Report: Over $200 billion in COVID-19 loans may have been stolen

The money, from the Cares Act, was intended as a lifeline for struggling Americans to sustain their businesses during the COVID-19 pandemic.
Posted at 2:55 PM, Jun 28, 2023

A new report shows more than $200 billion meant to help struggling businesses during the pandemic may have been stolen.

The Small Business Administration released the shocking numbers Tuesday, citing fraud as the main issue.

Unfortunately, this is just the latest price tag from federal COVID funds suspected to have been misused.

The money was part of the Cares Act, and was supposed to be used as a lifeline for struggling Americans to keep their businesses afloat during the COVID-19pandemic.

But the report states that it was the allure of easy money that drew fraudsters to the programs.

The report estimates that at least 17% of the $1.2 trillion doled out by the Small Business Administration was stolen by fraudulent pandemic claims. That represents an estimated $200 billion loss of federal funds, perhaps the largest amount of money ever lost by a government program.

During the initial roll-out in 2020, Inspector General of the SBA Mike Ware noted the importance of dependable internal controls within the SBA in order to mitigate the risk of fraud.

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One of the findings contends that the agency "weakened or removed the controls necessary to prevent fraudsters from easily gaining access to the programs."

Michael Horowitz, the Chairman of the Pandemic Response Accountability Committee, recently told ABC News that he agrees that mistakes were made.

"A decision was made at the outset of the pandemic: speed was the key," said Horowitz. "We're going to send the money out. We're not going to vet people. That was a bad choice. It was the wrong choice. It never should have happened."

A spokesperson emphasized that the vast majority of those fraudulent loans went out during the first nine months that those programs were around, under the Trump administration.

This is just the latest look into these funds, and one report has been worse than the next.

A recent investigation by the Associated Press estimates the program had more than $280 billion in losses.

Still, a senior White House official said the administration believes the figures are far lower.

"We think the amount of likely or actual fraud is significantly less — significantly under $100 billion, perhaps around $40 billion," said Senior Advisor Gene Sperling.

The new report also states that as of last month, oversight had led to more than 1,100 indictments, 803 arrests, and more than 500 convictions.

The report also indicates some of that money has been recovered.

Between the SBA and federal investigators, they've been able to get back about $30 billion.