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MEMORANDUM
June 13, 2022
To:
Members, Select Subcommittee on the Coronavirus Crisis
Fr:
Majority Staff
Re:
The Biden Administration’s Efforts to Root Out Fraud in Pandemic Relief
Programs and Bring Wrongdoers to Justice
This memorandum describes updated data obtained by the Select Subcommittee
regarding federal efforts to investigate fraud committed against pandemic relief programs and
bring wrongdoers to justice. These relief programs were vital to helping Americans in need
during the economic crisis brought on by the coronavirus pandemic. However, as the Select
Subcommittee reported last year, the Trump Administration failed to take basic steps to prevent
expansive fraud against them.1 Under the Biden Administration, federal investigative and law
enforcement agencies have been working hard to undo the damage and reclaim funds for the
American taxpayer.
This analysis is based on data provided to the Select Subcommittee by the Department of
Justice (DOJ), the Small Business Administration (SBA) Office of Inspector General (OIG), the
Pandemic Response Accountability Committee (PRAC), and the United States Secret Service
(USSS).
I.
KEY FIGURES
•
Over $10 billion: Amount of Paycheck Protection Program (PPP) and COVID-
19 Economic Injury Disaster Loan (COVID-19 EIDL) funds returned to the
government as a result of SBA OIG investigations and financial institution
actions, as of June 2, 2022. SBA OIG provided financial institutions with
information, education, and alerts to assist them in returning potentially fraudulent
funds to the government. The $10 billion figure represents an increase of nearly
$5 billion since SBA OIG’s April 2022 Semiannual Report to Congress, owing to
an increase in the reported amount of funds returned by financial institutions.
1 Majority Staff, Select Subcommittee on the Coronavirus Crisis, Lowering the Guardrails: How the
Trump Administration Failed to Prevent Billions in Pandemic Small Business Fraud (Mar. 25, 2021) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2020-03-25%20Staff%20Memo%20-
%20Small%20Business%20Fraud.pdf).
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•
1,481: Defendants criminally charged by U.S. Attorneys’ Offices and the DOJ
Fraud Section across 1,003 cases involving over $1.07 billion in losses from PPP,
COVID-19 EIDL, and Pandemic Unemployment Insurance (PUI).2 DOJ has
charged 1,239 additional defendants in 830 additional cases since the Select
Subcommittee last reported on these figures in March 2021.
•
At least 1,150: OIG investigations into PPP, COVID-19 EIDL, and PUI fraud
currently ongoing, according to the PRAC. This is an increase of 965
investigations since PRAC Chair Michel E. Horowitz last testified before the
Select Subcommittee in March 2021. These investigations cover more than $2.4
billion in losses from PPP and EIDL, as well as funds lost from PUI.3
•
At least 1,200: Indictments resulting from OIG investigations into pandemic-
related fraud, according to the PRAC, up from 240 in March 2021. These have
led to over 950 arrests (up from 190 in March 2021) and more than 450
convictions (up from 36 in March 2021).
•
Over 1,000: COVID-19 fraud-related cases opened by USSS in the last two
years. These cases led to the seizure of more than $1 billion, as well as the return
of approximately $86 million to crime victims.
II.
VITAL PANDEMIC RELIEF PROGRAMS WERE SUSCEPTIBLE TO
SIGNIFICANT AMOUNTS OF FRAUD
Together, the PPP, COVID-19 EIDL, and PUI programs resulted in the disbursement of
over $2 trillion in federal funds, including roughly $800 billion in PPP loans, over $350 billion in
COVID-19 EIDL loans and grants, and approximately $872.5 billion in PUI payments.4
2 PUI programs were expansions of traditional Unemployment Insurance and included Pandemic
Unemployment Compensation, Pandemic Unemployment Assistance, and Pandemic Emergency Unemployment
Compensation. Due to the nature of data provided to the Select Subcommittee, this memorandum uses the term PUI
broadly to include traditional Unemployment Insurance and the various pandemic expansion programs.
3 According to PRAC, the Department of Labor OIG does not track the dollar amount of loss associated
with PUI investigations.
