More than USD 200 billion may have been stolen from two large COVID-19 relief initiatives, according to new estimates from a federal watchdog investigating federally funded programmes that helped small businesses survive the worst public health crisis in more than a hundred years.
The numbers issued on Tuesday by the US Small Business Administration inspector general are much greater than the office’s previous projections and underscore how vulnerable the Paycheck Protection and COVID-19 Economic Injury Disaster Loan programmes were to fraudsters, particularly during the early stages of the coronavirus pandemic.
The inspector general’s report said, “At least 17 percent of all COVID-EIDL and PPP funds were disbursed to potentially fraudulent actors”. The fraud estimate for the COVID-19 Economic Injury Disaster Loan programme is more than USD 136 billion, which represents 33 per cent of the total money spent on that programme, according to the report.
The Paycheck Protection fraud estimate is USD 64 billion, the inspector general said. 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.”
The SBA inspector general had previously estimated fraud in the COVID-19 disaster loan programme at USD 86 billion and the Paycheck Protection programme at USD 20 billion. The Associated Press reported June 13 that scammers and swindlers potentially swiped about USD 280 billion in COVID-19 emergency aid; another USD 123 billion was wasted or misspent.
The bulk of the potential losses are from the two SBA programmes and another to provide unemployment benefits to workers suddenly unemployed by the economic upheaval caused by the pandemic. The three initiatives were launched during the Trump administration and inherited by President Joe Biden. Combined, the loss estimated by AP represents 10 per cent of the USD 4.2 trillion the US government has so far disbursed in COVID relief aid.
The SBA inspector general, Hannibal “Mike” Ware, said in a statement on 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 USD 200 billion from American taxpayers and exploit programmes meant to help those in need.”
Ware, in an interview with The Associated Press earlier this month, 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.
