The federal government failed to take basic precautions to prevent fraud in a federal program to help small businesses during the pandemic, resulting in the loss of potentially billions of dollars while putting applicants at risk for identity theft, a House subcommittee said Tuesday.
The committee leader, Democratic Rep. James Clyburn, blamed the Trump administration for the problems in Economic Injury Disaster Loan program, which is overseen by the Small Business Administration, according to the Associated Press.
The Mississippi lawmaker said as much as 20% of the money – or tens of billions of dollars – may have been awarded to fraudulent applicants.
The government’s Pandemic Response Accountability Committee says inspectors general for federal agencies have at least 1,150 ongoing investigations into fraud from different aid funds, also according to the wire service.
Out of the $400 billion in funds the EIDL program grants, an estimated $80 billion was received fraudulently, The SBA’s Office of the Inspector General stated.
Clyburn said the Biden administration has now put safeguards in place.
House Minority Whip Steve Scalise defends the Trump administration, saying it did all it could to prevent the economy from crashing. The Louisiana Republican also said the former administration needed to provide relief as fast as possible to save jobs from being lost.
Many of the fake applications had red flag warnings including international addresses and improper phone numbers, but most were still approved, said the subcommittee staff, the wire service also reports.