Kristofer Pasquale, J.D., CFE, Heather McCormick, Alex Meusburger and the SBAOIG Pocket Teams 

Three public servants in the Small Business Administration’s Office of Inspector General are leading an ongoing nationwide effort to return stolen COVID-19 relief funds to the American taxpayer.

Heading teams composed of investigators working across agencies, special agents Kristopher Pasquale, Alex Meusburger and Heather McCormick established a new model for prosecuting fraud that so far has led to the return of about $1.2 billion to the federal government and more than 550 investigations into pandemic relief theft since 2020.

In 2022, Congress responded to this promising work by expanding the statute of limitations for fraud on SBA loans to 10 years, giving investigators more time to bring to justice the fraudsters who exploited the government during an unprecedented crisis.

“Kristopher, Alex and Heather stepped up to identify fraudulent schemes. Their work has become a model for the rest of the country and is leaving a legacy that benefits American businesses, taxpayers and law enforcement,” said Shafee Carnegie, SBA’s assistant inspector general for investigations.

In 2020, Congress tasked SBA with quickly distributing more than $1 trillion for small businesses affected by COVID-19 lockdowns and other public health restrictions.

However, the agency lacked the resources to fully track what amounted to “14 years’ worth of lending in just 14 days,” according to Sheldon Shoemaker, SBA’s deputy inspector general. Bad actors exploited the situation. The agency estimated it disbursed more than $200 billion in potentially fraudulent loans through its COVID-19 relief programs, stretching the SBA’s few-dozen inspector general agents to the max.

In response, Pasquale devised the “pocket team” concept, which partnered SBA agents with law enforcement agencies, including the Justice Department, IRS, FBI, Secret Service and others, to pick off the fraudsters one by one.

Using new methods in data analytics, the teams cross-checked loan applications with criminal history records, examined tax and payroll documents, combed through IP and email address records, and probed bank statements to create what Pasquale terms “an assembly line of justice.”

The result was a new law enforcement methodology that has shrunk the length of a typical SBA investigation from years to weeks. In 2024, Pasquale’s team initiated a series of indictments and arrests that culminated with charges against Blueacorn, a lending service provider that facilitated more than $6 billion SBA loans, netting the company more than $1 billion in lender fee profits. A trial is currently underway.

Pasquale established the first “pocket team” in Oregon; Meusburger took the concept to Washington state, where he averaged roughly one indictment per month; and McCormick headed another team in Denver, working with large banks to identify and return the fraudulent funds they held.

“The last five years have been the most invigorating period of law enforcement for me. The money was going out so fast, and we had an opportunity to recover it, help the taxpayer and catch the bad guys,” Pasquale said.