4 Small Business Administration, Office of Inspector General, Paycheck Protection Program (PPP) Report
(May 31, 2021) (online at www.sba.gov/sites/default/files/2021-06/PPP_Report_Public_210531-508.pdf); Small
Business Administration, Press Release: SBA Administrator Guzman Announces Key Policy Change: Existing
COVID Economic Injury Disaster Loan Program Borrowers to Receive an Additional Deferment (Mar. 15, 2022)
(online at www.sba.gov/article/2022/mar/15/sba-administrator-guzman-announces-key-policy-change-existing-
covid-economic-injury-disaster-loan); Senate Committee on Homeland Security and Governmental Affairs,
Testimony of Inspector General Larry D. Turner, Department of Labor, Hearing on Pandemic Response and
Accountability: Reducing Fraud and Expanding Access to COVID-19 Relief Through Effective Oversight (Mar. 17,
2022) (online at www.hsgac.senate.gov/imo/media/doc/Testimony-Turner-2022-03-17-REVISED.pdf).
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Although these programs were vital to America’s strong economic recovery,5 they were also
susceptible to significant amounts of fraud, which, as the Select Subcommittee reported last
year,6 was partly due to failures on the part of the Trump Administration:
•
COVID-19 Economic Injury Disaster Loans: Data provided to the Select
Subcommittee by SBA OIG identify just over $86 billion worth of COVID-19
EIDL loans and grants as potentially fraudulent due to the presence of various
fraud indicators. This represents an increase of $7 billion in such loans and grants
from what the Select Subcommittee reported in 2021.7 This includes around
$67.5 billion in loans and grants disbursed to applicants using duplicate
information (e.g., IP addresses, email addresses), $7.8 billion to applicants that
changed bank accounts, $3.2 billion to applicants linked to identity theft, $4.8
billion to sole proprietor applicants that also claimed employees, and $2.1 billion
to applicants on the Treasury Do Not Pay list. SBA OIG stated that it “does not
believe the full scope of [COVID-19 EIDL] fraud will be realized until after the
deferment periods for these programs.”8
•
Paycheck Protection Program: Both SBA OIG and independent researchers
have found indications of widespread PPP fraud. A group of University of Texas
professors estimated that between $64.2 billion and $117.3 billion worth of PPP
loans were questionable and possibly fraudulent, owing to suspicious loan
indicators such as multiple loans to the same address or missing business registry
data.9 SBA OIG similarly found “strong indicators of widespread potential abuse
and fraud in the PPP.”10
5 Center on Budget and Policy Priorities, Robust Covid Relief Achieved Historic Gains Against Poverty and
Hardship, Bolstered Economy (Feb. 24, 2022) (online at www.cbpp.org/research/poverty-and-inequality/robust-
covid-relief-achieved-historic-gains-against-poverty-and).
6 Majority Staff, Select Subcommittee on the Coronavirus Crisis, Lowering the Guardrails: How the
Trump Administration Failed to Prevent Billions in Pandemic Small Business Fraud (Mar. 25, 2021) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2020-03-25%20Staff%20Memo%20-
%20Small%20Business%20Fraud.pdf).
7 Email from Staff, Small Business Administration, Office of Inspector General, to Staff, Select
Subcommittee on the Coronavirus Crisis (June 6, 2022); Majority Staff, Select Subcommittee on the Coronavirus
Crisis, Lowering the Guardrails: How the Trump Administration Failed to Prevent Billions in Pandemic Small
Business Fraud (Mar. 25, 2021) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2020-03-25%20Staff%20Memo%20-
%20Small%20Business%20Fraud.pdf).
8 Email from Staff, Small Business Administration, Office of Inspector General, to Staff, Select
Subcommittee on the Coronavirus Crisis (June 6, 2022).
9 John M. Griffin, Samuel Kruger, and Prateek Mahajan, Did FinTech Lenders Facilitate PPP Fraud?
(May 19, 2022) (online at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3906395).
10 Small Business Administration, Office of Inspector General, SBA’s Paycheck Protection Program Loan
Review Processes (Feb. 28, 2022) (online at www.sba.gov/sites/default/files/2022-
02/SBA%20OIG%20Report%2022-09.pdf).
