Loading...

US Failed to Stop Fraud in COVID Loan Program, Clyburn Says

June 14, 2022by Jennifer McDermott and Jeff Mulvihill, Associated Press
US Failed to Stop Fraud in COVID Loan Program, Clyburn Says
House Majority Whip Jim Clyburn addresses the South Carolina Democratic Party convention on Saturday, June 11, 2022, in Columbia, S.C. (AP Photo/Meg Kinnard)

The U.S. government failed to take basic steps at the beginning of the coronavirus pandemic to prevent fraud in a federal aid program intended to help small businesses, depleting the funds and making Americans more vulnerable to identity theft, the head of a congressional panel examining the payouts said Tuesday.

Democratic Rep. James Clyburn blamed the Trump administration for the problems in the COVID-19 Economic Injury Disaster Loan program, overseen by the U.S. Small Business Administration, amid revelations that as much as 20% of the money — tens of billions of dollars — may have been awarded to fraudsters. Clyburn said the Biden administration has implemented measures to identify potential fraud and directed loan officers to address indications of fraud before approving loans, while Congress has invested in fraud prevention and accountability.

House Majority Whip Steve Scalise said the Trump administration and Congress worked together at the beginning of the pandemic, when uncertainty was rampant and much of the economy was locked down, to deliver “much needed relief as fast as we could to help save as many jobs as we could” and prevent the economy from crashing.

Scalise, R-La., said Democrats are undermining the successes, and he asked why the House Select Subcommittee on the Coronavirus Crisis wasn’t looking into the enhanced unemployment insurance program that was plagued by “egregious and unprecedented fraud” and is a “leading contributor” to the high inflation rates.

“I hope that in our oversight of pandemic programs, my Democratic colleagues will be able to recognize the difference between what was needed to save the economy during an unprecedented pandemic versus pushing a partisan, inflation-inducing agenda,” he said.

Clyburn, of South Carolina, said the subcommittee will determine what more must be done to bring perpetrators of fraud to justice and how to protect future emergency programs.

Clyburn said he supports extending the statute of limitations for this kind of fraud case to give investigators more time to untangle complex potential crimes. Witnesses at the hearing suggested standardizing the data collected by states to make it easier for federal authorities to spot possibly fraudulent patterns.

The SBA’s Office of the Inspector General has estimated that at least $80 billion distributed from the $400 billion EIDL program could have been fraudulent, much of it in scams using stolen identities. Separately, staff for the select subcommittee on Tuesday issued a report that found that some 1.6 million applications for the loans may have been approved without being evaluated.

The subcommittee’s staff found that those loans were approved in batches of up to 500 applications at a time. Applications were allowed to move through even if they had certain red flags for fraud — such as international client locations or phone numbers not associated with the business or the owner — so long as they weren’t too many of them. The process meant that while software analyzed the applications, they were not even opened by officials before being greenlighted for funding.

The SBA’s inspector general, Hannibal “Mike” Ware, said initially there was a huge struggle at the agency about the “need for speed versus the need for controls.” He said he was “screaming” about the need for fraud controls. He said the most concerning thing was self-certification, which meant applicants could say they had a business or a certain number of employees and get money.

The subcommittee hearing also tackled broader fraud concerns with the flood of pandemic aid from multiple federal government programs for states, local governments, businesses and the unemployed. The $5 trillion in total aid, delivered in a series of bills signed by Presidents Donald Trump and Joe Biden, have come with numerous complications.

Fraud overwhelmed enhanced unemployment insurance programs funded by the federal government and administered by the states. There was so much aid to governments that many struggled to find a way to spend it all under the original regulations. And there have been questions about whether the Paycheck Protection Program to keep employees working was worth it.

The Secret Service said in December that nearly $100 billion has been stolen from COVID-19 relief programs, basing that estimate on its cases and data from the Labor Department and the Small Business Administration. The White House downplayed the estimate, saying it was based on old reports.

The Federal Emergency Management Agency may have been double-billed for the funerals of hundreds of people who died of COVID-19, the Government Accountability Office said in April. States and cities continue to be slow to spend their pandemic relief money.

The select subcommittee said Tuesday that more than $10 billion allocated under two massive business loan programs has been returned because of investigations and bank actions. Federal prosecutors have charged nearly 1,500 people with crimes related to fraud against the government over the business loans and enhanced unemployment insurance programs.

The government’s Pandemic Response Accountability Committee says inspectors general for various federal agencies have at least 1,150 ongoing investigations into fraud from the different aid funds. Officials say it could take years to untangle all the problems.

___

McDermott reported from Providence, Rhode Island, and Mulvihill reported from Cherry Hill, New Jersey.

In The News

Health

Voting

Congress

November 22, 2022
by Dan McCue
Supreme Court Says Trump Must Give Tax Returns to Congress

WASHINGTON — The Supreme Court gave former President Donald Trump a little less to be thankful for this Thursday, clearing... Read More

WASHINGTON — The Supreme Court gave former President Donald Trump a little less to be thankful for this Thursday, clearing the path for the imminent handing over of his tax returns to a congressional committee. As is their custom, the justices did not explain the rationale... Read More

GOP's Lackluster Fundraising Spurs Post-Election Infighting

WASHINGTON (AP) — Trailing badly in his Arizona Senate race as votes poured in, Republican Blake Masters went on Tucker Carlson’s Fox... Read More

WASHINGTON (AP) — Trailing badly in his Arizona Senate race as votes poured in, Republican Blake Masters went on Tucker Carlson’s Fox News program and assigned blame to one person: Senate Minority Leader Mitch McConnell. “You know what else is incompetent, Tucker? The establishment. The people who control the... Read More

November 18, 2022
by Dan McCue
Hoyer Endorses Clyburn for New Leadership Role

WASHINGTON — The future of the leadership of the House Democratic Caucus took another turn Friday afternoon with outgoing House... Read More

WASHINGTON — The future of the leadership of the House Democratic Caucus took another turn Friday afternoon with outgoing House Majority Leader Steny Hoyer, D-Md., endorsing the candidacy of outgoing House Majority Whip Jim Clyburn, D-S.C., for assistant Democratic leader in the 118th Congress. "I have... Read More

November 18, 2022
by Dan McCue
Jeffries Announces Bid to Be Top Democrat in the House

WASHINGTON — Rep. Hakeem Jeffries, D-N.Y., made it official Friday morning, formally announcing his bid to replace outgoing House Speaker... Read More

WASHINGTON — Rep. Hakeem Jeffries, D-N.Y., made it official Friday morning, formally announcing his bid to replace outgoing House Speaker Nancy Pelosi, D-Calif., as the head of the party next year. Though it was no secret Jeffries would seek the job, he waited 24 hours after... Read More

November 17, 2022
by Tom Ramstack
Airlines Advised to Improve Access for Disabled Passengers

WASHINGTON — Airlines were forced to address turmoil about disability access Thursday in Congress at a time they already are... Read More

WASHINGTON — Airlines were forced to address turmoil about disability access Thursday in Congress at a time they already are embroiled in complaints from employees and passengers. Heather Ansley, a government relations executive for the Paralyzed Veterans of America, summed up many of the concerns for... Read More

Pelosi to Step Aside From Dem Leadership, Remain in Congress

WASHINGTON (AP) — House Speaker Nancy Pelosi said Thursday that she will not seek a leadership position in the new Congress, making... Read More

WASHINGTON (AP) — House Speaker Nancy Pelosi said Thursday that she will not seek a leadership position in the new Congress, making way for a new generation to steer the party after Democrats lost control of the House to Republicans in the midterm elections. Pelosi announced in a spirited... Read More

News From The Well