SBA Watchdog Exposes Over $200 Billion in Fraudulent COVID Relief Claims: Uncovering Substantial Financial Losses

**Title: Over $200 Billion Possibly Stolen from COVID-19 Relief Programs, Reports Reveal**

**Subtitle: Vulnerabilities exposed: Fraud in Paycheck Protection and COVID-19 Economic Injury Disaster Loan Programs**

More than $200 billion may have been stolen from two large COVID-19 relief initiatives, according to new estimates from a federal watchdog investigating federally funded programs that helped small businesses survive the worst public health crisis in more than a hundred years.

The Vulnerability of Paycheck Protection and COVID-19 Economic Injury Disaster Loan Programs

The U.S. Small Business Administration inspector general released new numbers that are significantly higher than previous projections. These figures highlight the susceptibility of the Paycheck Protection and COVID-19 Economic Injury Disaster Loan programs to fraud, especially in the early stages of the pandemic.

COVID-EIDL and PPP Funds Disbursed to Potentially Fraudulent Actors

According to the inspector general’s report, at least 17 percent of all COVID-EIDL and PPP funds were disbursed to potentially fraudulent actors. The report estimates that $136 billion, representing 33 percent of the total money spent, was fraudulently obtained from the COVID-19 Economic Injury Disaster Loan program. Additionally, the Paycheck Protection program had an estimated fraud amount of $64 billion.

Disputing the New Numbers

A senior SBA official, Bailey DeVries, disputed the new numbers in comments attached to the report. DeVries argued that the inspector general’s approach contained serious flaws that overestimated fraud and mislead the public about the effectiveness of their efforts to prevent fraud. Previously, the SBA inspector general had estimated fraud in the COVID-19 disaster loan program at $86 billion and the Paycheck Protection program at $20 billion.

Scammers and Swindlers Take Advantage of COVID-19 Emergency Aid

The Associated Press reported in June that scammers and swindlers potentially stole about $280 billion in COVID-19 emergency aid, while another $123 billion was wasted or misspent. The majority of potential losses come from the SBA programs and another initiative to provide unemployment benefits to workers affected by the pandemic. These initiatives were launched during the Trump administration and continued under President Joe Biden. The AP’s estimates, combined, account for 10% of the $4.2 trillion the U.S. government has distributed in COVID relief aid.

Fraud Figures Won’t Be the Last

According to Hannibal “Mike” Ware, the SBA inspector general, these latest fraud figures won’t be the final ones. He stated in an interview that his office still has a backlog of over 90,000 actionable leads related to pandemic relief fraud. The investigation and assessment of fraud are ongoing.

Lack of an Accepted System for Assessing Fraud

The federal government has not established an accepted system for assessing fraud in federal programs, according to the SBA. Previous analyses pointed to “potential fraud” or “fraud indicators” without providing a true fraud estimate. The SBA clarified that their “working estimate” identified $28 billion in likely fraud for the COVID-19 Economic Injury Disaster Loan program.

Stricter Rules and Proposed Measures

To combat pandemic fraud, the Biden administration has implemented stricter rules, including the use of the “Do Not Pay” database. President Biden has also proposed a $1.6 billion plan to enhance law enforcement efforts against pandemic relief fraudsters.

Assessing the Scope of the Issue

Regardless of the total fraud amount, which emanates mainly from the three programs implemented in 2020, Gene Sperling, the White House American Rescue Plan coordinator, emphasized the need to address the vulnerabilities that allowed criminal fraud to occur. The amount of over $200 billion is considered unacceptable, unprecedented, and unfathomable by Bob Westbrooks, a former executive director of the federal Pandemic Response Accountability Committee.

Conclusion

The vulnerability of COVID-19 relief programs to fraud must be addressed to protect taxpayers’ funds and ensure targeted relief reaches those in need. The government’s response should include implementing basic fraud controls, verifying individuals’ identities, and ensuring proper distribution of relief funds. Ongoing investigations and stricter regulations aim to prevent future fraudulent activities and safeguard public resources.