PRAC Fraud Prevention Alert — PPP and HUD Income Misrepresentation (May 2025)

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Summary

A Fraud Prevention Alert issued in May 2025 by the Pandemic Response Accountability Committee (PRAC), a committee of the Council of the Inspectors General on Integrity and Efficiency. It describes how PRAC data analysts compared income derived from sole proprietor Paycheck Protection Program (PPP) loans with income reported to the Department of Housing and Urban Development (HUD) for housing assistance by individuals using the same personally identifiable information. The alert states that PRAC flagged 43,680 individuals with potential significant disparities applying for more than $860M in PPP loans, using a threshold of derived income at least 10 times the income reported to HUD. It says discrepancies could stem from fraud, identity theft, data entry errors or timing issues, and describes one case with 100 fraudulent PPP loan applications and restitution of over $1.6 million.

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FRAUD PREVENTION ALERT: Using 
Data Analytics to Compare Income 
Representations by Applicants Seeking 
Benefits from Multiple Federal Programs 
Could Have Prevented Hundreds of Millions 
of Dollars in Pandemic Fraud
The Pandemic Response Accountability Committee (PRAC) continues to issue alerts to detail how potential fraud in 
federal pandemic programs has been identified using data analytics tools, and how these lessons learned can be 
used to prevent fraud in other government programs. In this alert, we detail how we used data analytics to identify 
suspicious Paycheck Protection Program (PPP) 
applications by comparing the derived income 
of sole proprietor PPP applicants with the 
incomes reported by individuals using the same 
personally identifiable information as the PPP 
sole proprietor applicants to obtain housing 
assistance from the Department of Housing and 
Urban Development (HUD).
Specifically, as shown by the case examples in 
the text box on this page, our data analysts found 
evidence of substantial disparities between the 
derived income by sole proprietor applicants 
seeking Small Business Administration (SBA) 
PPP loans as compared to the income reported 
to HUD by individuals using the same personally 
identifying information to obtain housing 
assistance that was available for individuals with 
limited incomes.1 
Case Examples
1.
A sole proprietor applicant received two first draw* PPP loans
from SBA totaling roughly $40,000, equating to an annual income
of $190,000 based on SBA’s defined PPP loan calculation. An
applicant with the same personally identifying information reported
an annual income of $15,000 to HUD. This same individual also
claimed to be a CEO and owner of multiple other companies of
varying business types receiving over $2.5 million in PPP and
COVID-19 Economic Injury Disaster Loan (EIDL) pandemic funding.
2.
A sole proprietor applicant received a PPP loan of $20,833
from SBA, equating to an annual income of $100,000 based on
SBA’s defined PPP loan calculation. An applicant with the same
personally identifying information reported an annual income of
$600 to HUD. This same individual also claimed to be the owner
of multiple other businesses of varying types receiving almost
$900,000 in PPP and COVID-19 EIDL pandemic funding.
*Note: per SBA’s guidance, First Draw PPP loans could be used to help fund payroll
costs, rent, utilities, etc. and eligible borrowers could apply for a Second Draw PPP
loan with the same general loan terms as their First Draw PPP loan. The PRAC used
First Draw PPP loans to derive income for sole proprietor applicants.
The PRAC flagg
ed 43,680 
individuals
 with pote
n
tial significant 
disparities in r
eported income a
pplying 
for
 more than
 $860M in PPP loans
. One individua
l received a
 PPP loan of $2
0,833 from SBA,
 equating to an a
nnual income 
of $
100,000 b
ased on SB
A’s defi
ned PPP loan calculation. An applicant with the same personally identifying information reported an annual income of $600 to HUD.
1	
While many types of businesses were eligible to receive a PPP loan, our analysis focused on sole proprietors or equivalent, including Sole Proprietorship, 
Independent Contractors, Self-employed Individuals, and Single Member LLC. Our analysis only considered these businesses as their annual income could 
be derived based on the loan amount using an SBA formula.
May 2025

