According to National Review, the Small Business Administration ( SBA ) didn’t take necessary fraud detection measures until after it distributed hundreds of billions of dollars in Covid-19 relief, according to a report from a government watchdog. The Government Accountability Office ( GAO ), an independent agency that audits the federal government, claims that the majority of the agency’s fraud referrals lacked the necessary information for further action once it did begin flagging fraud.
The Paycheck Protection Program ( PPP ) and the Economic Injury Disaster Loan ( EIDL ) programs, respectively, are among the two major Covid-19 loan initiatives covered by a report from the GAO that details significant flaws in the SBA’s fraud detection system. These initiatives were intended to assist little, under-performing companies in the crisis.
The SBA established a four-step monitoring process to overcome Covid-relief scams. This included examining files for anomalies, examining data for oddities, conducting human-led reviews of marked files, and referring good fraud cases to the inspector general of the agency. The SBA did, however, find that it did not fully utilize this process until more than$ 525 billion in PPP money and more than$ 210 billion in EIDL cash had already been distributed.
SBA’s decision to implement the procedure was delayed until more than half of the programs ‘ money had been approved, which limited its ability to prevent fraud. More than$ 210 billion of an eventual$ 385 billion ( or about 55 % ) had already been distributed prior to the full implementation of COVID-EIDL, specifically. More than$ 525 billion of an eventual$ 800 billion ( or roughly 66 percent ) had already been approved for the PPP, according to the GAO report.
Fraud referrals proved to be largely ineffective once the scam recognition process was suddenly put in place. About 2 million of the 3 million scams visits sent to the inspector general by the SBA were not sufficiently detailed. In consequence, investigators were unable to thoroughly investigate numerous instances of possible fraud or to refer them to the Justice Department for trial.
In an effort to keep them afloat, the SBA distributed more than$ 1 trillion in pandemic loans to more than 10 million small businesses between 2020 and 2022. When considering small business loans, expanded unemployment benefits, and other government assistance programs, the total amount of Covid-relief fraud ranges widely, reaching as much as$ 200 billion in misused taxpayer funds.
Senator Joni Ernst ( R., Iowa ), the chairman of the Senate Small Business Committee, harshly criticized the SBA’s oversight shortcomings. According to Ernst,” Bad players stole hundreds of billions because the SBA fully lacked basic fraud protections.” Fortunately, Expand, Administrator Loeffler, and I have been working hard to find out every penny stolen. I’ll work to make sure that the scammers are held responsible and that taxpayers are compensated.
Under the Biden administration, SBA Administrator Kelly Loeffler has pledged to bite down on Covid-relief fraud and to strengthen oversight of defraudulent product payouts. She has expressed her excitement about working with the Department of Government Performance of the Trump administration to find and retrieve hundreds of millions of money that the SBA has sent out as false.
The watchdog organization suggested that the SBA and its inspector general’s office work together to create a strategy for preventing potential EIDL scams in response to the GAO’s studies. The SBA apparently has begun putting steps into place to put the advice into action.
