The US Small Business Administration (SBA), a federal watchdog, said the US Government lost close to $200 billion to fraud from its COVID-19 relief programs.
The inspector general’s report said “at least 17 percent of all COVID-EIDL (Economic Injury Disaster Loan) and PPP (Paycheck Protection Program) funds were disbursed to potentially fraudulent actors”. Over the course of the pandemic, the SBA disbursed about $1.2 trillion of EIDL and PPP funds.
The fraud estimate for the COVID-19 EIDL program is more than $136 billion, which represents 33 percent of the total money spent on that program, while the PPP Protection fraud estimate is $64 billion, the report said.
The SBA inspector general, Hannibal ‘Mike’ Ware, said in a statement: “The report utilises investigative casework, prior (inspector general) reporting, and cutting-edge data analysis to identify multiple fraud schemes used to potentially steal over $200 billion from American taxpayers and exploit programs meant to help those in need.”
The agency added that over 86 percent of likely fraud took place in 2020, when the administration for former President Donald Trump was in office. President Joe Biden took office in January 2021.
The United States is probing many fraud cases pegged to US government assistance programs. In May 2021, Attorney General Merrick Garland launched a COVID-19 Fraud Enforcement Task Force.
In September last year, the inspector general for the US Labour Department said fraudsters likely stole $45.6 billion from the United States’ unemployment insurance program during the coronavirus outbreak by applying tactics like using Social Security numbers of deceased individuals.
As for its future plans, SBA said it continues to work on obtaining additional datasets through partnerships with other government agencies as well as through subpoenas of certain lenders and their third-party processors.
“As we receive and analyse additional datasets, the fraud groups may be refined to identify additional fraudulent loans. The potential fraud estimates directly correlate to our investigative casework, adjudicated and ongoing criminal cases, and to schemes SBA OIG and other oversight agencies are continuing to unravel and then prosecute,” an SBA press statement added.
The report highlighted one fraudster who scammed SBA’s loan programs more than 150 times to obtain more than $3 million.
To date, at least $30 billion has been recovered, seized or returned to the US Treasury. Financial institutions returned $8 billion and borrowers returned an additional $20 billion. The IG’s report said SBA’s work has produced 529 fraud convictions so far and that 570 investigations are ongoing.
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