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Small Business Administration(SBA) Identifies $80 Billion in Potential Pandemic Fraud
The Small Business Administration (“SBA”) recently announced that it has identified over $80 billion in COVID-19 relief loans that may have been fraudulently obtained, a significant portion attributable to PPP Loan Fraud. The government is starting to retroactively examine these loans and insiders who blow the whistle using a whistleblower law firm may do so by invoking the False Claims Act and potentially receive up to 30% of what the government recaptures. That’s potentially billions in whistleblower awards available.
The SBA had disbursed over $1 trillion to companies as part of the federal government’s immense efforts to stem the economic impact of the pandemic. However, the SBA prioritized speed over oversight which came at a significant cost. Federal watchdogs determined that the SBA failed to implement safeguards that could have prevented substantial waste and outright fraud.
In recent testimony before Congress, the inspector general (“IG”) of the SBA stated that his office’s recommendations to reduce the risk of fraud were ignored by the agency. Instead, the SBA actually reduced its standard fraud mitigation procedures to expedite the distribution of funds. The weakened protocols were especially detrimental to the enhanced Economic Injury Disaster Loan (“EIDL”) program, which provides low-interest business loans. The IG found that $78.1 billion in potentially fraudulent loans were disbursed through the EIDL program, along with $3.6 billion of such fraudulent loans issued through the Paycheck Protection Program (“PPP”).
Federal investigators found that the SBA approved loans without proper identity verification and without checking federal blacklists for fraudulent actors. Fraudsters exploited these lapses through widespread identity theft.
The SBA’s staggering findings do not even present the full picture of the immense fraud perpetrated during the pandemic. For instance, the Government Accountability Office (“GAO”) estimated that as of Fall 2021, at least $2.3 billion of unemployment benefits have been fraudulently obtained.
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Prosecuting pandemic fraud has been a top priority for the Department of Justice (“DOJ”) and of its new director of COVID-19 fraud enforcement, Associate Deputy Attorney General Kevin Chambers. As of Spring 2022, the DOJ has carried out investigations and prosecutions involving more than $8 billion fraudulently obtained from federal aid programs.
Pandemic fraudsters obtained loans by assuming false identities and switching bank accounts at the last minute, fabricating employee numbers, creating post-hoc shell companies, and other methods. They have spent their ill-gotten gains on such toys as luxury vehicles and rare Pokémon cards.
Individuals with knowledge of pandemic-related fraud can assist the DOJ by retaining a whistleblower attorney and filing a claim under the False Claims Act. Led by former FBI Special Agent Jason T. Brown, the whistleblower team at Brown, LLC has a proven track record of success against those who steal from the nation’s taxpayers in this manner. Call 877-561-0000 or email info@jtblawgroup.com for a free, confidential consultation.