Fraudsters Stole More Than $200 Billion From Two COVID Relief Programs, Watchdog Estimates

Small Business Administration inspector general still has tens of thousands of pandemic relief fraud tips to pursue

June 27, 2023

Fraudsters and swindlers stole more than $200 billion from just two government programs aimed at providing relief during the coronavirus pandemic, according to a federal watchdog estimate.

A Small Business Administration inspector general released the numbers Tuesday, finding that "fraudulent actors" stole more than $136 billion from the Economic Injury Disaster Loan Program and $64 billion from the Paycheck Protection Program, two government initiatives that worked to keep small businesses afloat during the pandemic. Those figures mark a whopping 17 percent of all funds issued under the two programs, with a third of all Economic Injury Disaster Loan Program funds being stolen, according to the report.

While fraud in federal spending programs is nothing new, the numbers mark a substantial increase in past projections of stolen funds under the two initiatives. The Small Business Administration inspector general previously estimated that roughly $106 billion was stolen from the Economic Injury Disaster Loan Program and Paycheck Protection Program, according to the Associated Press.

The race to get COVID funds out the door left federal pandemic relief programs ripe for fraud—the government lost roughly 10 percent of all pandemic relief funds to fraud and improper payments, according to an Associated Press estimate, and those figures will likely continue to grow. Inspector General Mike Ware earlier this month told the outlet that he has tens of thousands of "actionable leads into pandemic relief fraud," leads that would take a century to sort through.

"We will continue to assess fraud until we're finished with the investigations on these things," Ware said.

Scammers, in some cases, used fake Social Security numbers from dead people and federal prisoners to exploit COVID unemployment relief. The Biden administration in 2021 and 2022 paid dead people almost a billion dollars in improper payments, a June Free Beacon report revealed. In one case, a Missouri man "collected $200,000 in checks for his dead mother for 26 years before the government found out, while a Michigan man collected $500,000 under the name of a dead relative," fiscal watchdog group OpenTheBooks found.

In other cases, the Small Business Administration disbursed funds to seedy businesses. It sent $117,000 to six massage parlors that were later busted for sex crimes, the Washington Free Beacon reported last year. Now, former executive director of the Pandemic Response Accountability Committee Bob Westbrooks is hammering the federal government for its failure to uphold the "integrity" of its pandemic programs.

"The government can walk and chew gum at the same time," Westbrooks told the Associated Press. "They should have put basic fraud controls in place to verify people's identity and to make sure targeted relief was getting into the right hands."