According to recent estimates from a US federal inspector, more than $200 billion may have been taken from two massive COVID-19 relief projects, Fox News reported. Notably, the watchdog was looking into nationally financed programs that assisted small businesses in dealing with the pandemic. On Tuesday, the Small Business Administration’s (SBA) inspector general released a report that provides the most recent estimate of how much of the $1.2 trillion disbursed by the SBA was stolen through fraudulent claims. The analysis centered on two programs established to assist small businesses during a pandemic, both of which fall under the purview of the SBA: the Paycheck Protection Programme (PPP) and the Economic Injury Disaster Loans (EIDL). The report said, “At least 17 percent of all COVID-EIDL and PPP funds were disbursed to potentially fraudulent actors”.
According to the research, the fraud estimate for the COVID-19 Economic Injury Disaster Loan program is more than $136 billion, representing 33 percent of the entire money spent on that program. Meanwhile, Paycheck Protection fraud is estimated to be worth USD 64 billion. 21%, or 4.5 million, of the 22.1 million loans and grants disbursed were given to potential fraudsters.
SBA weakened controls, leading to widespread fraud in COVID aid
“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. Because of the “allure of ‘easy money,’ ” an overwhelming number of fraudsters were drawn to the program and took “advantage of the economic crisis and [diverted] funding intended for deserving eligible American small business owners,” the report said.
As a result, several federal agencies are collaborating to retrieve the stolen funds. According to the inspector general, almost $30 billion in COVID-19 EIDL and PPP money have been confiscated or refunded to the SBA. According to Forbes, as of May, the supervision had resulted in 1,011 indictments, 803 arrests, and 529 convictions—all related to Covid-19 PPP and EIDL fraud. The inspector general’s office is still investigating tens of thousands of leads on waste, fraud, and abuse in the lending programs, which is expected to take years. In an interview with ABC News in 2021, SBA Inspector General Hannibal Mike Ware claimed that fraud from Covid aid programs will be “larger than any government program that came before it.”