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•
Pandemic Unemployment Insurance: The Department of Labor OIG has
estimated the amount of PUI overpayment at $163 billion based on an improper
payment rate of 18.71%, although it stated that this is likely an undercount.11
Several states have acknowledged paying out fraudulent payments worth billions
of dollars.12
The vast amount of fraud in these relief programs is also illustrated by the exorbitant
number of hotline complaints that investigative entities have received during the pandemic. SBA
OIG has received 230,553 fraud hotline and website complaints related to PPP and COVID-19
EIDL since March 2020 (a substantial majority of which—148,525—were received between
March 2020 and March 2021, as the Select Subcommittee reported last year).13 DOJ’s National
Center for Disaster Fraud has also received 185,251 complaint submissions between March 2020
and April 2022, 179,750 of which were referred to law enforcement agencies. Over 134,000 of
these complaints were related to PUI fraud, while most of the remainder related to PPP and
COVID-19 EIDL fraud.14
III.
FEDERAL AGENCIES HAVE MADE SIGNIFICANT PROGRESS
UNCOVERING FRAUD AND BRINGING WRONGDOERS TO JUSTICE
Data provided to the Select Subcommittee illustrate the broad and successful federal
efforts underway to uncover the fraud in pandemic relief programs and to prosecute wrongdoers:
•
Pandemic Response Accountability Committee and Offices of Inspectors
General: The PRAC, which supports and coordinates oversight of pandemic
relief spending among the more than 70 federal OIGs, informed the Select
Subcommittee that there are currently at least 1,150 ongoing OIG investigations
into fraud in PPP, COVID-19 EIDL, and PUI. This is an increase of 965
investigations since March 2021, when the PRAC testified to the Select
Subcommittee that there were 185 publicly announced criminal investigations.
11 Senate Committee on Homeland Security and Governmental Affairs, Testimony of Inspector General
Larry D. Turner, Department of Labor, Hearing on Pandemic Response and Accountability: Reducing Fraud and
Expanding Access to COVID-19 Relief Through Effective Oversight (Mar. 17, 2022) (online at
www.hsgac.senate.gov/imo/media/doc/Testimony-Turner-2022-03-17-REVISED.pdf).
12 State Unemployment Systems Face ‘Epidemic of Fraud’; $63 Billion Paid Out Wrongly Across US,
Chicago Tribune (Mar. 1, 2021) (online at www.chicagotribune.com/business/ct-biz-unemployment-fraud-phony-
claims-20210301-tcn4rvtcm5czzfq5uvnogrwuem-story.html); Texas Unemployment Fraud Soars to $2.5 Billion
During Pandemic, KVUE ABC (Nov. 19, 2021) (online at www.kvue.com/article/news/local/texas/texas-
unemployment-fraud-pandemic/269-bef17d2a-07d9-4520-a7b6-1ff63ed34d91).
13 Email from Staff, Small Business Administration, Office of Inspector General, to Staff, Select
Subcommittee on the Coronavirus Crisis (June 6, 2022); Majority Staff, Select Subcommittee on the Coronavirus
Crisis, Lowering the Guardrails: How the Trump Administration Failed to Prevent Billions in Pandemic Small
Business Fraud (Mar. 25, 2021) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2020-03-25%20Staff%20Memo%20-
%20Small%20Business%20Fraud.pdf).
14 Email from Staff, Department of Justice, to Staff, Select Subcommittee on the Coronavirus Crisis (June
8, 2022).
