Congress is investigating fraud in small business pandemic aid

A congressional committee on Tuesday will examine the payouts under a federal law coronavirus pandemic Aid program designed to help small businesses weather the COVID-19 outbreak amid reports that up to 20% of the money may have been given away to scammers.

The problems in the COVID-19 Economic Injury Loan Programsupervised by the US Small Business Administrationincluded a finding by congressional investigators that about 1.6 million applications for the loans may have been approved without a review.

Separately, the SBA’s Office of the Inspector General estimated that at least $80 billion distributed from the $400 billion program could have been potentially fraudulent, much of it in stolen identity scams.


The program is expected to be the focus of a congressional subcommittee hearing that will also address broader fraud issues with the deluge of pandemic aid from multiple federal government programs for states, local governments, businesses and the unemployed.

The $5 trillion in total aid, provided in a series of bills signed by Presidents Donald Trump and Joe Biden, came with numerous complications.

fraud overwhelmed improved unemployment insurance programs funded by the federal government and administered by the states. There was so much aid to governments that many struggled to find a way to spend everything under the original regulations. And there were questions about whether the Paycheck Protection Program Keeping employees busy has paid off.


The House Select subcommittee on the coronavirus crisis says more than $10 billion committed under two massive business loan programs has been returned due to investigations and bank action. Federal prosecutors have charged nearly 1,500 people with crimes related to fraud against the government over business loans and enhanced unemployment insurance programs.

The government’s Pandemic Response Accountability Committee says inspectors general from various federal agencies have at least 1,150 ongoing investigations into fraud from the various relief funds. Officials say it could take years to unravel any issues.

One focus of the subcommittee is a report released Tuesday by its own staff, which found that up to 1.6 million loan applications designed to keep small businesses afloat and payroll were approved through a batch method became. That could mean they weren’t even opened by officials before the green light was given for funding.


The report blames the SBA for setting up the batch approval feature early in the pandemic during the Trump administration.


McDermott reported from Providence, Rhode Island and Mulvihill reported from Cherry Hill, New Jersey.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, transcribed or redistributed without permission.

https://www.local10.com/news/politics/2022/06/14/congress-examines-fraud-in-pandemic-aid-for-small-businesses/ Congress is investigating fraud in small business pandemic aid

Sarah Y. Kim

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