Covid-19 Relief Fund Fraud: More than $280 Million stolen!

Covid-19 Relief Fund Fraud: More than $280 Million stolen!

According to a recent report from the Office of the Inspector General for the U.S. Small Business Administration, approximately $200 billion in COVID-19 relief funds allocated to small businesses may have been fraudulently obtained. The report indicates that fraudsters took advantage of vulnerabilities in the system, bypassing controls and gaining easy access to funds intended for struggling businesses affected by the economic crisis caused by the pandemic.

The report suggests that around 17% of the $1.2 trillion disbursed through the Small Business Administration’s pandemic assistance loan programs could have been stolen by fraudulent actors. Specifically, the COVID-19 Economic Injury Disaster Loan program is estimated to have suffered more than $136 billion in fraudulent activity, representing approximately 33% of the total funds disbursed. The Paycheck Protection Program is estimated to have experienced $64 billion in fraudulent activity.

These figures reflect a significant increase compared to previous estimates of fraud in these programs. Previously, the inspector general estimated fraud in the COVID-19 disaster loan program at $86 billion and fraud in the Paycheck Protection Program at $20 billion.

The Office of the Inspector General has been actively investigating over 1,000 cases since March 2020, and it expects that the overall estimate of potential fraud could fluctuate. The office has already identified more than $400 billion in loans that require further investigation.

In response to the report, a senior Small Business Administration official raised concerns about the inspector general’s methodology, suggesting that it overestimates the extent of fraud. The official pointed out that the SBA’s repayment data contradicts the estimated fraud rates, indicating a significantly lower rate of overdue borrowers. Additionally, the official emphasized that the majority of fraud occurred during the initial nine months of the programs and that the SBA has since implemented stronger fraud controls.

The report underscores the vulnerability of the pandemic relief programs, particularly in their early stages, to exploitation by fraudsters. The rush to provide emergency assistance led to weakened controls, making it easier for fraudsters to access the funds. Efforts have been made to enhance oversight and prevent further fraudulent activities in subsequent relief programs.

Despite the ongoing debate over the exact extent of fraud, it is clear that significant challenges exist in safeguarding relief funds and ensuring they reach those truly in need.

Source: COVID-19 pandemic relief: Over $200 billion may have been stolen (usatoday.com)

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Dr. Muhammad Hussain
Dr. Muhammad Hussain

MD, Entrepeneur & Administrator. Six years of experience, working in the field of clinical care, medical administration, and healthcare business.

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