The U.S. government may have awarded $5.4 billion in coronavirus aid to small businesses with potentially ineligible Social Security numbers, another indication that federal haste earlier in the pandemic opened the door for widespread waste, fraud and abuse. The watchdog overseeing stimulus spending — the Pandemic Response Accountability Committee (PRAC) — offered the estimate, reports the Washington Post. It came as House Republicans are holding their first hearing this week to study the $5 trillion in federal stimulus aid approved since spring 2020. The suspected fraud targeted two of the most generous emergency initiatives: the Paycheck Protection Program (PPP), and the Economic Injury Disaster Loan (EIDL). Started under President Trump — and managed by the beleaguered Small Business Administration — $1 trillion in loans and grants went to help cash-strapped companies stay afloat during the worst economic crisis since the Great Depression.
The money served as a wellspring for criminal activity, as malicious actors took advantage of SBA and its poor oversight to bilk the government out of seemingly massive sums. PRAC found that the SBA failed to prevent a wave of applications from collecting federal money using suspect Social Security numbers. Studying more than 33 million applicants, the PRAC uncovered more than 221,000 ineligible Social Security numbers on requests for small-business aid. That included thousands of cases where the number was “not issued” by the government, for example, or it did not match the correct name and birth information. More than a quarter of those applications, using nearly 70,000 suspect Social Security numbers, were approved between April 2020 and October 2022 despite the questionable data — and the government loaned those applicants about $5.4 billion, the watchdog found. SBA spokeswoman Christina Carr called the report a “prime example of why it was a mistake not to implement additional anti-fraud measures during the Trump administration.” Gene Sperling, a top White House official tapped to oversee federal pandemic spending, said President Biden and his aides have worked to “reinstate strong anti-abuse measures in these emergency small business programs.”