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 “Action Through Innovation: Private Sector Solutions to Recouping Stolen Pandemic Loan Funds.” Chairman Williams issued the following statement on yesterday’s hearing.

“When the pandemic started, the SBA took on an outsized role in restarting our nation’s economy. The PPP and EIDL programs were vital to saving small businesses, but that fact does not excuse $200 billion in fraud.” said Chairman Williams. “It’s a top priority of this Committee to recoup these stolen funds, and yesterday’s hearing looked at new, innovative private sector solutions to do just that. I’m very grateful for our four witnesses, and we’ll continue our work on holding these fraudsters accountable.”

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Watch the full hearing here.

Below are some key excerpts from yesterday’s hearing:

Chairman Williams: “Mr. Zerbe, during your time as senior counsel at the Senate Finance Committee, you crafted legislation under Senator Grassley to overhaul the IRS whistleblower program, as you said and my team and I are exploring the idea of creating a similar self-sustaining program which will allow any citizen to collect a commission if they report COVID fraud that results in money returned to the Treasury. So question is, do you think it would be possible to create this type of program that would empower everyday Americans to report fraud? And what are some of the things we should be aware of as we look to create this program?” Mr. Zerbe: “I think that's an excellent question, Mr. Chairman. I do, I've seen it in a number of government agencies have created these whistleblower award programs. And so I think they're very much the SBA is a good possibility in terms of also looking at creating a whistleblower reward program. You already have the Qui Tam False Claims Act, where they're bringing in a few cases in right now from out from attorneys, from whistleblowers, and that's had some success. But I think having in parallel with that, an in-house whistleblower award program will very much be a way to, as you say, commission to bring in the energy of the whistleblowers, their attorneys, their advisors to help the SBA move forward. So, yes, I think it's a very good candidate for the SBA to look at doing this.”

Rep. Lalota: “$200 billion. Let's put that in perspective. If Congress had that $200 billion back, we could give the average taxpayer a $2,000 tax cut. Or we could deter conflict with China by buying four new aircraft carriers, eight new submarines, and 27 new Navy destroyers. Or we could fully fund the state and local tax deduction, which a lot of my constituents would like. $200 billion, approximately one in five COVID loans were potentially fraudulent… Despite the widespread fraud, the SBA has downplayed the fraud stolen from our fellow taxpayers and has given a free pass to anyone who has stolen less than $100,000 by refusing to investigate those smaller loans… My question, sir, is what effect is the SBA's decision to not investigate those smaller loans have on future behavior?” Mr. Breeden: “I think it's very deleterious, sir. It sends a message that, okay, you can play around the edges and people just won't bother. And I think the principle that if you steal from your neighbors, you steal from your fellow citizens, that will always be a matter worthy of government's attention is the right message to send.”

Rep. Stauber: “Can any of the other three witnesses to my question to Ms. Miller, what should be the amount somebody should go to prison for, for stealing the taxpayer’s money? What is it? Mr. Breeden?” Mr. Breeden: “Well, sir, I think I think the threshold of what can be prosecuted should be fairly low. The theory of broken windows in law enforcement that you don't just because somebody only broke one window, if that happens across an entire city, it can have a very bad effect. So the level ought to be low. Then you have to have prosecutorial discretion where prosecutors have to look at and say, is this an egregious fraud or is it not? Rep. Stauber: “The broken windows theory. As a former police officer, I subscribe to that theory. Absolutely. You know, in Minnesota, we had Feeding Our future. It was a nonprofit meant to feed people. There were over $250 million of COVID-19 federal funds that were stolen. And these fraudsters bought luxury cars, real estate, and other unlawful futures. The Small Business Administration, I think, and our government and inspector general, we need to hold these people to task.”

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