By taking advantage of gaps in the control of the disbursement of government relief funds and the COVID-19 outbreak, fraudsters and other bad actors profited from the situation.
Out of the $4.2 trillion that the US government has dispersed, about $280 billion may have been stolen, and an additional $123 billion may have been wasted or misapplied.
Unprecedented Fraud and Misuse of Federal Relief Funds
A US military, pastors, a former state lawmaker, a roofing contractor, and other people were all implicated in the theft.
Scammers were able to readily take advantage of the system in the early stages of the relief programs due to a lack of control and constraints.
Investigations are ongoing, and more than 2,230 people have been charged with fraud offenses relating to the pandemic.
The COVID-19 Economic Injury Disaster Loan and Paycheck Protection programs, which would grow to be worth more than a trillion dollars, were the two enormous relief operations that the organization was tasked with managing when the pandemic hit.
To assist failing businesses and their employees, the SBA’s staff had to quickly disburse funds. SBA moved from a walk to an Olympic sprint thanks to COVID-19.
An SBA inspector general’s report claims that between March 2020 and the end of July 2020, the organization approved 3.2 million COVID-19 economic damage disaster loans worth $169 billion while also putting into place the enormous new Paycheck Protection Program.
Massive Fraud Exposes Weak Safeguards and Oversight
The majority of the stolen money came from sizable assistance programs that President Biden inherited from the Trump administration and were designed to help small companies and unemployed people.
When the country was dealing with the severe effects of the pandemic, the fraudulent activities show a widespread plague of scams and swindles.
According to estimates, there has been fraud to the tune of tens of billions of dollars, probably even more.
By approving measures that quickly injected emergency aid into the economy, both former President Trump and former President Biden exposed the Small Business Administration to an unprecedented role in overseeing relief operations.
Due to intense pressure to disperse cash rapidly, the agency abandoned controls and permitted self-certification by borrowers.
Fraudulent actions were made easier by the lack of thorough reviews and the use of existing databases.