The report was released by the inspector general of the Small Business Administration
More than $200 billion may have been stolen from two large COVID-19 relief initiatives, according to new estimates from a US federal watchdog, Fox News reported. Notably, the watchdog was investigating federally funded programs that helped small businesses survive the pandemic.
On Tuesday, the inspector general of the Small Business Administration (SBA) released a report that gives the largest estimate yet of how much of the $1.2 trillion disbursed by the SBA was stolen by fraudulent claims.
The report focused on two programs created during a pandemic to support small businesses, both under the SBA's purview: the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL).
The report said, "At least 17 percent of all COVID-EIDL and PPP funds were disbursed to potentially fraudulent actors".
The fraud estimate for the COVID-19 Economic Injury Disaster Loan program is more than $136 billion, which represents 33 percent of the total money spent on that program, according to the report. Meanwhile, the Paycheck Protection fraud estimate is USD 64 billion.
Of the 22.1 million loans and grants disbursed, 21%, or 4.5 million, were handed to potential fraudsters.
"In the rush to swiftly disburse COVID-19 EIDL and PPP funds, SBA calibrated its internal controls. The agency weakened or removed the controls necessary to prevent fraudsters from easily gaining access to these programs and provide assurance that only eligible entities received funds. Because of the “allure of ‘easy money,'” an overwhelming number of fraudsters were drawn to the program and took “advantage of the economic crisis and [diverted] funding intended for deserving eligible American small business owners,'' the report said.
As a result, multiple federal agencies are working to recover the stolen money. So far, nearly $30 billion in COVID-19 EIDL and PPP funds have been seized or returned to the SBA, the inspector general said.
The report also noted that as of May, the oversight has resulted in 1,011 indictments, 803 arrests, and 529 convictions—all related to Covid-19 PPP and EIDL fraud, as per Forbes. The inspector general's office is still working on tens of thousands of investigative leads on waste, fraud, and abuse in the loan programs, expected to continue for years.
In a 2021 interview with ABC News, SBA Inspector General Hannibal Mike Ware predicted that the amount of fraud from Covid relief programs would be “larger than any government program that came before it.”