Pandemic PPP Fraud Explodes – A National Scandal

A Florida man fraudulently used a $7.2 million emergency loan to purchase a 12,579-square-foot mansion and several cars. A California couple fraudulently collected $18 million and purchased “three houses, diamonds, gold coins, luxury watches, expensive furniture and other valuables.” Another man forged enough applications to collect $27 million in Paycheck Protection Program (PPP) funds.

“The biggest fraud in a generation.” That’s how a former U.S. attorney described the immense waste and abuse from the federal government’s emergency pandemic aid. The extent of this fraud and waste is still being uncovered, and most lawmakers do not want to discuss this national scandal.

The numbers are staggering. Approximately $80 billion of the $800 billion disbursed by the PPP program was likely fraudulent. Added to that, the Small Business Administration also disbursed as much as $80 billion in fraudulent Economic Injury Disaster loans. And on top of that, the unemployment-insurance system lost as much as $163 billion of its $1 trillion in pandemic-era disbursements to fraud and overpayments.

Overall, waste, fraud, and overpayments may reach $320 billion of the $2 trillion disbursed from these key pandemic programs.

How much is $320 billion? It is enough to send each family in the U.S. $2,400 or eliminate the employee half of the payroll tax for six months. It is also as much as Washington annually spends on international affairs, farm subsidies, natural resources, environment, energy, science, space, technology, unemployment benefits, training, employment, social services, general commerce, air transportation, water transportation, disaster relief and insurance, community and regional development, general-purpose fiscal assistance, general retirement and disability insurance, and the postal service — combined.

But that is not all the unnecessary pandemic spending. State and local governments received $350 billion for budget deficits that did not even exist. Most of that funding remains unspent, while some was diverted into luxuries such as golf courses. The $1.9 trillion American Rescue Plan reportedly funded items such as an “armored SWAT vehicle in Pittsburgh, ‘restorative justice’ educational discipline in New York City, racial healing pop-ups in Minneapolis, and school vape detectors in Montgomery, Ala.” Washington sent nearly $200 billion in grants to K–12 education systems to be able to reopen safely following the pandemic. When they eventually re-opened, schools needed only a small fraction of this money, and the vast majority remains an unspent slush fund.

Overall, the amount of “emergency” pandemic spending that was either lost to waste and fraud, or sent to state and local governments that had no need for it, likely approaches $1 trillion. Just paying the interest on that federal borrowing will cost taxpayers $30 billion to $40 billion per year, forever.

The horror stories are absurd. The Economic Injury Disaster Loan Program disbursed $6.7 billion in loans and grants to 845,000 applications that are now suspected for identity theft. A network of individuals working under a Minnesota nonprofit organization called Feeding Our Future obtained nearly $250 million in pandemic funds purportedly for the purpose of feeding (fictional) needy children. They instead spent the money on homes, expensive cars, and other personal items. The state of California paid out more than $20 billion in unemployment benefits to non-eligible criminals, including $810 million to prison inmates. The examples of individuals using identity theft or fake businesses to collect millions in emergency aid and then spend it on expensive homes, vacations, luxury cars, and jewelry are too numerous to list.

The federal government simply failed to take oversight seriously. The $478 million earmarked by Congress for oversight came to just $1 for every $12,000 in pandemic aid, according to the Washington Post. The chairman of the Pandemic Response Accountability Committee told NBC News, “The Small Business Administration, in sending that money out, basically said to people, ‘Apply and sign and tell us that you’re really entitled to the money.  And, of course, for fraudsters, that’s an invitation.  What didn’t happen was even minimal checks to make sure that the money was getting to the right people at the right time.”

SOURCE: National Review

If your bank, credit union or financial institution experienced financial fraud, contact us. We provide the forensic investigations, complex litigation and debt collection services needed to recover on loans and debts owed.

Saldutti Law is a creditors’ rights and debt collection law firm. Saldutti Law specializes in the areas of creditors’ rights, banking law, SBA loans, loan workouts, lease recoveries, real estate foreclosure and rent collection, bankruptcy litigation, judgment enforcement, commercial collections, complex litigation, and forensic investigations.