Feb 1, 2023
Follow us on Google for more Moneywise news
Add us on GoogleA U.S. government watchdog has issued a “deeply disturbing” fraud alert over the widespread use of “questionable” Social Security numbers (SSNs) to get pandemic loans.
The Pandemic Response Accountability Committee (PRAC) found that 69,323 potentially fraudulent SSNs were used to obtain $5.4 billion from the Paycheck Protection Program (PPP) and the COVID-19 Economic Injury Disaster Loan (EIDL) program.
Advertisement
The shocking revelation dropped just days before a hearing by the Republican-led House of Representatives Oversight Committee on fraudulent pandemic spending was set to begin.
Thanks for subscribing!
The money news that actually matters.
By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.
“What PRAC has discovered is deeply disturbing,” said Sens. Rand Paul and Joni Ernst, who are demanding an investigation into COVID-19 loan fraud. “The extent of the fraud could be far greater.”
Suspicious SSNs fell through the cracks
The Small Business Administration (SBA) launched the PPP and EIDL programs in 2020 to help small businesses and their employees recover from the economic impacts of the pandemic.
Over the pandemic, the SBA provided about $800 billion in PPP loans and over $378 billion in EIDL loans — not all of them, it would seem, to deserving businesses and individuals.
But with that much money being distributed in pandemic relief — and so quickly — oversight was a must. And so the CARES Act created PRAC for just that purpose. In a review of more than 33 million PPP and EIDL applications, the committee uncovered 221,427 potentially invalid SSNs.
Of those, 69,323 sketchy SSNs made it through the system and were used in connection with 99,180 successful loan applications, amounting to $5.4 billion that was doled out between April 2020 and October 2022.
A further 175,768 of the red-flag SSNs were used in loan applications that weren't paid out. However, PRAC cautioned that these SSNs “could be used in a future attempt to obtain benefits from other government programs, and therefore warrant further scrutiny.”
To find the suspicious activity, PRAC’s Pandemic Analytics Center of Excellence (PACE) used publicly available Social Security Administration (SSA) data to identify suspicious SSNs, such as those not issued by SSA or those with inaccurate names and dates of birth.
Must Read
- The ultra-rich use these 5 real estate strategies to build wealth while they sleep — you can start with just $100
- Here’s the average income of Americans by age in 2026. Are you keeping up or falling behind?
- Insurance companies profit most from drivers who auto-renew without shopping around. Comparing 100+ quotes takes 2 minutes and costs nothing
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Probing pandemic fraud
What made these two programs particularly vulnerable to fraud, PRAC says, was the “elevated urgency” to hand out the funds in a timely manner.
Advertisement
“SBA’s initial approach to implement these programs quickly made billions of dollars available to millions of borrowers affected by the pandemic, but used few program controls to verify applicants’ eligibility prior to disbursing funds,” the committee explained in its fraud alert.
After the announcement, Paul and Ernst sent a letter to Hannibal Ware, Inspector General of the SBA, calling for “more scrutiny” into pandemic relief to assess the “true extent of fraudulent activity” in the government’s pandemic programs.
The senators went on to urge the SBA to work with the Department of Justice to “ensure that fraudsters are held accountable.”
If such an investigation does happen, it wouldn’t be the first examination of how pandemic funds were used. The SBA’s COVID-19 relief programs have already come under fire for how “hundreds of billions of taxpayer dollars spent under the guise of pandemic relief were lost to waste, fraud, abuse and mismanagement,” as House Committee on Oversight and Accountability Chairman Rep. James Comer put it.
The committee opened a hearing on Wednesday to probe how taxpayer dollars were used — or in their words “wasted” — in COVID-19 relief programs.
“We must identify where this money went, how much ended up in the hands of fraudsters or ineligible participants, and what should be done to ensure it never happens again,” Comer said in his opening remarks.
You May Also Like
- JP Morgan sees gold hitting $6,000/oz before 2027 — and a Gold IRA lets you hold the physical metal while deferring the tax bill. Get your free guide from Priority Gold
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.
