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Van Duyne Pens Letter to SBA to Claw Back Fraudulent COVID Funds

Van Duyne Investigates the SBA

WASHINGTON, D.C. – Today, Small Business Subcommittee on Oversight, Investigations, and Regulations Chairman Beth Van Duyne (R-TX) issued the following statement after penning a letter to Small Business Administrator Isabella Guzman seeking information on the SBA’s actions on retrieving COVID-program fraudulent loans.

“As the Small Business Administration (SBA) doled out an unprecedented amount of relief money, the agency refused to implement common-sense guardrails to protect American taxpayers,” said Rep. Van Duyne. “This ineptitude allowed criminals to steal as much as $85 billion in the form of potentially fraudulent loans. Even worse, the SBA does not seem to care about recouping these funds – by deciding not to collect on PPP and EIDL loans below a threshold, they’ve chosen to give a free pass to fraudsters. As Chairman of the Subcommittee on Oversight, Investigations, and Regulations, I am working to claw back as much of the stolen funds as possible and prevent another theft of taxpayer dollars.”

Read the full letter here.

Read key excerpts of the letter:

“The SBA Office of Inspector General (OIG) found that SBA did not have an organizational structure with clearly defined roles, responsibilities, and processes to manage and handle potentially fraudulent PPP loans across the program.” In fact, as discussed at the hearing, the OIG noted rampant fraud in all the pandemic related programs managed by the SBA. The OIG found about 70,000 loans totaling more than $4.6 billion in the PPP and $78.1 billion in the EIDL were potentially fraudulent. On April 1, 2022, the SBA established the Fraud Risk Management Board (FRMB) to provide anti-fraud oversight and coordination at the SBA, but during the hearing you were unable to provide an update on the individuals running this board or what, if any, progress they are making.

“During the hearing, you also stated that the SBA has successfully clawed back about $29 billion of the $82.7 billion in potential fraud flagged by the SBA, but were unable to share specifically where that money went. It is imperative that we understand where these funds went and how the SBA is working to prevent future fraud. We therefore request the following documents and information, covering the time period March 27, 2020 to the present, as soon as possible but no later than May 3, 2023:”

  1. A list of all potentially fraudulent loans in both PPP and COVID EIDL and the date each loan was disbursed.
  2. All “indicators” used by the SBA to determine whether a loan was fraudulent.
  3. What actions the SBA has taken to claw back the fraudulently obtained funds and what tools are available to the SBA to get these taxpayer fund returned.
  4. A full accounting of all loans comprising the reported $29 billion in fraudulent loans the SBA clawed back.
  5. List of the SBA’s Fraud Risk Management Board members, including the program manager, and a status update on their work.