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Thus far, OIG investigations have resulted in more than 1,200 indictments (up
from 240 indictments or complaints in March 2021), over 950 arrests (up from
190 in March 2021), and more than 450 convictions (up from 36 in March 2021)
for pandemic-related fraud. PRAC data show that, together, OIG investigations
into PPP and COVID-19 EIDL fraud cover more than $2.4 billion worth of losses
to the government.15
•
Department of Justice: As of May 2022, U.S. Attorneys’ Offices and the DOJ
Fraud Section have criminally charged approximately 1,481 defendants (1,261
and 220, respectively) across 1,003 cases (855 and 148, respectively) involving
PPP, COVID-19 EIDL, and PUI. In total, these charges cover more than $1.07
billion in losses to the government. The U.S. Attorneys’ Office cases cover more
than $678 million in losses related to PPP and COVID-19 EIDL fraud and more
than $63 million related to PUI. The DOJ Fraud Section charges cover
approximately $336 million in losses related to PUI, PPP, and COVID-19 EIDL,
as well as some healthcare fraud. According to DOJ, “most of these cases are still
in progress and many more matters are in the investigative stage.”16 These figures
represent significant increases over what the Select Subcommittee reported in
March 2021. Since that time, DOJ has charged 1,239 additional defendants in
830 additional cases.17
•
Secret Service: USSS has opened almost 1,000 COVID-19 fraud-related cases in
the last two years. In fiscal year 2021, it also arrested approximately 940
individuals in connection to cyber-crime, which saw an uptick during the
pandemic, and responded to over 700 network intrusions.18
These investigations and prosecutions are producing real benefits by recovering funds for
American taxpayers. SBA OIG provided data to the Select Subcommittee that show their efforts
15 Email from Staff, Pandemic Response Accountability Committee, to Staff, Select Subcommittee on the
Coronavirus Crisis (June 8, 2022); Select Subcommittee on the Coronavirus Crisis, Testimony of Inspector General
Michael E. Horowitz, Pandemic Response Accountability Committee, Hearing on Rooting Out Fraud in Small
Business Relief Programs (Mar. 25, 2021) (online at
http://docs.house.gov/meetings/VC/VC00/20210325/111408/HHRG-117-VC00-Bio-HorowitzM-20210325.pdf).
These are minimum numbers as there are differences in OIG case management tracking capabilities and some OIGs
may not have responded to PRAC’s poll. The investigations into PUI fraud also cover losses to the government,
although the Department of Labor OIG does not track the dollar amounts associated with its investigations.
16 Email from Staff, Department of Justice, to Staff, Select Subcommittee on the Coronavirus Crisis (June
8, 2022).
17 Majority Staff, Select Subcommittee on the Coronavirus Crisis, Lowering the Guardrails: How the
Trump Administration Failed to Prevent Billions in Pandemic Small Business Fraud (Mar. 25, 2021) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2020-03-25%20Staff%20Memo%20-
%20Small%20Business%20Fraud.pdf).
18 Email from Staff, United States Secret Service, to Staff, Select Subcommittee on the Coronavirus Crisis
(June 9, 2022); United States Secret Service, U.S. Secret Service Names National Pandemic Fraud Recovery
Coordinator to Bolster Fight Against Fraud (Dec. 21, 2021) (online at
www.secretservice.gov/newsroom/releases/2021/12/us-secret-service-names-national-pandemic-fraud-recovery-
coordinator).
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have led to over $10 billion being returned to the federal government from PPP and COVID-19
EIDL, as of June 2, 2022. This includes $1.07 billion of COVID-19 EIDL and PPP funds
returned by or seized from loan recipients as a result of SBA OIG investigations, more than $1
billion of COVID-19 EIDL funds seized in collaboration with SBA and USSS, and over $8
billion in COVID-19 EIDL funds returned to the federal government by financial institutions
with assistance from SBA OIG (nearly $5 billion more than the agency reported in April 2022).
SBA OIG’s assistance to financial institutions has included providing education regarding SBA’s
pandemic programs, issuing fraud alerts, and providing information on how to return funds to
SBA.19 USSS’s COVID-19 fraud investigations have resulted in the seizure of more than $1
billion and the return of approximately $86 million to crime victims, and its cyber fraud efforts
resulted in the prevention of over $2.3 billion in financial losses.20
IV.
