Unemployment Insurance cover you for answering questions for senator white house. What exactly is the modus operandi of these potential scams how close we are to prosecution. Do we have a dollar amount in terms of what the impact is . The we are working with the Financial Institutions for these payments to go and that they would be able to prevent over 500 million in payments. Weve also been able to recover and return to the state of michigan about 30 million. You had the specific individuals . I do not personally have that investigation. I dont mean you personally. I need nor agency. I would have to go back to the specific information. Can you provide more details to my office later today . Im out of time right now and need more information from the agency so i would appreciate Additional Information later. Thank you mr. Chair. Im very interested in the line of questioning by senator durb durbin. Has there been any based on the information from these three entities . I do not have any of the investigations in front of me. What i can believe as we have done outreach with those outlets and i am not aware of any situation where we thought the information and havent obtained pursuant to legal process. Will apparently, according to the way the situation was described by the judge, the list goes on. The list is bipartisan supported and may give you more tools to go after these kind of crimes. You indicated that people that commit these kind of acts, so i would like to know has anybody gone to prison or are you seeking prison time. Thank you for the question, senator. The standard incarceration length applied, that normally applies under the circumstances with respect to some of the fraud for example, again, a lot of the factors need to show how long the present time would be. The calculation would be between 50 months to 100 months and it is typical for the type that we have seen right across procedure in the millions of dollars. There are a number that we bring to bear to address the problems do you think we should have higher consequences during the crisis and pandemic . Maybe we should be looking at the higher limits of consequences. What do you think . Senator, i think there is an honest and important debate to the level of consequences during a National Emergency. Thereve been discussions about the proposed legislation or sentencing guidelines in the discussions in the departments view that should continue, and we would be willing to have discussions about other proposed legislations. Is it asked about the scam involving a nigerian and 50 . They are perpetrated by the foreign entities and i wonder how easy is it for you to prosecute foreign entities and do you need more tools, any of you, to go after the criminals . I will defer to our Law Enforcement and investigative colleagues with respect to the investigation but from the prosecution perspective, we have a number of tools and jurisdictions which permit federal prosecutors to charge them effectively prosecute for criminal organizations and those tools in many respects are as robust as they can get in certain jurisdictional constitutional limits in bible deeper into my investigations. As ive mentioned previously, working with International Partners is important to us and so would they be from a foreign country that we work very closely through the conjunction with the Law Enforcement partners to bring charges. Many are internetbased and have a foreign access. They have assigned attaches where we know some of these schemes emanate and that gives greater connection with our International Partners and enhances ability to bring those individuals to justice the senator boxer for ask anything you want to ask. I apologize. The panel explained the difficulties that the show in abundance of information so is there something more they can do to protect themselves from that sort of fraud . I would say just a basic there are a number of services where individuals can have access to their Credit Report and i would imagine that reviewing your Credit Report for anything that may not have knowledge of what they imported, but also i think that taking preventive measures there is a way the criminals approach sending these unsolicited emails. So i would say using basic common sense on how the public feels with some of these opportunities that these criminal organizations take advantage of. So it is a difficult thing but unsolicited emails and phone calls where individuals are actually providing information as we talk about some of that it may be stolen. So i would say in some ways it preventative measures. Thank you mr. Chair. I want to direct my questions not just because hes from new jersey and bold and with the generation thinks about him at these issues are impacting the states and i would love to get some of his insight. We have seen numerous examples of retailers taking advantage of the pandemic and gouging outrageous fees for the supplies and equipment and things that would be essential in our critical to the safety and wellbeing of so many of the First Responders and others. The behavior is immoral and reprehensible. My team and i have introduced the disaster profiteering act on may 7. I am curious what you think of the power of having a federal law against the gouging and if you can talk up the prevalence of this in new jersey and how that would have been successful to try to combat these issues. Thank you, senator. I agree. I think new jersey is one of the states that have left the largest impacts from this type of conduct because as Everybody Knows new york, new jersey, it is onisone of the most impacteds in the country. We also have some of the most vulnerable victims for this as we have a very Large Population by the attorney general ba bargs of the task force to enforce the act, we have had the tools to address price gouging in the materials. Materials. Athose designated by the department of health and Human Services and that is how we have been able to update. I havent felt constrained as the task force leader, but as you mentioned, there is a history here to take advantage of disasters with this. We saw it in katrina and new jersey and weve seen it throughout the country on a scale we have never before with covid19 because it is the Largest Health crisis we have had since the spanish flu. Weve been unable to address certain types of price gouging because i of this and the federl statute. Things like meat, food, other materials personal consumers need are better suited and prosecuted to the state attorney generals office. What we have done is ive worked with mr. Hughes. Im grateful for that response and i do really believe that there is an urgency to get more tools to deal with that. The task force in the state and federal agencies in the time of coordination and cooperation that is needed in circumstances like this and so i want to hear a little bit more about the federal and state task force and what kind of schemes you have uncovered and combating the fraud that you see out there. Theyve been in almost daily contact with our task force folks in new jersey sharing referrals. Unfortunately, i cannot get into the specifics of the referrals because the cases that i have on my mind are not ones that are publicly available information at this time. But i can tell you is we havent seen a lot of these hurdles because weve put our egos aside and focused on making sure the cases were broad. Im going to submit a lot of questions for the record to put you on the spot and i apologize for doing this in advance, but my question and Anthony Ambrose is he a Police Director . A national treasure. Ive been saving this since i came into office. The fact that they stayed together as a community and were peaceful in their reaction is a credit for his handling of Law Enforcement and the Community Engagement and i saw firsthand as the other cities struggled and they are doing so because of the work that was done in the new distance degree and as i said above support that has shown quite frankly that support both have shown to me not just prosecution of education and Community Engagement i wish that the current attorney general would actually engage in use them. They were a constructive force and i appreciate you and Anthony Ambrose is a treasure he takes better care and i would encourage him to get out there and exercising to be more healthy i need to call him. Im trying to lose weight myself. So here is the deal. I ask you do you have the tools necessary and the resources. It seems that there are tools we could utilize that maybe you do not have. I think senator durbin had a bill and senator klobuchar. I think senator booker. Get back to us about what we can do a, just let us know. Thank you for being on the front lines and we will hold a hearing over an opened for additional questions. Thank you. During the summer months, reach out to your elected officials with cspans congressional directory with all the Contact Information you need to stay in touch with members of congress, federal agencies and state governors. Rder your copy online today at cspanstore. Org. The House Oversight and Reform Committee discusses ways to combat policing and iscrimination. This november we are going to take back the house. We are going to hold the senate and we are going to keep the white house. President trump returns to the campaign trail saturday for a rally in tulsa. Watch on cspan, on demand at cspan. Org or listen on the go ith a free cspan radio app. What do you think we can do about that . With police reform, protests and the coronavirus continuing to affect the country, watch our live unfiltered coverage of the governments response with briefings from the white house, congress, governors and mayors from ahl across the country updating the situation and from the campaign 2020 trail join the conversation every day on our live callin Program Washington journal and if you missed any of our live coverage watch any ime on demand. On thursday the Supreme Court ruled against Trump Administration efforts to end the daca program which allows noncitizens brought to the u. S. Illegally as children to apply for protection from deportation. The program was created during the Obama Administration in 2012 and permitted about 650,000 noncitizens to stay and work in the u. S. While awaiting a decision on their legal status. We will show you the oral argume,