There are over $200 billion in fraudulent business loans

An Evaluation of COVID-19, the Electronic IdL and PPP Fraud, and How the Small Business Administration Effet was Tightened

The SBA and federal investigators are clawing back some of the money that was stolen. There have been over 1,100 indictments, 803 arrests, and 529 convictions related to the COVID-19 EIDL andPPP fraud in the last five years. The report says nearly $30 billion of aid has been seized or returned to the government.

That’s the latest, most complete assessment so far by the Office of Inspector General of the Small Business Administration, which oversaw the disbursement of the aid.

The report shows how a rush to make money available made it easy for fraudsters to apply for loans to keep non-existent businesses afloat, and they are covered by tax dollars.

The report says the agency weakened the controls needed to prevent fraudsters from easily getting access to the programs and that only eligible entities received funds. An overwhelming number of fraudsters to the programs were attracted to the lure of easy money in this pay and chase environment.

“There is something to that argument, especially when it’s applied to the very early weeks of the program,” says Sam Kruger, an assistant professor of finance at the University of Texas who has studied pandemic fraud. But he says the data analysis behind this new report shows the government did have the ability to tighten up the system.

The SBA’s leaders said that 70% of potential fraud happened in the first nine months of the program, and that they implemented anti- fraud measures early on in the program.