More than $200 billion may have been stolen from two major initiatives to help small businesses during the coronavirus pandemic, a new US watchdog estimates.
The numbers released today by the US Small Business Administration's inspector general are much higher than the office's previous projections.
The administration emphasizes how vulnerable the salary and loan protection programs in case of economic injuries caused by the coronavirus were to fraudsters, especially in the early stages of the pandemic.
The inspector general's report states that "at least 17 percent of all COVID-EIDL and PPP funds were disbursed to potentially fraudulent actors."
The estimate of fraud for the COVID-19 economic injury loan program is more than $136 billion, representing 33 percent of the total money spent on the program, according to the report.
In comments accompanying the report, a senior SBA official disputed the new figures.
SBA Acting Associate Administrator for Access to Capital Bailey DeVries said the inspector general's approach "is seriously flawed."
He alleges that because of this, the inspector general significantly overestimates fraud and unintentionally misleads the public into believing that the work that was done had a significant impact on fraud protection.
The Associated Press reported on June 13 that fraudsters potentially stole about $280 billion in emergency aid while another $123 billion was misspent.
The bulk of the potential losses are from two SBA programs, with the other from providing benefits to unemployed workers who suddenly lost their jobs due to the economic upheaval caused by the pandemic.
SBA Inspector General Hannibal Ware said today that the report uses investigative cases, previous (Inspector General) reporting and state-of-the-art data analysis to identify multiple fraud schemes.
An SBA spokesperson said today that "it is vital to clarify that 86 percent of probable fraud in the PPP and COVID-EIDL programs occurred in the first nine months of those programs.
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