‘Deeply disturbing’: U.S. watchdog uncovers $5.4 billion in potentially fraudulent COVID-19 loans — obtained using over 69,000 sketchy Social Security numbers

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.

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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.

“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.