Fraudsters likely stole $200 billion from pandemic funding meant for small businesses
(The Center Square) – Taxpayers lost nearly $200 billion to fraudsters that was meant for struggling small businesses, according to a new watchdog report on the Small Business Administration’ COVID-era pandemic relief programs.
The SBA Office of Inspector General released a report on COVID-19 Pandemic EIDL and PPP Loan Fraud, which found that 17 percent of the $1.2 trillion allocated by Congress was “disbursed to potentially fraudulent actors.”
“OIG’s oversight and investigative work has resulted in 1,011 indictments, 803 arrests, and 529 convictions related to COVID-19 EIDL and PPP fraud as of May 2023,” the report said.
Despite these arrests, only $30 billion of the lost funds has been recovered. The IG has pledged to continue working to get the funds back, saying it has thousands of open investigations.
Most of the lost taxpayer money, which was “intended to help eligible small business owners and entrepreneurs adversely affected by the crisis,” will likely not be recovered.
Lawmakers responded to the report with concern. Chair of the House Committee on Small Business Roger Williams, R-Texas, said the latest IG report shows far more criminal fraud taking advantage of SBA than has been reported so far.
Williams blasted the SBA, saying it “failed to implement basic guardrails to protect the integrity of these programs, resulting in roughly 1 in 5 loans dispersed being labeled as potentially fraudulent.”
“When COVID-19 hit the United States, the SBA was tasked with taking on an oversized role to help save small businesses and our nation’s job creators,” he said. “Unfortunately, these after-action reports show the agency was not up to the task. I look forward to hearing directly from Inspector General Ware in July on what went wrong, how to fix these issues, and what recourse we must take to recoup these stolen taxpayer dollars.”
The SBA is just one of several agencies that saw similar waste, fraud, and abuse to the tune of hundreds of billions of dollars in total lost during the rush of pandemic-era spending. As The Center Square previously reported, an analysis from Open The Books found 82 programs across 17 agencies made improper payments in fiscal year 2022 alone, averaging $20.5 billion per month, or $683 million per day.
With the latest report on SBA, which showed higher losses than previously reported, those number could be even higher.
“In 2022, the incorrect payments totaled $1,673 for every individual tax return filed that year. (167,915,264, according to the IRS),” said Adam Andrzejewski, CEO of Open the Books. “They amounted to $846 for every man, woman, and child in the country. So, the government wasted $3,384 for every family of four – an amount equal to two average mortgage payments. (331,893,745, U.S. pop in 2021, from U.S. Census Bureau website).”