(LR) Kevin Chambers, Director of COVID-19 Fraud Enforcement, Department of Justice; Hannibal “Mike” Ware, Inspector General, Small Business Administration; Michael Horowitz, Chairman of the Pandemic Response Accountability Committee; and Roy D. Dotson Jr., Acting Special Agent in Charge, National Pandemic Recovery Coordinator, US Secret Service; testify in a hybrid hearing conducted by the House Subcommittee on the Coronavirus Crisis at Rayburn House on June 14, 2022 in Washington, D.C.
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Fraudsters have potentially stolen over $200 billion in federal loans meant to assist small businesses battling the COVID-19 pandemic. government guard he said on Tuesday.
A recent report has estimated that not less than 17% of the $1.2 trillion paid out by the Small Business Administration can have been defrauded by fraudulent entities, in response to the SBA’s Office of Inspector General.
The inspector general found that greater than $136 billion from the Economic Damage Loan Program and $64 billion from Payday Protection Program loans were potentially stolen. In total, the SBA disbursed $400 billion in EIDL funds and $800 billion in payday protection program loans over the duration of the programs.
The inspector general said an amazing variety of scammers lured by easy money were capable of reap the benefits of the schemes because the SBA relaxed its internal controls in a rush to assist small businesses struggling in the course of the pandemic shutdown.
The SBA, in a letter accompanying the report, questioned the inspector general’s conclusions. Bailey DeVries, a senior official on the SBA, said the report vastly overestimated the amounts of fraud in the programs.
DeVries said the Trump administration rushed to lend in the primary few months of this system, but additional fraud checks were introduced in 2021.
She also said that the 34% of the potential fraud rate the inspector general found in the EIDL program was inconsistent with the SBA’s current repayment figures.
SBA figures show that 12% of the loans went to borrowers who’re late, most of that are likely real businesses which might be either closed or just unable to repay, DeVries said. She said around 74% of companies have either fully repaid or began paying off their loans, while 14% are still in the deferral period.
In accordance with the report, investigations by the inspector’s office led to greater than 1,000 indictments, 803 arrests and 529 convictions related to fraud in loan programs. These investigations resulted in the seizure or return of nearly $30 billion in stolen loans by federal law enforcement.
In accordance with the report, the inspector general’s office continues to be working on tens of hundreds of investigative leads regarding waste, fraud and abuse in loan programs. Hundreds of those investigations are expected to proceed for years, the inspector general said.
The payday protection program provided guaranteed loans to small businesses, individuals, and non-profit organizations that could possibly be forgiven if the borrower met certain conditions. The Economic Injury Loan Program provided low-interest, fixed-rate loans to assist small businesses and other organizations meet operating costs.
In accordance with the report, roughly 1.6 million EIDL loans value $114 billion are overdue, delinquent or in liquidation since May. Greater than 69,000 of those $3.2 billion loans have been forgiven. Greater than 500,000 PPP loans have defaulted
The inspector general’s report says non-payment is usually an indicator of credit fraud, although not all loans which might be late, delinquent or charged might be fraudulent.