The acting head of the U.S. Agency for International Development (USAID), Peter Marocco, revealed to congressional lawmakers on Wednesday that his agency is preparing potential criminal referrals against individuals who misused taxpayer funds meant for foreign aid. Marocco’s remarks, made during a closed-door session with the House Foreign Affairs Committee, suggest that USAID—long criticized for its lack of oversight—is facing a reckoning.
According to The New York Times, an internal review is still in its early stages, but investigators believe they have uncovered a pattern of illegal activity within the agency. USAID, which serves as the primary vehicle for distributing U.S. foreign aid, has long operated with limited accountability. Now, under President Donald Trump’s directive, Marocco is working to dismantle the agency while investigating the grants and contracts it awarded.
Much of the funding in question was intended to promote economic growth and humanitarian stability in conflict-prone regions. However, critics have argued for years that USAID’s structure allows billions of dollars to be funneled into opaque, loosely monitored programs—many of which have done little to advance U.S. interests.
The investigation into USAID’s spending comes as the Trump administration suffered a legal setback on Wednesday when the Supreme Court denied its request to block a lower court order requiring nearly $2 billion in USAID payments. The decision provided temporary relief to international aid organizations and contractors seeking compensation for work completed under Biden-era agreements.
The ruling came after a federal district court judge ordered the Trump administration to unfreeze USAID funds that had been halted as part of a broader review of foreign aid spending. While the Supreme Court’s refusal to intervene means the payments must proceed for now, it does not settle the larger question of whether these funds were allocated properly—or if criminal misconduct occurred in their distribution.
Rep. Brian Mast (R-FL), chairman of the House Foreign Affairs Committee, confirmed to The Times that USAID’s design has historically made accountability difficult.
“Mr. Marocco was very clear in exposing the waste that goes on out there and in pointing out the way that many of these programs in State and USAID were designed to not be accountable,” Mast said.
USAID has long been a focal point for Republican lawmakers seeking to rein in government waste, but scrutiny has intensified under Trump’s administration. USAID was one of the first agencies targeted by the Elon Musk-led Department of Government Efficiency (DOGE), a Trump-era initiative aimed at cutting unnecessary spending across the federal government.
If Marocco’s investigation uncovers criminal wrongdoing, the findings could serve as a basis for prosecutions and further efforts to restructure—or even dismantle—USAID.
