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Feds find thousands of phony or erroneous COVID-19 relief applications

Craig Nigrelli (Reporter )
A new investigation says thousands of small business owners may have misrepresented their incomes to secure emergency pandemic relief.
Image credit: Getty Images

Summary

Loan income discrepancies

According to the federal Pandemic Response Accountability Committee (PRAC), an investigation found "significant income discrepancies" in applications for more than $860 million worth of approved small business loans during the COVID-19 pandemic.

Allegations of fraud

The PRAC identified possible fraud, identity theft, data entry errors or data timing issues as explanations for the inconsistencies found in loan applications. Lawmakers have also held hearings regarding $200 billion of government relief funds alleged to be lost to fraud at both the federal and state levels.

Investigation examples

One example involved a criminal group that created fake businesses and bank accounts, resulting in "lucrative benefits," with six people convicted of fraud and some sentenced to prison and ordered to repay over $1.6 million.

Full story


While the COVID-19 pandemic is technically over, the fallout continues years later. A new investigation by the federal Pandemic Response Accountability Committee (PRAC) found tens of thousands of cases in which loan applicants may have misrepresented their income. 

How much money does the case involve?

According to its website, the PRAC oversaw more than $5 trillion in pandemic relief programs and spending. It found “significant income discrepancies” in applications for more than $860 million worth of approved small business loans.

The Small Business Administration (SBA) distributed those small business loans, doling out more than $1 trillion in taxpayer dollars to more than 10 million small businesses across the United States. The investigation implicates about 40,000 of those 10 million small businesses.

Allegations of fraud or identity theft

Unbiased. Straight Facts.TM

The Pandemic Response Accountability Committee says it found more than 40,000 cases of incorrect applications for COVID-19 relief money, totalling over $860 million in assistance.

The committee compared the data of applicants who received benefits from the Department of Housing and Urban Development (HUD) and also qualified to get money from the SBA’s Paycheck Protection Program (PPP). The investigation found that in more than 40,000 cases, the applicant represented a much higher income to the Small Business Administration than they did to HUD. 

PRAC said that when people or companies misrepresented their incomes, they took benefits away from the people the program was intended to help. The committee said the inconsistencies could be due to fraud, identity theft, data entry errors or data timing issues. 

Lawmakers previously held hearings regarding $200 billion of government relief money that they say was lost due to alleged federal and state fraud. One example included a criminal conspiracy in which a group set up fake businesses, created more than 100 bank accounts and received lucrative benefits. Six people were convicted of fraud in that scheme. Authorities sentenced two to prison and required them to pay back more than $1.6 million. 

The PRAC says it is releasing this report to help federal agencies learn from past mistakes and prepare for distributing future emergency aid.

Chris Field (Senior Executive Producer) and Matt Bishop (Digital Producer) contributed to this report.
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Why this story matters

A federal investigation has uncovered tens of thousands of cases where applicants for COVID-19 pandemic relief loans may have misrepresented their income, raising concerns about the effectiveness and oversight of emergency aid distribution during the pandemic.

Pandemic relief fraud

The article highlights findings from the Pandemic Response Accountability Committee that suggest issues with income misrepresentation and possible fraud in some pandemic relief loan applications.

Oversight and accountability

The investigation underscores the importance of federal oversight in managing large-scale emergency programs and learning from past errors to strengthen future aid distribution.

Economic impact

Allegations of improper or fraudulent loan allocations may have prevented relief funds from reaching the intended recipients, affecting the overall effectiveness of government pandemic response.

Sources

  1. The Center Square
  2. Pandemic Response Accountability Committee

Sources

  1. The Center Square
  2. Pandemic Response Accountability Committee