Over $200 Billion Pandemic Support Lost To Fraud; Federal Investigators Scramble To Retrieve!

Over $200 billion in pandemic support for small businesses has been lost to fraud, prompting federal investigators to scramble to retrieve the funds, Washington Examiner reported.

Over $200 Billion Pandemic Support Lost To Fraud; Federal Investigators Scramble To Retrieve! (PHOTO: PBS)

Federal Investigators Scramble to Retrieve Funds

The Small Business Administration (SBA) disbursed a total of $1.2 trillion in funds, and the lost amount represents approximately 17% of the total.

Efforts by federal agencies such as the U.S. Secret Service, the SBA, and the inspector general’s office have led to the recovery of about 15% or close to $30 billion of the lost funds. However, significant work still lies ahead for investigators.

The funds were distributed through two SBA programs: the Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Program (PPP). The EIDL program, which offered low-interest disaster loans that required repayment, had a higher potential for fraud. It is estimated that $136 billion, or 33% of the total funds allocated to small businesses, may have been lost to fraud in this program.

On the other hand, the PPP program, which provided grants to businesses, had a slightly lower estimate of possible fraud at around $64 billion, or 8% of the total funds disbursed.

The rapid implementation of emergency programs like the EIDL and PPP during the early stages of the pandemic made them more vulnerable to fraud. Internal controls were relaxed to expedite the process, increasing the risk of program fraud, as noted in a report by the SBA’s inspector general, Hannibal “Mike” Ware.

While the SBA has denied allegations that it allowed fraud through a lax screening process, it acknowledges that decisions made during the previous administration prioritized speed over robust fraud controls.

READ ALSO: New York Fraud Lawsuit; Court Dismisses Ivanka Trump

Over $200 Billion Pandemic Support Lost, Federal Investigators Doubled Efforts

The SBA has since introduced additional fraud controls and implemented a strengthened anti-fraud control framework in 2021.

The issue of fraud in COVID-19 relief programs is significant, with estimates suggesting that the monetary value of fraud in these programs may surpass any previous government program.

The federal watchdog, the Pandemic Response Accountability Committee, discovered that nearly 70,000 potentially suspect Social Security numbers were used to successfully apply for EIDL or PPP funds, amounting to $5.4 billion.

The investigation into the lost funds and efforts to recover them will continue, with Hannibal Ware scheduled to appear before Congress in July to discuss his findings.

READ ALSO: Sober Homes Operator In Massachusetts Pleads Not Guilty In COVID-19 Relief Fraud