The Small Business Administration would have likely lost more than $200 billion to fraud, waste and abuse in its efforts to help small businesses during the pandemic through systems like the paycheck hedging program, a government watch report released Tuesday — the most recent astronomical figure for unnecessary spending revealed. of federal Covid money.
During the implementation of systems such as the PPP and the Economic Disaster Loan Program (EIDL), safeguards were weakened, which would have prevented fraudsters from gaining easy access, the SBA’s Office of Inspector General said in the report.
Because of the “lure of simple money,” an overwhelming number of scammers were lured into the program and appropriated “the economic crisis and [diverted] investments for eligible and deserving American small business owners,” the OIG report said.
The report noted that, through May, OIG surveillance resulted in 1011 indictments, 803 arrests, and 529 convictions, all similar to the Covid-19 PPP and EIDL fraud.
17 %. That’s the percentage of the $1. 2 trillion distributed through the SBA that likely would have been lost due to fraud, waste and other abuses, according to the report.
SBA spokesman Han Nguyen criticized the findings, saying in a statement, “We strongly disagree with the OIG’s projected overall fraud of $200 billion. “The SBA said its own investigation estimated that $36 billion had been lost from its Covid relief budget, of which up to $30 billion had been recovered. According to the SBA, about 86% of fraudulent invoices were sent in the first nine months of the pandemic.
Prior to Tuesday’s report, SBA Inspector General Hannibal “Mike” Ware warned that lax internal controls can create a threat of fraud within SBA systems. In a 2021 interview with ABC News, Ware predicted that the amount of fraud from Covid aid systems would be “greater than any government program that preceded it. “A recent Associated Press investigation raised the numbers even higher, estimating that of the $4. 2 trillion the U. S. government has spent on the U. S. government. of $280 billion. The AP also found that another $123 billion had been wasted or wasted.
“A resolution was made at the beginning of the pandemic — speed was key,” Michael Horowitz, chairman of the Pandemic Response Accountability Committee, a federal watchdog that tracked the amount of money defrauded by the government during the pandemic, told ABC News in March. 2022. “It was a bad choice. It was the wrong choice. This deserves never to have happened. “
Ware is scheduled to appear before Congress in July to discuss the findings of his report.
‘Unprecedented’ fraud has penetrated COVID-19 small loan launch, Watchdog Warns (ABC)
The Big Scam: How Billions in COVID-19 Humanitarian Aid Were Stolen or Wasted (Associated Press)
CORRECTION (6/27): This story has been updated to note that the inspector general’s report made us think that $200 billion was potentially lost, rather than lost, as well as the SBA’s reaction to the report.
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