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Committee on Small Business Hearing Examines the SBA and OIG Reports of Fraud in Pandemic Lending Programs

Committee Hearing Recap

WASHINGTON, D.C. – Yesterday, Congressman Roger Williams (R-TX), Chairman of the House Committee on Small Business, led a full Committee on Small Business hearing titled “Stolen Taxpayer Funds: Reviewing the SBA and OIG Reports of Fraud in Pandemic Lending Programs.” Chairman Williams issued the following statement recapping yesterday’s hearing.

“Despite Administrator Guzman’s absence, yesterday’s hearing shed light on the rampant fraud that occurred under the SBA’s watch. Unlike the SBA, this Committee is working on solutions to recoup these stolen funds, not sweep them under the rug. The OIG’s report which detailed an alleged $200 billion in pandemic fraudulent loans, warrants the full attention of this Committee,” said Chairman Williams. “Her failure to not appear before this Committee is truly a slap in the face to Main Street and to the taxpayers.”


Watch the full hearing here.

Below are some key excerpts from yesterday's hearing:

Chairman Williams: “Shortly after you released your fraud report, the SBA released a statement that expressed its concern that the IG's approach contained serious flaws. It significantly overestimated fraud and mislead the public. I don't know if I ever remember a time an agency ever accused their nonpartisan watchdog of misleading the American people and the congressional committees that are charged with their oversight. So, Mr. Ware, question, did you and all the employees within your office put together this report to lie about what occurred within these pandemic programs? Is that your goal?” Inspector General Ware: “Absolutely not. Our goal, like we have demonstrated from the beginning of the pandemic, is to be independent and keep an objective eye so that you can properly oversee these programs along with us. And I think that we've done that. I am super confident in this report.”

Rep. Van Duyne: “So with the SBA distributing approximately $1.2 trillion in COVID EIDL and PPP loans, the IG, who was trained and responsible for the investigatory process of the SBA, estimates over $200 billion was wasted. However, in order to save face to the public, the SBA, who has admitted they have no role in investigating fraud, reported roughly $36 billion in wasted spending. The $164 billion difference in wasted dollars alone is troubling. But what concerns me the most is the SBA, who again has said that they are not an investigatory entity, has wasted additional time and dollars to put out a completely false report to cover their previous waste… Mr. Ware, just looking at typical fraud investigation case on average, how long does a standard OIG fraud investigation take?” Inspector General Ware: “About 250 days.” Rep. Van Duyne: “So do you agree with the SBA? They were able to meaningfully process 3,000 human led reviews of potentially fraudulent loans per day?” Inspector General Ware: “Absolutely not.”

Rep. Stauber: “On July 27, 2023, the Small Business Administration Inspector General issued his report underscoring how vulnerable the PPP and EIDL programs were to fraudsters. Not three hours later, the SBA Administrator's office released a contradicting report. Three hours later, unfortunately, the SBA and the Biden Administration have failed to provide a detailed account of how this significant misappropriation of taxpayer funds occurred and how they and how they plan to recover these stolen items or funds, rather. Given the roughly $160 billion discrepancy between the OIG report and the SBA report, it would be pertinent to hear from both parties as to why the discrepancy… On multiple occasions, the Office of the Inspector General has described SBA’s data tracking environment as informal and ad hoc as the designee to investigatory body for the SBA. The OIG holds the authority to shed light on this matter. Therefore, I would appreciate some insights on the following. Inspector General, where, aside from the Inspector General's Office, do you consider the SBA to be the subject matter experts in fraud investigation?” Inspector General Ware: “No.” Rep. Stauber: “How much weight should we give to the space assessments of your fraud investigation?” Inspector General Ware: “Well, I would say that SBA is not positioned to define fraud for the Office of Inspector General.”