Report says federal agency failed to prevent billions of dollars in fraudulent PPP loans, as CBS 2 exposed for months
CHICAGO (CBS) -- For months, we exposed rampant fraud in the Chicago area during the COVID-19 pandemic.
Now, a new federal report says a U.S. government agency dropped the ball on preventing billions of dollars in fraudulent loans.
CBS 2's Jermont Terry pored over the scathing report from the U.S. Small Business Administration Office of Inspector General. The report said oversight did not exist – the government did not have any fraud prevention measures in place when it started the Paycheck Protection Program.
Sba Oig Report 22-13 by Adam Harrington on Scribd
The result was billions of your tax dollars going to waste.
As the COVID-19 pandemic lingers, the cash the federal government has been dishing out to keep businesses thriving is no longer flowing. The Paycheck Protection Program has closed.
A total of $813 billion in PPP loans went out in all, and a new report shows "more than 70,000 loans totaling over $4.6 billion in potentially fraudulent PPP loans" are now being called into question.
For months, CBS 2 exposed massive PPP loan fraud in the Chicago area.
"It's extremely frustrating to see this money going to people that didn't deserve it," Department of Homeland Security Special Agent Jeff Strauss said on Dec. 8. "And then it's just gone. It didn't stay in our country. It didn't help our citizens. It didn't help the impacted communities. It's just gone."
First, we exposed over 1,000 ghost businesses in Markham that received Paycheck Protection Program loans intended for small businesses struggling during the pandemic. The ghost businesses had fake addresses and no licenses.
Still under investigation is Markham police Officer Kenneth Muldrow, who received a $20,000 loan for a lawn care service where he used the Markham police station as the address of his business.
We even revealed how DHS agents were working to find the thousands who essentially stole from taxpayers who fraudulently applied for and received the COVID relief money.
"Whether it was a few thousand dollars or hundreds of thousands of dollars, the outcome is the same," Special Agent Strauss said on Dec. 8. You defrauded the United States government, and we will find you."
Now, the SBA Office of Inspector General backs our investigations. It says there was no oversight, and adds, "Speed became the highest priority in complying with the mandate."
This all involved billions of your tax dollars going out.
The OIG report shows through May 2021, the SBA "processed 11.8 million guaranteed PPP loans totaling $799.8 billion."
Just over $800 billion went to 5,460 private lenders, according to the report. Yet when the banks tried flagging problematic loans, the OIG found the "SBA did not provide lenders sufficient specific guidance to effectively handle potentially fraudulent PPP Loans."
That led to loans getting approved day after day.
Federal authorities are still collecting fraud tips, and as it stands, they have received more than 54,000 PPP-related complaints to the SBA OIG hotline.