In a WSJ op-ed, I tell how a fraudster received a $42,200 Covid-19 Economic Injury Disaster Loan in my name for an alleged “Arthur M.D. Potato Farm.” As discussed in the NYT passages quoted below, there was also massive fraud in other related Congress-funded Small Business Administration Covid boondoggle programs. The NYT article blames the Trump Administration, but in my struggle to clear up the potato farm fraud case, a S.B.A. official told me that the Congress in 2020 put enormous pressure on the S.B.A. to get the money out the door as quickly as possible. The House of Representatives, which takes the lead in spending legislation, was controlled by the Democratic Party.
In the passages quoted below, “P.P.P.” means “Paycheck Protection Program” and “E.I.D.L.” means “Economic Injury Disaster Loan.”
(p. B4) An emergency relief program hastily rolled out in the early days of the pandemic had such poor fraud protections that it improperly doled out nearly $4.5 billion to self-employed people who said they had additional workers — even those who made wildly implausible claims, like having one million employees.
The $20 billion program, called the Economic Injury Disaster Loan Advance, offered small businesses immediate grants of up to $10,000 in the months after the pandemic shuttered much of the economy. But hundreds of thousands of the grants it made were inflated because there was no system to catch applications with “flawed or illogical information,” Hannibal Ware, the Small Business Administration’s inspector general, wrote in a report released on Thursday [Oct. 7, 2021].
. . .
. . . the S.B.A. skipped an obvious safeguard: It did not require sole proprietors claiming to have employees to enter their Employer Identification Number, instead allowing them to use their Social Security numbers.
. . .
Some of the claims were outright absurd. Hundreds of applicants received the maximum grants after saying that they employed more than 500 workers, a number that would generally make them ineligible for the small business program. Fifteen said they had one million employees — a figure that would put them in league with Amazon and Walmart.
The Small Business Administration “never requested additional information from these sole proprietors to verify the number of employees cited on their grant applications before approving and disbursing the grants,” Mr. Ware said in his report.
. . .
. . . a Bloomberg article last year described how almost comically easy it was to scam the system. It cited how-to videos that circulated on YouTube with titles like “$10k SBA Loans & GRANTS Got The STREETS Going CRAZY!”
. . .
The Justice Department has already prosecuted hundreds of cases involving fraudulent claims across the government’s $1 trillion small business pandemic relief programs, reclaiming more than $600 million.
But that is only a sliver of the amount lost to bogus claims. A March memo by the House Select Subcommittee on the Coronavirus Crisis identified an estimated $84 billion in suspected fraud in the P.P.P. and E.I.D.L. programs after the Trump administration “refused to implement basic controls.”
Mr. Ware told a House committee in April [2021] that his office had opened more than 400 cases involving the agency’s assorted relief programs.
“Fraud investigations will be a decades-long effort,” he said.
For the full story see:
(Note: ellipses, bracketed date, and bracketed year, added.)
(Note: the online version of the story has the date Oct. 7, 2021 [sic], and has the title “S.B.A. Overpaid $4.5 Billion on ‘Illogical’ Small Business Grant Claims.”)