Congress examines fraud in pandemic aid for small businesses | Health


A congressional panel will consider payments under federal law on Tuesday coronavirus pandemic aid program to help small businesses weather the COVID-19 outbreak amid revelations that up to 20% of the money may have gone to fraudsters.

The problems in COVID-19 Economic Disaster Loan Programsupervised by the american small business administrationincluded a finding by congressional investigators that some 1.6 million loan applications may have been approved without being assessed.

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

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

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The total $5 trillion in aid, delivered in a series of bills signed by Presidents Donald Trump and Joe Biden, has come with many 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 it all under the original regulations. And we wondered if paycheck protection program keeping the employees working was well worth it.

The House Special Subcommittee on the Coronavirus Crisis says more than $10 billion allocated under two massive business loan programs has been returned due to investigations and bank actions. 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 of the various aid funds. Officials say it could take years to sort out all the issues.

One of the subcommittee’s targets is a report released Tuesday by its own staff that found that up to 1.6 million applications for loans meant to keep small businesses open and payroll have been approved by a batch method. That could mean they weren’t even opened by officials until they were given the go-ahead for funding.

The report blames the SBA for creating the batch approval function early in the pandemic, under the Trump administration.

The SBA Inspector General’s Office said Tuesday ahead of the hearing that many of the report’s claims are based on OIG reports over the past two years, but that it cannot validate the statements or independent research carried out by the sub-committee included in the report. The bureau said it was “aggressively rooting out fraud and bringing wrongdoers to justice.”

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

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