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 2020, Congress 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.
Of the 22.1 million loans and grants disbursed, 21%, or 4.5 million, were handed to potential fraudsters, according to Ware’s report.
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.