A government watchdog has found $5.4 billion worth of potentially fraudulent loans taken out at the height of the Wuhan coronavirus (COVID-19) pandemic.
The Pandemic Response Accountability Committee (PRAC) recently issued an alert identifying 69,323 questionable Social Security numbers used to obtain billions from the COVID-19 Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP). The said programs under the Small Business Administration provided nearly $1.3 trillion in assistance to small businesses and their employees affected by the pandemic.
Established by virtue of the 2020 CARES Act, the PRAC is part of the bigger Council of the Inspectors General on Integrity and Efficiency.
PRAC noted in its report that the fraudulent loans were disbursed between April 2020 and October 2022. It added that about 57,500 forgivable PPP loans worth $3.6 billion were disbursed by August 2020.
"Eligibility for these disbursements could have been questioned further by SBA before the loan and/or grant had been disbursed if the COVID-19 EIDL and PPP loan programs required SBA – or SBA otherwise had access to information necessary – to verify the accuracy of SSNs and the associated information on borrower applications, such as the applicants’ full names and dates of birth," the fraud alert stated.
According to the report, the EIDL and PPP programs "were more susceptible to fraud due to the elevated urgency for agencies to provide timely relief to applicants in response to the pandemic." It also noted that while SBA's "initial approach to implement these programs quickly made billions of dollars available to millions of borrowers affected by the pandemic," the agency used few program controls to verify applicants' eligibility prior to disbursing funds.
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GAO: Pandemic unemployment benefits fraud costed gov't $60B
The report's release came amid the House Oversight Committee's hearing that tackled the federal government's spending during the pandemic. Committee chairman Rep. James Comer (R-KY) announced the Feb. 1 meeting to probe many fraud cases pegged to United States government assistance programs including the PPP, unemployment insurance and Medicare.
The Kentucky congressman accused the Biden administration of allowing fraud to run rampant in federal assistance programs, and also accused Congress Democrats of conducting little oversight. He assured the public that this will change and President Joe Biden will be held accountable under the Republican-controlled House of Representatives.
"We owe it to Americans to identify how hundreds of billions of taxpayer dollars spent under the guise of pandemic relief were lost to waste, fraud, abuse and mismanagement," Comer said.
Meanwhile, a separate report from another watchdog – the Government Accountability Office (GAO) – revealed that the federal government lost more than $60 billion to unemployment insurance fraud during the pandemic. The GAO's Jan. 23 report said state workforce agencies managed to prove that $4.3 billion were fraudulently claimed. Moreover, at least $45 billion unconfirmed transactions were flagged as potentially fraudulent. (Related: Government watchdog: Over $60B lost to pandemic unemployment benefits fraud.)
Findings from the Department of Labor also showed that about $878 billion in total unemployment benefits was paid out from April 2020 through September 2022. Regular unemployment insurance comprised $209 billion of that total, while about $669 billion in payouts under various pandemic unemployment programs comprised the remaining amount. Unemployment benefits formally ended on Sept. 6, 2021.
Visit Pandemic.news for more stories about pandemic-related federal benefits.
Watch former National Economic Council Director Larry Kudlow reveal how billions of federal relief money were fraudulently spent.
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