Congress probes whistleblower claims about massive fraud of small business COVID relief fraud

The House Small Business Committee is investigating claims from whistleblowers that taxpayers were fleeced out of $200 billion in COVID-19 aid that was supposed to help small businesses survive the pandemic.

Last month, the committee held a hearing titled, “Action Through Innovation: Private Sector Solutions to Recouping Stolen Pandemic Loan Funds," which was meant to offer solutions to help recoup fraudulent loans that were issued by programs such as the COVID-19 Economic Injury Disaster Loan (EIDL).

“When the pandemic started, the SBA took on an outsized role in restarting our nation’s economy," Chairman Roger Williams (R-Texas) said during the hearing. "The PPP and EIDL programs were vital to saving small businesses, but that fact does not excuse $200 billion in fraud."

A policy expert from the National Whistleblower Center, Dean Zerbe, testified before the committee. 

During his testimony, Zerbe said he believed that a self-sustaining program that would allow citizens to collect commissions if they report COVID-19 fraud that results in money going back to the Treasury, would be a good idea. 

“I’ve seen it in a number of government agencies, [which] have created these whistleblower award programs,” Zerbe  said. “And so I think very much the SBA is a good possibility in terms of also looking at creating a whistleblower reward program. You already have the False Claims Act, where they’re bringing in a few cases right now from attorneys, from whistleblowers, and that’s had some success."

"But I think … parallel with that, an in-house whistleblower award program will very much be a way ... to bring in the energy of the whistleblowers, their attorneys, their advisors to help the SBA move forward," he added.

Something else that Zerbe pointed out was that a program like this would save time and resources, all while benefiting taxpayers. 

“When I served as senior counsel and tax counsel for the Senate Finance Committee, I was the lead staffer for then-Chairman Grassley to pass the 2006 amendments that modernized the IRS whistleblower statute – that has brought in over $6 billion dollars," he said in a prepared statement. 

Williams said a solution needs to be found because the federal government “cannot continue with business as usual” if there is inadequate oversight.