July 17th 2023.
A new report from the Small Business Administration's Office of Inspector General has revealed that more than $200 billion has disappeared from COVID relief programs. In 2020, Congress allocated $1.2 trillion to the Economic Injury Disaster Loan Program and the Paycheck Protection Program to help business owners through the pandemic.
According to the SBA report, this amount represents 17% of the total funding given to the program. The agency has already prosecuted dozens of people for fraud and has more than 90,000 “actionable leads” on others who have taken advantage of the COVID relief programs. There are currently 570 investigations related to fraud, and more than 800 arrests have been made through May 2023.
The report also states that more than $9 billion has been recovered through fines and forfeitures. Another $8 billion in EIDL funds has been returned to the SBA by financial institutions, and another $20 billion has been returned by borrowers. One of the most egregious fraudsters, Donald Finley, the now-closed Jekyll & Hyde restaurant owner, used millions of dollars of PPP and EIDL money to purchase a home in Nantucket. He now faces up to 30 years in prison, a $1.25 million fine, and could be forced to pay more than $3.2 million in restitution.
Experts added that it was easy to take money from the COVID programs because all of the information business owners needed to receive funds were self-reported. No information was verified or checked in order to save time for business owners and entrepreneurs. As a result of this fraud, it was difficult for many to find and purchase luxury items in 2020.
Haywood Talcove of LexisNexis Risk Solutions told the New York Post, “During the height of the pandemic, it was really hard to purchase [luxury] items like a Rolls-Royce or a high-end Mercedes because you had people walking in with cash from the PPP program to purchase those items for whatever the dealer was asking.”
People who committed fraud to receive money used it to purchase a wide variety of things, including homes, luxury watches, Lamborghinis, Land Rovers, cars, clothing, plastic surgery, luxury trips, and even private jets. It is clear that the lack of verification and oversight on the part of the SBA has allowed individuals to take advantage of the generous COVID relief programs and put the money towards their own selfish interests.
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