COVID-19 relief fraud led to billions in taxpayer-funded Paycheck Protection Program loans lost
PPP loans lost to fraud on massive scale
David Spunt reports on estimated $100 billion in fraud cases
Officials still cannot say exactly how many billions of dollars in Paycheck Protection Program loans fraudsters made off with in the past couple of years, but they know it is a lot.
Reports and estimates vary, but multiple inspectors general have said the total value of the fraudulently obtained loans through the Paycheck Protection Program is likely to total in the billions. A total of $800 billion was earmarked for relief by the Small Business Administration during the early days of the COVID-19 pandemic.
"I can't rule out that the fraud could be not only in the tens of billions, but maybe, as some have estimated, upwards of $100 billion," Department of Justice Inspector General and Pandemic Response Accountability Committee (PRAC) Chair Michael Horowitz told Fox News. "But it's too early for me to tell you how high that number is going to go. I know it's in the billions."
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Fox News spoke with Inspector General Horowitz in his capacity as chair of the Pandemic Response Accountability Committee, where he leads a roundtable of the government’s inspectors general on chasing down fraud and inefficiencies in pandemic relief programs. The group is working on collecting data and making government-wide recommendations to avoid waste and criminality in future crises.
"PRAC has 21 inspectors general working together. We meet regularly, we compare notes, we share information, we share resources," Horowitz said. "It has been, I think it's fair to say, for us as a community, a game changer. But by making sure we're collaborating and working effectively, sharing data, sharing information, sharing resources. You can't oversee $5 trillion with just a handful of people."
Horowitz said there are major areas where the government failed to initially enact safeguards against fraud in the PPP loan program.
"Well, I think first and foremost, verify the identity of the person who’s applying. Identity theft has been a very significant problem, and what we found was that basic steps to determine identity weren’t undertaken," Horowitz said.
He adds that a basic verification check that runs applications against the Treasury Department’s "do not pay" system, which flags individuals and entities who have indicators of fraud, was overlooked during the early days of the program.
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"It turned out 57,000 loans were paid out in those first few weeks to individuals who were on the do not pay list," he told Fox News. "There wasn’t a check on it. That’s a system that was already in place that could have easily been checked."
He also cited the Social Security Administration’s deceased individual’s list as a database that could’ve been used to curb some instances of fraud in the program.
Horowitz is not the only watchdog raising flags on pandemic-relief fraud. Fox News spoke to multiple government officials involved with designing, implementing and accounting for massive government spending to counter the worst economic effects of the pandemic.
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"We issued three white papers making sure that folks knew the importance of setting up the proper internal control framework to ensure that, although we have these things moving quickly, that the control structure could stand the test of fraud," Small Business Administration Inspector General Hannibal "Mike" Ware told Fox News. "We knew that fraud was going to occur regardless. Because this much money, moving that quickly, the fraudsters would be lining up at the door, which is what we found."
Ware was one of the first oversight officials to warn Congress and other government officials about what was expected to be rampant fraud in a number of pandemic-relief programs. The Small Business Administration was in charge of dispersing the PPP loans, and Ware said the agency processed "14 years’ worth of lending within 14 days."