Fraudsters bilked billions of dollars from the US government’s Covid relief programs meant to combat one of the worst pandemics in a century and help stabilize a crumbling economy. A new report from a federal watchdog says more than $200 billion was potentially stolen, upping the estimate from previous projections by the office of the Small Business Administration’s inspector general. That’s almost 10% of the nearly $4.2 trillion in Covid-related relief funds dispersed since 2020.
The astronomical figure of misspent taxpayer money was squandered during the rush to distribute funds as the nation faced an economic disaster and a growing death toll from the coronavirus pandemic. Investigators and outside experts say the federal government rushed to spend trillions of dollars while implementing too few safeguards to stop thieves from plundering the aid.
Investigators said the Small Business Administration weakened its controls in a rush to get the money out the door, resulting in costly errors. It also pushed through applications with false or misleading information. The agency’s investigators said the problems arose from an insufficient culture of accountability at SBA and its subsidiaries and from a lack of internal and external oversight.
Some of the most significant losses came from SBA’s Covid-19 Economic Injury Disaster Loan and Paycheck Protection Program schemes, intended to boost businesses that lost revenue due to business closures during the pandemic. The AP previously reported that about 17% of all funds related to those schemes were disbursed to potentially fraudulent actors. The figure was up from the office’s previous estimate of 15%. It underscored how vulnerable those programs were to fraudsters at a time when the US economy was suffering from overrun hospitals, closed schools, and shuttered businesses.
Investigators said Many criminals who took advantage of the programs victimized innocent people in their quest for funds. Sometimes, they used social security numbers stolen from dead people to apply for loans and obtain checks. The SBA said it has already recouped more than $30 billion in those fraudulent payments while investigators are still trying to trace and recover the rest of the stolen money.
White House American Rescue Plan coordinator Gene Sperling acknowledged the extent of the problem when he spoke to reporters earlier this year. He vowed to continue working with Congress on “putting the money back where it belongs, to people who need it the most.”
