[JustTheNews] Federal committee found tens of thousands of dishonest or erroneous Paycheck Protection Program applications.
In a new investigation, a federal committee tasked with tracking COVID-19 assistance fraud found tens of thousands of dishonest or erroneous Paycheck Protection Program applications.
| It was designed that way, to get money into the economy as quickly as possible. |
The Pandemic Response Accountability Committee (PRAC) report, released this month, revealed more than 40,000 instances when applicants for more than $860 million in taxpayer-funded PPP loans “significantly misrepresented their incomes.”
The Small Business Administration, which distributed the PPP loans, allocated more than $1 trillion in taxpayer-funded pandemic assistance to more than 10 million small businesses.
A recent report from the Government Accountability Office showed that nearly 2 million potentially fraudulent SBA applications – including the 40,000 PPP applications – still require investigation, as The Center Square reported.
PRAC said it achieved its findings by comparing the reported incomes of sole proprietor PPP applicants with the reported incomes of applicants for Department of Housing and Urban Development (HUD) assistance grants using the same personally identifiable information.
Data analysts found “significant [income] misrepresentations…where the derived income for PPP applicants was at least 10 times greater than the income reported to HUD by housing assistance recipients.”
PRAC said the inconsistencies could be due to fraud, identity theft, data entry errors, or data timing issues.
One confirmed example of fraud involved an applicant who received a $20,833 PPP loan based on his alleged $100,000 annual income reported to SBA. But the same individual reported an annual income of $600 to HUD, while claiming to own multiple other businesses receiving nearly $900,000 in PPP loans and other pandemic aid.
Since the pandemic, when the federal government cumulatively spent $5 trillion in COVID-19 related aid, lawmakers and organizations have held oversight hearings into at least $200 billion lost to fraud, only $5 billion of which has been recovered.
Most of that fraud was preventable, according to PRAC and other watchdog groups.
“We hope that by sharing this potential fraud scheme with the public and the oversight community we can alert (1) Offices of Inspectors General (OIGs) to be on the lookout for similar cross-program schemes, (2) program implementers to build better internal controls and checks upfront to mitigate this risk, and (3) policymakers to consider issues related to cross-agency risks including income verification,” PRAC concluded.
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