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The U.S. government may have awarded roughly $5.4 billion in coronavirus aid to small businesses with potentially ineligible Social Security numbers, offering the latest indication that Washington's haste earlier in the pandemic opened the door for widespread waste, fraud and abuse.
The top watchdog overseeing stimulus spending — called the Pandemic Response Accountability Committee, or PRAC — offered the new estimate in an alert issued Monday, just days before House Republicans are set to hold their first hearing to study the roughly $5 trillion in total federal stimulus aid approved since 2020.
The alleged wave of grift targeted two of the government's most generous emergency initiatives, the Paycheck Protection Program, known as PPP, and the Economic Injury Disaster Loan, dubbed EIDL. Started under President Donald Trump — and managed by the beleaguered Small Business Administration — the loans aimed to help cash-strapped companies stay afloat financially during the worst economic crisis since the Great Depression.
But the money also served as a wellspring for criminal activity, as malicious actors took advantage of SBA and its poor oversight to bilk Washington for massive sums. In the latest example, the PRAC found that SBA failed to prevent a wave of applications from collecting federal money using suspect Social Security numbers.
Studying more than 33 million applicants, the PRAC uncovered more than 221,000 applicants that appeared to seek aid using ineligible Social Security numbers. That included thousands of cases where the number itself was "not issued" by the government, for example, or it did not match the correct name and birth information.
More than a quarter of those applications, nearly 70,000, were approved between April 2020 and October 2022 despite the suspect information — and the government loaned those applicants about $5.4 billion, the report indicates.
The revelations affirmed the immense task the government faces to keep watch over more than $5 trillion in emergency aid approved since 2020. The risk of loss has been especially great at SBA, which already has granted full or partial forgiveness to more than 93 percent of its PPP recipients.
The fraud is also likely to galvanize GOP critics who initially helped approve PPP, EIDL and other key pandemic programs. The House Oversight Committee — now run by Chairman James Comer (R-Ky.) — is slated to hold a hearing on COVID fraud Wednesday featuring testimony from Michael Horowitz, the director of PRAC.
The SBA did not immediately respond to a request for comment.
Comer, who spoke Monday at an event hosted by the National Press Club, appeared to foreshadow his growing alarm with the fate of the country's stimulus dollars.
"I don't think history will be kind to the PPP loan program," he said.
(Social Security Administration/Facebook)
