The government has lost a total of over $200 billion dollars in COVID relief money due to possible fraud, waste, and abuse, according to a study from the Office of the Inspector General of the Administration of small businesses issued this week.
The most recent estimate from the OIG is much larger than earlier estimates, which were estimated to be around $100 billion.
The Paycheck Protection along with COVID-19 Economic Disaster Loan programs were among the relief efforts, designed to offer small firms and people who lost their employment as a result of tight lockdown measures immediate financial help.
According to the research, at least 17% of the relief monies—a total of around $1.2 trillion—were given to alleged fraudsters, involving “far greater than $136 billion in COVID-19 EIDLs as well as $64 billion in PPP funds.”
Inspector General Hannibal “Mike” Ware said that 1,011 indictments, 803 arrests, and 529 convictions had been made as a consequence of the OIG’s investigation into the allegedly stolen cash. Relief money that was unlawfully stolen has been recovered and given back to the SBA in the amount of $30 billion.
According to a prior prediction made by Ware in an interview in 2021, “In regard to the financial value, the total amount of fraud associated with these COVID assistance initiatives is going to be greater than any federal program that has come before it.”
According to the audit, the SBA’s widespread fraud was caused by “weakened or removed” regulations that allowed for the quick transfer of emergency cash to individuals in need.
According to the OIG, fraudsters who perceived a chance to take advantage of the SBA’s lessened hurdles were drawn to the simplified review process by the “allure of ‘easy money.'”
“OIG is pursuing tens of thousands of potential leads for investigations into claims of fraud, waste, and abuse involving public funds. The quick congressional move to raise the period of limitations for COVID-19 EIDL and PPP fraud to a ten-year period will result in thousands of inquiries for years to come. We strive to uncover fraud schemes, and since we anticipate that the total potential fraud estimate may change, we could periodically update this report,” according to the OIG report.
SBA acting assistant administrator Bailey DeVries was concerned that Ware’s study had “serious errors which significantly overestimate fraud.”
Additionally, DeVries asserted that the study would “unintentionally deceive the public into believing that everything that we did together had no major effect on protecting against fraudsters.”
She shifted part of the responsibility to “the prior administration” for putting speed ahead of quality, which “unnecessarily weakened the control conditions for PPP and COVID-EIDL for the initial several months of the program.”
According to DeVries, 86% of the fraud happened within the first nine months of the assistance programs’ implementation, and she argued that as time went on, the agency’s fraud prevention measures got better.
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