Government watchdog estimates U.S. lost $200 billion to COVID fraud
The U.S. government may have lost more than $200 billion in potential fraud through two COVID relief programs, according to estimates released Tuesday by the inspector general of the Small Business Administration.
Why it matters: The new figures are higher than the previous estimates and underscore the scale to which fraudsters targeted the pandemic relief programs.
Driving the news: Approximately 17% of all funds to the Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loan (EIDL) programs went to potentially fraudulent actors, per the report.
- The watchdog group identified examples of how the fraudsters used the funds, which were intended to boost businesses as they were struggling through the pandemic.
- One group "used taxpayer funds to buy luxury homes, gold coins, diamonds, jewelry, luxury watches, fine imported furnishings, designer handbags, clothing, and a luxury motorcycle," per the report.
The other side: The SBA refuted the report's findings and said that it "contains serious flaws that significantly overestimate fraud and unintentionally mislead the public to believe that work performed with OIG had no significant impact in protecting against fraud."
- SBA spokesperson Han Nguyen said in a statement that "it is vital to clarify that 86% of the likely fraud ... occurred in the first nine months of those programs when, as the SBA IG has often noted, the rush to get funds out led to unwise decisions to pull down anti-fraud guardrails."
Zoom out: A previous inspector general report estimated that fraud from EIDL was $86 billion and fraud from PPP was $20 billion, the Associated Press reported.
- "I think the bottom line is regardless of what the (total fraud) number is, it emanates overwhelmingly from three programs that were designed and originated in 2020 with too many large holes that opened the door to criminal fraud, Gene Sperling, the White House American Rescue Plan coordinator, told AP in a June interview.