U.S. watchdog uncovers $5.4 billion in potentially fraudulent COVID-19 loans obtained via falsified Social Security numbers
A U.S. government watchdog has sent out what it has described as a “deeply disturbing” fraud alert regarding the increasing use of “questionable” Social Security numbers (SSNs) to get access to COVID loans.
The Pandemic Response Accountability Committee (PRAC) confirmed that 69,323 fake SSNs were used to gain access to $5.4 billion from the Paycheck Protection Program (PPP) and the COVID-19 Economic Injury Disaster Loan (EIDL) program.
The alert was issued a matter of days before a hearing by the Republican-led House of Representatives Oversight Committee on fraudulent pandemic spending was scheduled to commence.
“What PRAC has discovered is deeply disturbing,” said Sens. Rand Paul and Joni Ernst, who are demanding an investigation into COVID-19 loan fraud. “The extent of the fraud could be far greater.”
The Small Business Administration (SBA) set up the PPP and EIDL programs in 2020 to assist small businesses and their employees ride out the effects of the COVID restrictions.
During the course of the COVID restrictions, the SBA provided about $800 billion in PPP loans and in escess of $378 billion in EIDL loans.
When a review was conducted into the 33 million PPP and EIDL, the PRAC found that just over 220,000 claims had SSN’s that were potentially fake.
Out of all the phony SSN’s 69,323 were able to slip through the system and were used in connection with 99,180 successful loan applications which amounted to $5.4 billion that was given out during the period of April 2020 and October 2022.
A further 175,768 of the questionable SSNs that were used in loan applications were not paid out. However, PRAC noted that these SSNs “could be used in a future attempt to obtain benefits from other government programs, and therefore warrant further scrutiny.”
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