WASHINGTON (AP) — According to a federal watchdog’s estimates, more than $200 billion may have been stolen from two major COVID-19 relief programs. These estimates highlight the vulnerability of the Paycheck Protection and COVID-19 Economic Injury Disaster Loan programs to fraud during the early stages of the pandemic.
The Small Business Administration inspector general’s report states that “at least 17 percent of all COVID-EIDL and PPP funds were disbursed to potentially fraudulent actors.” The COVID-19 Economic Injury Disaster Loan program is estimated to have experienced fraud totaling over $136 billion, representing 33 percent of the program’s total funds. The fraud estimate for the Paycheck Protection program is $64 billion.
However, a senior SBA official disputed these new numbers, stating that the inspector general’s approach contains serious flaws that overestimate fraud. The official argues that the work done together had a significant impact in protecting against fraud.
Previously, the Associated Press reported that scammers and swindlers potentially stole about $280 billion in COVID-19 emergency aid, with an additional $123 billion wasted or misspent. The potential losses mainly come from the two SBA programs and another program providing unemployment benefits. Combining these losses with the new fraud estimates aligns with the federal government’s reported $276 billion in potential fraud.
Despite these figures, a senior White House official overseeing pandemic relief spending stated that the majority of the fraud occurred during the first nine months of the pandemic under the Trump administration. The official expressed concern over the unacceptably high amount of fraud, which is estimated to be significantly less than $200 billion.
The SBA inspector general stated that this report is just the beginning, as there is a backlog of over 90,000 actionable leads into pandemic relief fraud. The agency has issued its own report detailing the anti-fraud measures it has implemented.
Fraud in pandemic unemployment assistance programs is estimated to be $76 billion, and an additional $115 billion was mistakenly distributed to ineligible recipients, according to congressional testimony. The Biden administration has implemented stricter rules and proposed a plan to boost law enforcement efforts against pandemic relief fraudsters.
The $200 billion in potential fraud has had consequences, including inflated house prices, according to a recent study. The study found that fraudulent Paycheck Protection loans led to an increase in housing prices in ZIP codes with high fraud rates. These unintended consequences of fraud impact individuals who paid inflated prices for their homes.
In conclusion, the estimates of potential fraud in COVID-19 relief programs are substantial and highlight the need for stronger measures to combat fraud and protect taxpayers’ funds.