Over $200bn likely stolen from US government's COVID-19 relief programmes, says federal watchdog

As per a new report published on Tuesday by the inspector general of the Small Business Administration, more than $200 billion may have been stolen from two large COVID-19 relief initiatives.

According to new estimates from a federal watchdog probing federally funded programs that helped small businesses survive the pandemic.

The numbers issued by the United States Small Business Administration inspector general, are much greater than the office's previous promontories and highlight how vulnerable the Paycheck Protection and COVID-19 Economic Injury Disaster Loan programs were to fraudsters, particularly during the early stages of the pandemic.

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The inspector general’s report said, “at least 17 per cent of all COVID-EIDL and PPP funds were disbursed to potentially fraudulent actors.”

As per the report, the fraud estimate for the COVID-19 Economic Injury Disaster Loan program is more than $136 billion, which represents 33 per cent of the total money spent on that program.

The inspector general said that the Paycheck Protection fraud estimate is $64 billion.

In comments attached to the report, a senior SBA official disputed the new numbers. Bailey DeVries, SBA’s acting associate administrator for capital access, said the inspector general’s “approach contains serious flaws that significantly overestimate fraud and unintentionally mislead the public to believe that the work we did together had no significant impact in protecting against fraud.”

Previously, the SBA inspector general had estimated fraud in the coronavirus disaster loan program at $86 billion and the Paycheck Protection program at $20 billion.

The SBA inspector general, Hannibal “Mike” Ware, said in a statement Tuesday that the report “utilizes investigative casework, prior (inspector general) reporting, and cutting-edge data analysis to identify multiple fraud schemes used to potentially steal over $200 billion from American taxpayers and exploit programs meant to help those in need.”

Earlier this month, Ware, in an interview with The Associated Press, said that these latest fraud figures won’t be the last ones issued by his office.

“We will continue to assess fraud until we’re finished with the investigations on these things,” Ware said. That could be a long while. Ware’s office has a backlog of more than 90,000 actionable leads into pandemic relief fraud, which amounts to nearly a century’s worth of work.

Han Nguyen, a spokesman for the SBA, said in a statement Tuesday that it is “vital to clarify that 86% of the likely fraud in the PPP and COVID-EIDL programs occurred in the first nine months of those programs when, as the (inspector general) has often noted, the rush to get funds out led to unwise decisions to pull down anti-fraud guardrails.”

Biden administration puts strict rules to control pandemic fraud

The Biden administration put in place stricter rules to stem pandemic fraud, including use of the “Do Not Pay” database.

Recently, Biden also proposed a $1.6 billion plan to boost law enforcement efforts to go after pandemic relief fraudsters.

“I think the bottom line is regardless of what the (total fraud) number is, it emanates overwhelmingly from three programs that were designed and originated in 2020 with too many large holes that opened the door to criminal fraud,” Gene Sperling, the White House American Rescue Plan coordinator, said in an early June interview.

“The swift distribution of funds and program integrity are not mutually exclusive,” Westbrooks said Tuesday. “The government can walk and chew gum at the same time. They should have put basic fraud controls in place to verify people’s identity and to make sure targeted relief was getting into the right hands.”

(With inputs from agencies)

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