The Small Business Administration's (SBA) oversight office revealed that more than $200 billion earmarked for loan programs to help companies affected by the COVID-19 pandemic were awarded to"potentially fraudulent actors."
In a new reportthe SBA's Office of the Inspector General (OIG) indicated that at least 17% of the $1.2 trillion in federal funds which were assigned to the plans of Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) were stolen.
Sba Oig Report 23 09 by Verónica Silveri on Scribd
Federal funds used to purchase "luxury homes, diamonds, jewelry"
The report identified several theft scams employed by criminals. One was to use fake Social Security numbers of deceased citizens and incarcerated felons to apply for loans. In addition, it was discovered that much of the money was used to buy "luxury homes, gold coins, diamonds, jewelry, luxury watches, fine imported furniture, designer handbags, clothing."
The OIG identified that one of the agency's mistakes was not having a "sound internal control environment in place to approve and disburse funds." They also cite the speed with which the money was delivered to those who requested it. This immediacy prevented proper verifications of the companies to whom the loan was actually to be granted.
All loans identified as fraudulent were justified and explained in the report. SBA spokesman Han Nguyen noted:
We also believe it is important to note that the agency estimates that 86% of fraudulently obtained loans were originated in the first nine months of the first pandemic relief program.
OIG investigations have resulted in more than 1,000 indictments, 800 arrests and 529 convictions of individuals or companies who stole money intended for pandemic relief programs. In addition, nearly $30 billion of fraudulent money has been seized or returned.
