Fraudsters scooped up more than $200 billion in COVID-19 relief funds meant to help struggling small businesses during the pandemic, a government watchdog says.
The inspector general of the Small Business Administration (SBA) released a report Tuesday that gives the largest estimate yet of how much of the $1.2 trillion disbursed by the SBA was stolen by fraudulent claims. At least 17% of all COVID-19 Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) funds were given away to potentially fraudulent actors, according to Inspector General Hannibal "Mike" Ware.
"In the rush to swiftly disburse COVID-19 EIDL and PPP funds, SBA calibrated its internal controls. 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," officials wrote. "However, the allure of ‘easy money’ in this pay and chase environment attracted an overwhelming number of fraudsters to the programs."
COVID-19 RELIEF FRAUD LED TO BILLIONS IN TAXPAYER-FUNDED PAYCHECK PROTECTION PROGRAM LOANS LOST
In 2020, Congress and then-President Donald Trump approved $953 billion for the PPP program, designed to keep workers employed during the pandemic. But the program was an easy target for thieves who took advantage of the loose controls on emergency spending to enrich themselves while employers could not afford to keep their workers on payroll.
So far, the Justice Department has opened more than 140 cases of fraud totaling millions of dollars, including a Minnesota man who claimed to have 28 employees when he had none, a Maryland pastor who bought luxury cars, and a Florida family who bought a $3 million home.
Previous reports and estimates have said the total value of fraudulently obtained PPP loans is likely to be in the billions.
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"I can't rule out that the fraud could be not only in the tens of billions but maybe, as some have estimated, upwards of $100 billion," Michael Horowitz, chair of the Department of Justice Inspector General Pandemic Response Accountability Committee (PRAC), told Fox News last year. "But it's too early for me to tell you how high that number is going to go. I know it's in the billions."
Tuesday's estimate confirms that nearly 1 out of every 5 dollars spent was wasted, totaling more than $200 billion.
Of the 22.1 million loans and grants disbursed, 21%, or 4.5 million, were handed to potential fraudsters, according to Ware's report.
SBA DOLED OUT $684M IN PPP LOANS TO ‘POTENTIALLY INELIGIBLE’ NONPROFITS
Multiple federal agencies are working to recover the stolen money, and there are 570 ongoing investigations in addition to congressional hearings. So far, nearly $30 billion in COVID-19 EIDL and PPP funds have been seized or returned to the SBA, the inspector general said.
Moving forward, the inspector general is working to obtain additional datasets from lenders and third-party processors to find potential fraud and bring criminals to justice.
Ware is scheduled to testify before Congress in July to discuss his report under oath.
Fox Business' Douglas Kennedy, Andrew Keiper, Perry Chiaramonte and David Spunt contributed to this report.
