WASHINGTON–There are “strong indicators of widespread potential fraud”—including as much as $45 billion in duplicative payments—in the SBA’s Economic Injury Disaster Loan (EIDL) and Advance Grant program, according to a new report from the agency’s Office of Inspector General.
Inspector General Hannibal “Mike” Ware issued a management alert to inform the agency it had been inundated with contacts to investigative field offices and the complaint hotline.
“OIG received complaints of more than 5,000 instances of suspected fraud from financial institutions receiving economic injury loan deposits,” the OIG said in a statement. “Nearly 3,800 of those reported instances of suspected fraud came from only six financial institutions. An additional 1,220 reports of suspected fraudulent transactions have come in from other financial institutions. Nine financial institutions have reported a combined total of $187.3 million in suspected fraudulent transactions.”
In addition, the OIG said from the inception of the Economic Injury Disaster Loan and Advance Program in March until May 19, the office received 465 hotline complaints by May 19, 2020. By June 26, 2020, the number of OIG hotline complaints had increased to 1,038. Of these, 692 complaints were about potential fraud or scams.
“Additionally, we have found indications of deficiencies with internal controls related to disaster assistance for the COVID-19 pandemic,” the OIG said. “Our review of SBA’s initial disaster assistance response has identified $250 million in economic injury loans and advance grants given to potentially ineligible recipients. We have also found approximately $45.6 million in potentially duplicate payments.”
The OIG is calling for swift management action to engage financial institutions immediately to identify disbursements that may have been obtained fraudulently, recover disbursed funds, and prevent additional taxpayer losses.
The full report can be downloaded here.