WashingtonMore than $200 billion may have been stolen from two major COVID-19 relief efforts, according to new estimates from a federal watchdog investigating federal programs that helped small businesses survive the worst public health crisis in more than 100 years.
Figures released Tuesday by the U.S. Small Business Administration’s (SBA) inspector general exceed the agency’s previous projections and expose the vulnerability of the Paycheck Protection (PPP) and COVID-19 Economic Injury Disaster Loan (COVID-EIDL) programs. Early stages of the coronavirus pandemic.
According to the inspector general’s report, “at least 17% of all COVID-EIDL and PPP funds were awarded to potentially fraudulent individuals.”
Fraud for the COVID-19 Economic Injury Disaster Loan Program is estimated to exceed $136 billion, which is 33% of the total investment in the program, the report said. Meanwhile, according to the inspector general, estimated payment protection program fraud is $65 billion.
In comments attached to the report, a senior SBA official questioned the new figures. Bailey DeVries, SBA’s acting associate administrator for access to capital, said the inspector general’s approach “is seriously flawed by significantly overestimating fraud and inadvertently misleading the public, believing that the work we do together has not had a significant impact on fraud prevention.”
The SBA inspector general previously estimated fraud at $86 billion in COVID-EIDL and $20 billion in PPP.
The Associated Press reported on June 13 that fraudsters and fraudsters siphoned off about $280 billion in Covid emergency aid, while another $123 billion was wasted or misspent. Most of the potential losses are two SBA programs and another effort to provide unemployment benefits to workers suddenly out of work amid the economic chaos caused by the pandemic.
All three initiatives were launched during the administration of President Donald Trump and passed on to his successor. In total, AP estimates the losses are about 10% of the $4.2 trillion the federal government has provided in COVID aid so far.
The federal government now reports $276 billion in fraud, matching the AP’s analysis.
Jean Sperling, the senior White House official in charge of pandemic relief spending, said in an interview on Tuesday that 86% of fraud or potential fraud on emergency loan programs occurred in the first nine months of the pandemic, when Trump was president.
“$200 billion is a very large number, but it should be remembered again as potential fraud,” Sperling said. “The amount defrauded or mostly defrauded is very small, less than $100 billion, maybe around 40 thousand”.
But, he added: “However, this is unacceptably high.”
SBA Inspector General Hannibal Ware said in a statement Tuesday that “the investigation will use investigative interest, previous reports (from the Office of the Inspector General) and innovative data analysis to identify a variety of fraudulent schemes used to defraud American taxpayers of more than $200 billion and exploit programs aimed at helping those in need.”
Ware told The Associated Press earlier this month that the latest fraud statistics would not be the last released by his office.
“We will assess the extent of the fraud till the completion of the related investigations,” he said.
It may take time. His office has more than 90,000 actionable leads on pandemic aid fraud, nearly a century’s worth of work.
The SBA released its own report on Tuesday detailing the steps it has taken to combat fraud. The agency’s administrator, Isabella Casillas Guzmán, said in a statement that the report was described as “effective measures to combat fraud and hold wrongdoers to account.”
The SBA previously told the AP that the federal government has not developed an accepted system for assessing fraud in federal programs. Previous analysis, the agency noted, flagged those numbers as a true estimate of fraud when there were no “potential fraud” or “indicators of fraud.” Regarding the COVID-EIDL program, the agency noted that its “task evaluation” revealed $28 billion in fraud.
According to Labor Department Inspector General Larry Turner’s testimony before Congress, fraud in unemployment assistance programs during the pandemic amounted to $76 billion. This is a conservative estimate. Another $115 billion was inadvertently sent to people who did not receive these benefits, according to his testimony.
The Biden administration implemented tough measures to crack down on pandemic-related fraud, including using a database of people who shouldn’t have paid. Biden recently proposed a $1.6 billion plan to increase police efforts to go after fraudsters of pandemic aid programs.
Bob Westbrooks, the former executive director of the Pandemic Response Accountability Commission, said in an interview that the $200 billion figure was “unacceptable, unprecedented and disproportionate.” Westbrooks last week released a book, “Left Holding the Bag: A Watchdog’s Account of How Washington Stumbled Its Covid Experiment.”
“The speedy delivery of funds and the integrity of the programs are not mutually exclusive,” Westbrooks said Tuesday. “Government can walk and chew at the same time. They should have basic fraud checks in place to verify people’s identities and ensure aid goes into the right hands.”
