Business

Over $200 Billion Stolen from COVID-19 Relief Programs, U.S. Watchdog Finds

Picture Source: AP

A federal watchdog investigating the COVID-19 relief initiatives has estimated that more than $200 billion may have been stolen from two major programs aimed at assisting small businesses during the pandemic. The U.S. Small Business Administration (SBA) inspector general’s latest figures reveal significant vulnerabilities to fraudsters within the Paycheck Protection Program (PPP) and the COVID-19 Economic Injury Disaster Loan (EIDL) program. These findings underscore the challenges faced during the early stages of the public health crisis and emphasize the need for stronger safeguards against fraudulent activities.

Magnitude of the Fraud:

The inspector general’s report indicates that approximately 17 percent of the funds disbursed through the COVID-EIDL and PPP programs went to potentially fraudulent actors. The estimated fraud amount for the COVID-19 EIDL program is over $136 billion, representing 33 percent of the total funds spent on the program. Meanwhile, the estimated fraud amount for the Paycheck Protection Program is $64 billion, as reported by the inspector general. These numbers far exceed the office’s previous projections and highlight the scale of fraudulent activities targeting the relief programs.

Dispute Over Numbers:

A senior SBA official has disputed the new fraud estimates presented by the inspector general. Bailey DeVries, SBA’s acting associate administrator for capital access, claimed that the methodology used in the report contained flaws and significantly overestimated the extent of fraud. The official argued that the work done by the SBA had a significant impact on preventing fraud, contrary to the report’s implications. Previous estimates by the SBA inspector general had placed the fraud figures at $86 billion for the COVID-19 disaster loan program and $20 billion for the Paycheck Protection program.

Widespread Losses:

The potential losses from the COVID-19 relief programs, including the PPP and the EIDL program, are part of a larger scope of financial misappropriation. An Associated Press report revealed that scammers and fraudsters may have potentially stolen around $280 billion in COVID-19 emergency aid, while an additional $123 billion was wasted or misspent. These losses encompass not only the SBA programs but also other initiatives, such as unemployment benefit programs. The collective losses estimated by the Associated Press account for approximately 10% of the $4.2 trillion disbursed by the U.S. government in COVID-19 relief aid thus far.

Ongoing Investigations and Future Implications:

The SBA inspector general, Hannibal “Mike” Ware, emphasized that the current fraud figures are not the final ones and that investigations into pandemic relief fraud are ongoing. With a backlog of over 90,000 actionable leads, the office anticipates continued efforts to uncover fraudulent activities. The lack of an accepted system for assessing fraud in federal programs adds complexity to the evaluation process. The Biden administration has implemented stricter rules and proposed a $1.6 billion plan to enhance law enforcement efforts against pandemic relief fraudsters.

Conclusion:

The staggering estimate of over $200 billion in potential fraud from the COVID-19 relief programs highlights the vulnerabilities faced by the PPP and the EIDL initiatives. As investigations continue, it is clear that stronger safeguards and fraud controls are necessary to protect against fraudulent actors and ensure targeted relief reaches those in need. The Biden administration’s commitment to addressing pandemic-related fraud underscores the importance of maintaining program integrity and preventing further financial losses.

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