Of the more than 33 million Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) applications submitted for relief funds during the COVID-19 pandemic, nearly 70,000 were allegedly fraudulent, a watchdog group claims.
These 70,000 claims resulted in over $5 billion being issued to people or businesses with bunk social security numbers, according to the Pandemic Response Accountability Committee (PRAC).
The U.S. government’s response to the COVID-19 outbreak included the disbursement of both the PPP and EIDL loans by the Small Business Administration (SBA) as a way for businesses to retain employees while the U.S. economy slowed.
“The PRAC determined that $5.4 billion in COVID-19 EIDL or PPP loans was disbursed to applicants using 69,323 of those SSNs between April 2020 and October 2022. The PRAC further determined that 175,768 of the SSNs were used in COVID-19 EIDL and/or PPP applications that were not disbursed by SBA,” read an alert from the watchdog PRAC released this week.
The Dallas Express reached out for comment regarding this staggering report of fraud from Texas Governor Greg Abbott, the U.S. Office of Treasury, and Representative James Comer, chair of the House Oversight Committee, but no responses had been submitted by the time of publication.
Comer and the Oversight Committee are set to meet Michael Horowitz, PRAC chair, when he gives testimony on Wednesday, CNN reported.
Officials from the SBA, the agency tasked with running the PPP, EIDL, and other relief programs, recently announced that they are focusing on the reported fraud. They also said they were “committed to tackling issues of identity theft and other types of fraud to prevent the theft of funds from the government, taxpayers and deserving small business owners.”
When the financial aid programs were initially introduced as the pandemic was in full swing, they successfully helped many small companies pay their workers. Indeed, those that used the money correctly had the loans forgiven, CNN reported.
However, these programs were also swiftly met by critics like the PRAC, who claim the programs were characterized by dubious lending and resulted in unchecked fraud.
“COVID-19 EIDL and PPP were more susceptible to fraud due to the elevated urgency for agencies to provide timely relief to applicants in response to the COVID-19 pandemic,” the PRAC alert read. “SBA’s initial approach to implement these programs quickly made billions of dollars available to millions of borrowers affected by the pandemic, but used few program controls to verify applicants’ eligibility prior to disbursing funds.”
The 69,323 social security numbers in question were flagged in at least one of the four following ways, PRAC wrote:
“The SSN was not issued by SSA;
The SSN was associated with a different name, according to SSA records;
The SSN was associated with a different date of birth at SSA; and
The SSN was not verified by SSA for another reason.”
The next step the watchdog group has decided to take in order to tackle the fraud includes forming a PRAC task force. This task force will work with other arms of law enforcement to combat and deter the crime. It also recommends that the Social Security Association and the Small Business Administration work in lockstep to prevent ID theft and assist in their program’s integrity.
