The Small Business Administration’s top watchdog says the agency may have funded international criminal organizations
Patrick Hauf • September 13, 2022 4:25 p.m.
According to a report by the agency’s inspector general, the Small Business Administration has awarded up to $1.3 billion in pandemic relief to unqualified foreign applicants who may have included international criminal organizations.
The report, released on Monday, revealed that the SBA approved and distributed 41,638 loans and grants to foreign applicants between March 20, 2020 and November 12, 2021, through the Economic Disaster Loan Program. Congress has ordered the SBA to provide these grants to companies located in the United States that have been affected by the pandemic, but the agency has acknowledged that it has failed to provide proper oversight of awards given to foreign entities. . The report found that the SBA had approved 3,097 grants for applicants in six unspecified “high-risk” countries, distributing $14.3 million to recipients.
“The numerous requests submitted from foreign IP addresses are an indication of potential fraud that may involve international criminal organizations,” the report concludes.
The report is not the first to identify widespread fraud across the program. A congressional oversight investigation in June concluded that 41% of the 3.9 million approved loan applications may not have been reviewed by the agency.
The agency’s report comes as the SBA’s Paycheck Protection Program faces similar criticism over widespread potential fraud. A May inspector general report concluded that the agency “lacks an organizational structure” to deal with fraud. The unions, which were not eligible for the PPP, received $36.7 million in loans under the program, the Washington Free tag reported.
Christina Carr, a spokeswoman for the SBA, said the Biden administration has worked to better oversee pandemic relief policies implemented under the Trump administration.
“SBA has been successful in shutting down most applications from foreign IP addresses and is committed to ensuring that effective fraud controls are in place for future programs,” Carr told the Free tag.
The potential fraud detailed in the report, however, dragged on for the first 10 months of the Biden administration, and EIDL claims stopped in January. Rep. Blaine Luetkemeyer (R., Mo.), a ranking member of the Small Business Committee, said the inspector general’s report shows there are still not enough measures in place for the agency to can track fraud.
“The SBA is not equipped with the infrastructure to handle large-scale direct lending programs such as EIDL,” Luetkemeyer told the Free tag. “With the already difficult task of recovering fraudulent funds now compounded by potential foreign criminal elements, the SBA requires significant programmatic reforms to prevent even more losses.”