WASHINGTON–The Small Business Administration’s Economic Injury Disaster Loan program improperly sent nearly $3.7 billion to recipients prohibited from receiving federal funds, according to a new government audit.
The findings related to the program, which was rushed into place during the pandemic, adds to a “mountain of evidence chronicling what the Small Business Administration’s inspector general, Hannibal Ware, called an ‘unprecedented amount of fraud’ in the agency’s pandemic relief efforts,” the New York Times said in its analysis.
As CUToday.info reported in October, Ware has chastised the agency for improperly doling out billions of dollars in relief money to self-employed people who made “flawed or illogical” claims of having additional workers on their payroll.
The Economic Injury Disaster Loan program distributed more than $210 billion during 2020 in loans and grants. And was designed to help businesses temporarily shut down because of the coronavirus.
A Failure to Check
But the agency failed to do a legally required check of applicants’ identifying details against the Treasury Department’s Do Not Pay system, according to the new Inspector General report.
“The Do Not Pay system was set up in 2011 to reduce improper payments to people who are dead, convicted of tax fraud or barred from receiving federal contracts, among other red flags,” the Times reported. “Mr. Ware found 117,135 applicants who got grants and 75,180 recipients who got loans despite matches in the system indicating a ‘high likelihood’ that the payments were improper.
In a response included in the report, the Small Business Administration said that on April 6, 2021 — more than a year after the disaster loan program began — it started checking Do Not Pay records before sending out funds. The agency also said it would review the loans and grants previously made to recipients who were flagged as ineligible, the Times reported.