By Kanishka Singh
WASHINGTON (Reuters) -The U.S. government likely awarded about $5.4 billion in COVID-19 aid to people with questionable Social Security numbers, a federal watchdog said in a report released on Monday.
The watchdog, the Pandemic Response Accountability Committee (PRAC), said it “identified 69,323 questionable Social Security Numbers (SSNs) used to obtain $5.4 billion from the Small Business Administration’s (SBA) COVID-19 Economic Injury Disaster Loan (COVID-19 EIDL) program and Paycheck Protection Program (PPP).”
The loans were disbursed between April 2020 and October 2022, the watchdog said in its report, which comes ahead of a scheduled Wednesday hearing by the Republican-led House of Representatives Oversight Committee on fraud in pandemic spending.
About 57,500 Paycheck Protection Program forgivable loans worth $3.6 billion were disbursed by August 2020, the report added.
The United States is probing many fraud cases pegged to U.S. government assistance programs, such as the Paycheck Protection Program, unemployment insurance and Medicare. In May 2021, Attorney General Merrick Garland launched a COVID-19 Fraud Enforcement Task Force.
Last year, the U.S. Justice Department tapped federal prosecutor Kevin Chambers to lead its efforts to investigate fraudsters who used the pandemic as an excuse to bilk government assistance programs.
The report demonstrates “the significant fraud and identity theft that occurred under the prior administration due to the lack of basic anti-fraud controls, as well as how consequential were the Biden administration’s quick actions to reinstate strong anti-abuse measures in these emergency small business programs,” Gene Sperling, a senior adviser to President Joe Biden said in an emailed statement.
The watchdog report mentioned that in 2021 the U.S. Small Business Administration made improvements to its assistance program controls. Biden took office in January that year.
In September, the inspector general for the U.S. Labor Department said fraudsters likely stole $45.6 billion from the United States’ unemployment insurance program during the coronavirus outbreak by applying tactics like using Social Security numbers of deceased individuals.
Also in September, federal prosecutors charged dozens of defendants, who were accused of stealing $250 million from a government aid program that was supposed to feed children in need during the pandemic.
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The U.S. Treasury Department’s inspector general for Covid-19 relief (TIGTA) recently published a report identifying $5.4 billion in potentially fraudulent loans processed under two emergency programs established by Congress to help small businesses during the pandemic.
The programs, the Paycheck Protection Program (PPP) and the Economics Injury Disaster Loans (EIDL), have provided $660 billion in relief to individuals and businesses affected by the economic downturn resulting from the pandemic. But TIGTA says their audit revealed several instances of financial fraud. This includes businesses that received PPP or EIDL loans despite not being eligible. It also includes loans that have been approved using false information.
The report goes on to identify a range of vulnerabilities that have been exploited by fraudsters. These include leveraging relationships with individuals or entities in order to obtain multiple loans, using false information to obtain bigger loans, not submitting required documentation to lenders, and engaging in “bust out” schemes where businesses seek to obtain loans for expenses already rendered rather than funding the actual business activity.
TIGTA’s report came alongside the announcement of several high-profile criminal prosecutions of individuals engaged in such fraud. The inspector general said in a statement that the report “demonstrates a need for additional guidance and oversight.”
The Treasury Department has vowed to continue to monitor the PPP program to prevent fraud and inappropriate behavior as Congress attempts to strengthen the system for distributing Covid-19 relief funds. It has also increased the number of criminal investigations into alleged fraud related to the program.
It is clear that further steps are needed to protect against the potential for fraud. Any measures taken must balance the need to ensure compliance while also allowing the PPP and EIDL programs to fulfill their goal of economically stimulating businesses affected by the pandemic shutdown.
