USA — The US Small Business Administration (SBA), a federal watchdog, has disclosed that the US Government suffered substantial losses of nearly US$200 billion due to fraud within its COVID-19 relief programs.
The inspector general’s report highlights that “at least 17 percent of all COVID-EIDL (Economic Injury Disaster Loan) and PPP (Paycheck Protection Program) funds were disbursed to potentially fraudulent actors.”
Throughout the course of the pandemic, the SBA distributed approximately US$1.2 trillion in EIDL and PPP funds.
The report reveals that fraud in the COVID-19 EIDL program amounts to over US$136 billion, which represents a staggering 33 percent of the total funds allocated.
Additionally, the estimated fraud for the PPP program stands at US$64 billion.
Hannibal ‘Mike’ Ware, the SBA inspector general, emphasized, “The report utilizes investigative casework, prior (inspector general) reporting, and cutting-edge data analysis to identify multiple fraud schemes used to potentially steal over US$200 billion from American taxpayers and exploit programs meant to help those in need.”
The SBA further disclosed that over 86 percent of the likely fraud occurred in 2020 when the administration of former President Donald Trump was in office, whereas President Joe Biden assumed office in January 2021.
The US Government is actively investigating numerous fraud cases related to government assistance programs.
In May 2021, Attorney General Merrick Garland launched a COVID-19 Fraud Enforcement Task Force to address this critical issue.
In September of the previous year, the inspector general for the US Labor Department revealed that fraudsters likely siphoned off US$45.6 billion from the country’s unemployment insurance program during the coronavirus outbreak.
They employed tactics such as utilizing the Social Security numbers of deceased individuals to carry out their fraudulent activities.
Looking ahead, the SBA has outlined its plans to acquire additional datasets through collaborations with other government agencies and subpoenas of certain lenders and their third-party processors.
The agency stated, “As we receive and analyze 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.”
The report highlights a specific case of a fraudster who managed to exploit SBA’s loan programs over 150 times, fraudulently obtaining more than US$3 million.
As of now, approximately US$30 billion has been recovered, seized, or returned to the US Treasury, with financial institutions returning US$8 billion and borrowers returning an additional US$20 billion.
The SBA’s diligent efforts have resulted in 529 fraud convictions, and 570 investigations are currently underway, according to the inspector general’s report.
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