NEW COLLABORATION MODELS HAVE EXPANDED AGENCIES’ ABILITY
TO ROOT OUT FRAUD
Investigating pandemic relief fraud has required massive efforts on the part of federal
agencies such as the OIGs and DOJ. According to the PRAC, thus far, at least 490 OIG
investigators and analysts have worked on investigations involving pandemic relief fraud.21
Additionally, while DOJ does not track the total number of prosecutors that have worked on
pandemic relief matters, the agency informed the Select Subcommittee that every one of the 93
U.S. Attorneys’ Offices has appointed a COVID-19 Fraud Coordinator. In March 2022, DOJ
also appointed a Director for COVID-19 Fraud Enforcement.22
The scale of fraud has required rapid hiring and creative staffing solutions to meet the
investigative demand placed on federal agencies. For example, SBA OIG has increased its
number of law enforcement agents from 37 in March 2020 to 63 in May 2022—a 70%
increase—and all these agents are focused on PPP and COVID-19 EIDL fraud.23 SBA OIG
19 Emails from Staff, Small Business Administration, Office of Inspector General, to Staff, Select
Subcommittee on the Coronavirus Crisis (June 6, 2022, and June 9, 2022); Small Business Administration, Office of
Inspector General, Semiannual Report to Congress (Apr. 29, 2022) (online at www.sba.gov/sites/default/files/2022-
05/SBA%20OIG%20Spring%202022%20Semiannual%20Report%20to%20Congress.pdf).
20 Email from Staff, United States Secret Service, to Staff, Select Subcommittee on the Coronavirus Crisis
(June 9, 2022).
21 Email from Staff, Pandemic Response Accountability Committee, to Staff, Select Subcommittee on the
Coronavirus Crisis (June 8, 2022).
22 Email from Staff, Department of Justice, to Staff, Select Subcommittee on the Coronavirus Crisis (June
8, 2022); Department of Justice, Offices of the United States Attorneys (online at www.justice.gov/usao) (accessed
June 9, 2022); Department of Justice, Justice Department Announces Director for COVID-19 Fraud Enforcement
(Mar. 10, 2022) (online at www.justice.gov/opa/pr/justice-department-announces-director-covid-19-fraud-
enforcement).
23 Emails from Staff, Small Business Administration, Office of Inspector General, to Staff, Select
Subcommittee on the Coronavirus Crisis (June 6, 2022, and June 9, 2022). This number includes Hotline staff, who
conduct a preliminary review and analysis of all complaints received to determine the appropriate course of action.
It also includes supervisory staff who may not have been directly assigned cases, but who play a critical role in
ensuring that cases are handled with excellence. Some staff are also investigating other SBA programs in addition
to PPP and COVID-19 EIDL.
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supported this hiring with supplemental funding, such as the $25 million that congressional
Democrats provided to the agency through the American Rescue Plan.24 However, the agency
informed the Select Subcommittee that “the fraud landscape exceeds the scope of current
investigative capacity,” and it lacks the budgetary authority to continue increasing its
investigative personnel.25
Notably, the PRAC has been able to assist OIGs that may be short staffed by providing
coordination, data analysis, investigative resources, and surge staff. The PRAC informed the
Select Subcommittee that it is “using [its] CARES Act authority to create new models for
coordination among the federal government’s 75 [Inspectors General].” One such model
involves conferring the PRAC’s broad pandemic jurisdiction to OIG members of the PRAC
Fraud Task Force, thereby enabling them to investigate cases outside of their traditional program
areas. Another model involves surge staffing. Facilitated by the PRAC, 10 individuals from
multiple OIGs were temporarily detailed to SBA OIG to help the agency triage its many hotline
complaints regarding PPP and COVID-19 EIDL fraud. The PRAC also employs 18 data science
fellows, who have been detailed to various OIGs to facilitate data analytics across pandemic
programs.26
24 Emails from Staff, Small Business Administration, Office of Inspector General, to Staff, Select
Subcommittee on the Coronavirus Crisis (June 6, 2022, and June 9, 2022); American Rescue Plan Act of 2021, Pub.
L. No. 117-2.
25 Email from Staff, Small Business Administration, Office of Inspector General, to Staff, Select
Subcommittee on the Coronavirus Crisis (June 6, 2022).
26 Emails from Staff, Pandemic Response Accountability Committee, to Staff, Select Subcommittee on the
Coronavirus Crisis (June 8, 2022, and June 9, 2022).