The federal government may have handed out more than $200 billion in taxpayer money to fraudsters under the guise of fighting the COVID-19 pandemic, according to a new report from the Small Business Administration’s (SBA) Office of the Inspector General (OIG).
During the pandemic, the SBA handed out $1.2 trillion under the Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) loans.
“Using OIG’s investigative casework, prior OIG reporting, advanced data analytics, and additional review procedures, we estimate SBA disbursed more than $200 billion in potentially fraudulent COVID-19 EIDLs and PPP loans,” the OIG report states.
The OIG report suggests as much as 17 percent of that “pandemic relief money” went to fraudsters rather than struggling small businesses.
To put that number in perspective, the partisan budget Gov. Janet Mills’ signed for the state of Maine this year was just $9.9 billion.
The report also found that an untold number of fraudulent cases involved Internet Protocol (IP) addresses from foreign countries, raising the prospect that malicious foreign actors could have exploited American relief programs to reap criminal profits.
“The agency weakened or removed the controls necessary to prevent fraudsters from easily gaining access to these programs and provide assurance that only eligible entities received funds,” the report states.
“However, the allure of “easy money” in this pay and chase environment attracted an overwhelming number of fraudsters to the programs,” it states. “OIG’s continuing reviews pertaining to oversight of SBA’s pandemic response have identified multiple weaknesses in controls that allowed fraudsters to take advantage of the economic crisis and divert funding intended for deserving, eligible American small business owners.”
Just $30 billion of the suspected $200 billion in fraudulent payments has been recovered.
The report states that personnel at SBA had raised concerns about the level of fraud and the lack of safeguards as early as July 2020.
The report places at least some of the blame on private sector lenders who took advantage of federal laws.
“Notwithstanding SBA’s efforts, certain lenders added to the fraud risks by prioritizing quickness and potential profit over a thorough review of applicant eligibility for government aid,” the report states. “For example, we found one lender escalated its loan processing volume from 200 loans per year to almost 500,000 loans per year during the pandemic — without a substantial increase in staff or security measures.”
The report, if accurate, suggests the U.S. government’s response to COVID-19 begat one of the largest fraudulent schemes in the history of modern governments.
Read the full report here:
<span class="dsq-postid" data-dsqidentifier="20560 https://www.themainewire.com/?p=20560">1 Comment
Everyone must realize by now that COVID19 was one of the largest fraudulent schemes in the history of modern governments. China came knocking and we let them in, lock, stock and barrel, followed closely by Gates, Soros, WHO and CDC. USA was ont caught unawares, just open handed.