2
Pandemic Response Accountability Committee
FRAUD PREVENTION ALERT: Using Data Analytics to Compare Income Representations by Applicants Seeking Benefits 
from Multiple Federal Programs Could Have Prevented Hundreds of Millions of Dollars in Pandemic Fraud
Relying on our subject matter expertise, we used iterative, multi-tiered data analytics techniques to flag over 40,000 
instances where PPP applicants may have significantly misrepresented their incomes when applying for more than 
$860M in PPP loans.2 We considered significant misrepresentations to be those instances where the derived income 
for PPP applicants was at least 10 times greater than the income reported to HUD by housing assistance recipients 
who used the same personally identifiable information as the PPP applicants.3 These discrepancies could be due to 
fraud by the same program beneficiaries who misrepresented income amounts to SBA and HUD, or it could be the 
result of identity theft related to either or both programs. In some instances, the discrepancies could be the result of 
data entry errors, or data timing issues related to when applications were submitted to each program.
We are unable to estimate the potential financial impact to the HUD housing assistance programs because, while we 
have access to applicant information, we do not have access to payment data.
Among the fraud identified through the PRAC’s proactive cross-
agency analysis of applicant income information, there was a 
large-scale multi-subject criminal conspiracy. The PRAC worked 
with our partner law enforcement agencies to investigate 
these anomalies and identified, in this one case alone, 100 
fraudulent PPP loan applications, 70 of which were funded, 
and the use of over 100 bank accounts used to facilitate 
the scheme. This case resulted in multiple federal criminal 
indictments, all of which resulted in convictions, and restitution 
to the SBA of over $1.6 million. The two main targets in this 
case each received 33 months in prison followed by three 
years’ supervised probation.
HUD uses the Enterprise Income Verification (EIV) system to 
ensure an applicant is income eligible.4 However, during the 
pandemic the use of EIV was temporarily waived. During this 
waiver period, a fraudster could have improperly obtained HUD housing benefits, effectively denying benefits to those 
who needed it most. This is especially problematic as many HUD-funded housing authorities have long waitlists 
of individuals who genuinely need assistance. Similarly, under this potential fraud scheme individuals may have 
deceitfully secured PPP loans that should have gone to those who legitimately qualified. 
We hope that by sharing this potential fraud scheme with the public and the oversight community we can alert 
(1) Offices of Inspectors General (OIGs) to be on the lookout for similar cross-program schemes, (2) program
implementers to build better internal controls and checks upfront to mitigate this risk, and (3) policymakers to
consider issues related to cross-agency risks including income verification.
Programs Involved
The now-concluded Paycheck Protection Program 
(PPP) provided SBA-backed loans to businesses to 
keep their workforce employed during the COVID-19 
crisis. HUD’s ongoing Housing Choice Voucher 
(HCV) Program, which did not receive pandemic 
funding, is the federal government’s major program 
for aiding very-low-income families, the elderly, and 
the disabled to afford decent, safe, and sanitary 
housing in the private market. Similarly, HUD’s 
Public Housing (Low-Rent) Program administers 
federal aid to help eligible low-income families, 
the elderly, and persons with disabilities to live in 
decent and safe housing.
2	
Refer to the “Analysis and Implications” section below on how we derived income for PPP sole proprietor loan applicants.
3	
The participant counts and payment amounts for potential income misrepresentation are higher when we lowered the ratio threshold to five times (5X) or 
two times (2X).
4	
The EIV system is derived from computer matching programs initiated by HUD with the Social Security Administration (SSA) and the U.S. Department of 
Health and Human Services (HHS), for all program participants with valid personal identifying information and Social Security number reported on the 
form HUD-50058. The match includes the following databases: SSA Benefits, SSA Death Master File, and the HHS National Directory of New Hires which 
includes quarterly unemployment insurance, quarterly wages, and monthly new hires.

3
Pandemic Response Accountability Committee
FRAUD PREVENTION ALERT: Using Data Analytics to Compare Income Representations by Applicants Seeking Benefits 
from Multiple Federal Programs Could Have Prevented Hundreds of Millions of Dollars in Pandemic Fraud
Our Analysis: What We Did, Why We Did It, and Implications Revealed
The PRAC’s Responsibilities
As part of our independent oversight of the $5 trillion in COVID-19 relief and response programs, we conduct in-
depth data analysis across multiple federal programs to identify potential fraud, waste, and abuse, and to help 
prevent misuse of future funds.
Our Pandemic Analytics Center of Excellence (PACE) has the unique ability to collect applicant and beneficiary 
data across agencies and benefits programs. We conduct data matching—linking data records in two or more data 
sets—to help identify unique recipients applying to multiple programs. The cross-cutting nature of our work can also 
reveal anomalies in applicants’ data that may raise red flags about fraud, waste, or abuse in programs not involving 
pandemic relief. 
Program Background
To be eligible for the HCV and Low-Rent HUD programs, HUD uses the EIV system to ensure an applicant is income 
eligible. To determine how much PPP money SBA awarded to a business operating as a sole proprietor or equivalent, 
SBA used a formula based on the borrower’s reported profit for the prior year.5
Analysis and Implications
Our data scientists compared data pulled from March 2020 to December 2021 to identify individuals who received 
PPP loans as sole proprietors and HUD’s HCV or Low-Rent Program benefits. Using the SBA formula for determining 
the PPP loan amounts for sole proprietors based on reported profits, we derived a recipient’s annual income. HUD’s 
HCV or Low-Rent Program participants are required to report their income on an annual basis. Comparing these 
amounts, we found instances when a sole-proprietor’s income level for the PPP loan was inconsistent with the 
income reported to HUD. 
We continue to share our work with the HUD and SBA Offices of Inspectors General to help flag potential cross-
agency and/or cross-program risks. 
5	
SBA updated guidance on PPP applications in March 2021. Before March 2021, businesses reported net profit in the PPP applications, and after March 
2021, SBA required applicants to provide gross profit.

For more information:
Lisa Reijula
Associate Director of Outreach and Engagement, PRAC
Lisa.Reijula@cigie.gov
Visit us at:
PandemicOversight.gov
Follow us at:
Report Fraud, Waste, Abuse, or Misconduct:
To report allegations of fraud, waste, abuse, or misconduct regarding 
pandemic relief funds or programs, please go to the PRAC website at
PandemicOversight.gov.
Pandemic Response 
Accountability Committee logo. A Committee of the Council of the Inspectors General 
on Integrity and Efficiency

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