Sen. Joni Ernst (R-IA) said a Government Accountability Institute (GAO) report found lax oversight by the SBA over hundreds of billions of dollars in coronavirus aid loans and grants doled out during the Biden-administration was either “jaw-dropping incompetence or willful negligence.” Ernst cannot decide which is worse.
The GAO, a nonpartisan watchdog, released a study on the SBA’s four-step antifraud process as the SBA distributed over $1 trillion in loans and grants to over ten million small businesses during the 2020-2022 coronavirus pandemic.
The four-step process consisted of screening, data analytics, human-led reviews, and referrals of likely fraudulent applications to the SBA’s Office of Inspector General (OIG).
Even though the process and various steps were introduced at different times for the COVID-19 Economic Injury Disaster Loan (COVID-19 EIDL) and the Paycheck Protection Plan (PPP), the “SBA did not implement the process until more than half of the programs’ funding had been approved, thus limiting its impact in preventing fraud,” the GAO wrote.
“Specifically, for COVID-EIDL, over $210 billion of an eventual $385 billion (or about 55 percent) had already been disbursed before the full process was implemented. For the PPP, over $525 billion of an eventual $800 billion (or about 66 percent) had already been approved,” the watchdog group continued.
The GAO recommended that SBA Administrator Kelly Loeffler “should collaborate with the SBA’s OIG to develop an effective plan, including the data elements to be provided and the process to be used, for referrals of potential or likely COVID-19 EIDL fraud cases.”
Caitlin O’Dea, a spokesperson for Administrator Loeffler, told Breitbart News that the SBA is working around the clock to hold those who committed fraud accountable. She said in a statement:
The SBA fully supports all efforts to crack down on fraud within its loan programs – in stark contrast to the last Administration, which failed to investigate or address more than $200B in estimated pandemic-era fraud. Under Administrator Loeffler, the SBA has already taken action to enhance fraud prevention and will continue working to hold pandemic-era fraudsters accountable in partnership with law enforcement.
The SBA will not be alone in these efforts.
Sen. Joni Ernst (R-IA), the chair of the Senate Small Business Committee and the chair of the Senate Department of Government Efficiency (DOGE) Caucus, said that she remains committed to working with the SBA to find the coronavirus pandemic-era fraud, recouping the funds, and holding the criminals accountable.
“The Biden SBA was completely asleep at the wheel pursuing fraud in pandemic relief programs,” Ernst said in a statement to Breitbart News. The agency’s shortcomings prevented millions of investigations from occurring and allowed potential criminals to get away. This report exposes either jaw-dropping incompetence or willful negligence by the bureaucrats overseeing these programs.”
DOGE recently revealed that $312 million in coronavirus aid fraud went to children under 11 years-old; Ernst said that this fraud was just the “tip of the iceberg.”
Ernst’s office has catalogued many of the ways that coronavirus aid has been abused:
While SBA ran the relief programs on a “first come, first serve” basis, the money ran out quickly, and many qualifying businesses were turned away as felons, gang members, and drug traffickers raked in cash. Some swindlers uploaded pictures of Barbie dolls as photo identification on SBA loan applications that were approved.
One alleged fraudster took home $8 million while nearly 2,000 struggling restaurants in Iowa were left empty-handed. Ernst detailed this in her report titled Small Business COVID-19 Fraud: Three Years Later State of Play – where she outlined the Biden SBA’s effort to discount the full extent of fraud and cast doubt on the legitimate estimates made by expert investigators.
An 2023 Ernst and Sen. Rand Paul (R-KY) investigation found that there was $5.4 billion in total loans to fraudulent Social Security numbers.
Sean Moran is a policy reporter for Breitbart News. Follow him on X @SeanMoran3.
Sean Moran is a policy reporter for Breitbart News. Follow him on X @SeanMoran3.
Sean Moran is a policy reporter for Breitbart News. Follow him on X @SeanMoran3.
Sean Moran is a policy reporter for Breitbart News. Follow him on X @SeanMoran3.
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