Internal emails show the tiny Business Administration struggled to prevent fraud in July and August in its disaster commercial loan program, despite leading the general public to believe otherwise, a report published Wednesday by the Project on Government Oversight revealed.
The government watchdog group said the emails concerned the agency’s Economic Injury Disaster Loan program, which has provided quite $188 billion through 3.5 million loans to assist businesses impacted by coronavirus pandemic shutdowns.
The finding contrasts statements made by SBA Administrator Jovita Carranza that safeguards were in situ to stop fraudulent loans.
The SBA military officer reported in late July that there’s “potentially rampant fraud” within the program. In response, Carranza said the watchdog is wrong “to portray SBA’s loan review process together without a filter, approving everything coming through,” adding the SBA “is doing all it can to scale back the danger of fraud on the loan side.”
The inspector general’s report states the SBA’s Office of the military officer received complaints of quite 5,000 instances of suspected fraud, with nine financial institutions reporting a combined total of quite $187 million in suspected fraudulent transactions.
An SBA insider told the watchdog group the agency could have prevented much of the fraud through better training, systematically verifying applicants’ tax information and requiring photo identification from all loan applicants.
“The lack of any quite robust fraud mitigation on the front before the cash went out the door was extremely concerning to the source, and that they supplied this documentation to copy their claims,” Nick Schwellenbach, a senior investigator with the project, told Politico.
The emails demonstrate a involve rapid response to ongoing widespread fraud.
The companion Paycheck Protection Program has also been subject to widespread fraud, with the Department of Justice releasing information on individuals attempting to get millions in fraudulent small business loans for private use.