SBA Had No Plan to Address Potential Fraud in $814B PPP Program

It’s no secret that the Paycheck Protection Program is rife with fraud, with some estimates putting total fraud up to $80 billion, nearly 10 percent of the $814 billion program.

Now, an investigation from the Small Business Administration Inspector General claims that the SBA created the program with no safeguards to protect against fraud, leading to what a former U.S. attorney has called the “biggest fraud in a generation.”

One of the IG’s most critical findings was, “The agency did not establish a centralized entity to design, lead, and manage fraud risk.” One might think that when pushing over $800 billion out the door, there would be someone in charge of making sure the money is going to the right people. They also “did not establish a sufficient fraud risk framework at the start of and throughout PPP implementation.”

Additionally, lenders that partnered with the SBA to help distribute loans, “were not always clear on how to handle PPP fraud or recover funds obtained fraudulently from the PPP that remained in the borrower’s account.”

Overall, the IG concluded that, “These control gaps weakened SBA’s ability to actively prevent and reduce fraud and increased the risk of fraudulent and ineligible applicants receiving PPP loans and loan forgiveness.”

Criminals have taken advantage of the lax oversight and enforcement to buy Teslas, mansions, and flights on private jets. So far, there have been 587 prosecutions of fraud claims, barely making a dent in the over 54,000 tips to the SBA’s fraud hotline, according to the report.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.