Report concludes fraud likely occurred in Coronavirus Food Assistance Program
By: Sydney Sheffield
The United States Government Accountability Office (GAO) recently published the results of an investigation into the United States Department of Agriculture’s (USDA’s) Coronavirus Food Assistance Program (CFAP), noting fraud is likely. During the pandemic, USDA through the CFAP provided producers with $31 billion for various commodities. GAO reported over half of those sampled did not provide full support for their payments and were “therefore potentially improper.”
This is not the first incident of possible fraud in the CFAP. In late 2020, a defendant submitted a CFAP application, claiming that his livestock business sustained significant losses due to the COVID-19 pandemic. The defendant made false and fraudulent claims as to his cattle inventory at his ranch and received payments from the USDA of over $70,000 due to those claims. The defendant admitted to making the false misrepresentations in the CFAP application and receiving over $70,000 in benefits and depositing them into his checking account. He eventually agreed to repay what he received from CFAP as part of the plea agreement.
“USDA’s Business Center 2021 payment integrity review for CFAP estimated that CFAP had a significant improper payment rate for the fiscal year 2020. Specifically, as part of a risk assessment, the Business Center estimated, according to errors that it found, that $449,871,216 (about 4.4%) of CFAP payments were improper and, thus, that the program is susceptible to significant improper payments,” the report says. “Consequently, USDA will be required to estimate and report improper payments for any future payments in the program.”
USDA paid producers $13.8 billion for field crops, $9.8 billion for livestock, $3.0 billion for dairy, and $4.4 billion for other commodities, such as fruits, tree nuts, and vegetables. Of the total, $661.5 million went to high-income producers whose average annual adjusted gross income exceeded $900,000 over a 3-year period. GAO conducted this review by examining a nongeneralizable sample of 90 producers whose CFAP claims GAO considered to have risk factors for improper payments. Risk factors include large claims for commodities for which the Farm Service Agency (FSA), the USDA agency that administered the program, has limited knowledge because the commodities are not typically eligible for FSA’s farm programs.
Other examples of possible fraud include 33 producers who provided support, such as sales receipts, for a lesser amount than they claimed and 9 producers who did not clearly establish ownership of commodities they claimed. In some cases, GAO found indicators of fraudulent activity to obtain the payments. GAO referred the 48 producers with potentially improper payments to USDA’s Office of Inspector General.
“Although the existence of fraud risk factors does not necessarily indicate that fraud exists or will occur, these factors are often present when fraud does occur. Further, while not all improper payments are the result of fraudulent activity, they are indicators of fraud risk,” the report said.
GAO recommended four executive action steps for FSA to take regarding the results:
The Administrator of FSA should conduct additional spot checks of CFAP payments and use a more risk-based approach to selecting producers for review
The Administrator of FSA should issue guidance directing the agency to identify factors which FSA is unfamiliar, for county offices should consider when selecting producers for CFAP spot checks
The Administrator of FSA should direct agency officials conducting CFAP payment spot checks to use support generated by third parties, or if such support is not available, document the reasoning why support self-generated by the producer was accepted
The Administrator of FSA should direct state offices to monitor the quality of the county offices' spot checks for CFAP
Read GAO’s full report of findings here.