The Honorable Isabella Casillas Guzman, Administrator, U.S. Small Business Administration (April 19, 2023)

Summary

A letter dated April 19, 2023 from the Subcommittee on Oversight, Investigations, and Regulations of the Committee on Small Business to the Honorable Isabella Casillas Guzman, Administrator of the Small Business Administration, following a House Committee on Small Business hearing on March 23, 2023. The letter states concern that the SBA has failed to properly investigate and recuperate potentially fraudulent PPP and EIDL loans, and says the Administrator stated at the hearing that the SBA had clawed back about $29 billion. It requests documents and information covering March 27, 2020 to the present, no later than May 3, 2023, including a list of potentially fraudulent loans and a list of Fraud Risk Management Board members. The signature block names Beth Van Duyne, Chairman.

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Full text

                                              April 19, 2023

The Honorable Isabella Casillas Guzman
Administrator
U.S. Small Business Administration
409 3rd Street S.W.
Washington, D.C. 20416

Dear Administrator Guzman:

        Thank you for appearing before the House Committee on Small Business on March 23,
2023. During the hearing, we discussed the nearly $85 billion in potentially fraudulent loans
from the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL)
program. We are concerned that the Small Business Administration (SBA) has failed to properly
investigate and recuperate these fraudulent loans. The Subcommittee on Oversight,
Investigations, and Regulations is conducting oversight of the potentially fraudulent claims to
ensure taxpayer funds are recovered, reallocated, and properly used moving forward.

        The SBA Office of Inspector General (OIG) found that SBA did not have an
organizational structure with clearly defined roles, responsibilities, and processes to manage and
handle potentially fraudulent PPP loans across the program.”1 In fact, as discussed at the hearing,
the OIG noted rampant fraud in all the pandemic related programs managed by the SBA. The
OIG found about 70,000 loans totaling more than $4.6 billion in the PPP and $78.1 billion in the
EIDL were potentially fraudulent.2 On April 1, 2022, the SBA established the Fraud Risk
Management Board (FRMB) to provide anti-fraud oversight and coordination at the SBA, but
during the hearing you were unable to provide an update on the individuals running this board or
what, if any, progress they are making.

        During the hearing, you also stated that the SBA has successfully clawed back about $29
billion of the $82.7 billion in potential fraud flagged by the SBA, but were unable to share
specifically where that money went.3 It is imperative that we understand where these funds went
and how the SBA is working to prevent future fraud. We therefore request the following



1
  U.S. SMALL BUS. ADMIN. OFFICE OF THE INSPECTOR GENERAL, FALL 2022 SBA OIG SEMIANNUAL REPORT TO
CONGRESS APR. 1, 2022 – SEPT. 30, 2022 (Nov. 30, 2022).
2
  Id.; U.S. SMALL BUS. ADMIN. OFFICE OF THE INSPECTOR GENERAL, REP. NO. 22-13, SBA’S HANDLING OF
POTENTIALLY FRAUDULENT PAYCHECK PROTECTION PROGRAM LOANS (May 26, 2022).
3
  Oversight of the Small Business Administration: Hearing before H. Comm. On Small Business, 118th Cong.
(statement of The Honorable Isabella Casillas Guzman, Administrator, Small Bus. Admin.).
The Honorable Isabella Guzman
April 19, 2023
Page 2 of 2

documents and information, covering the time period March 27, 2020 to the present, as soon as
possible but no later than May 3, 2023:

       1. A list of all potentially fraudulent loans in both PPP and COVID EIDL and the date
          each loan was disbursed.

       2. All “indicators” used by the SBA to determine whether a loan was fraudulent.

       3. What actions the SBA has taken to claw back the fraudulently obtained funds and
          what tools are available to the SBA to get these taxpayer fund returned.

       4. A full accounting of all loans comprising the reported $29 billion in fraudulent loans
          the SBA clawed back.

       5. List of the SBA’s Fraud Risk Management Board members, including the program
          manager, and a status update on their work.

        To schedule the delivery of responsive documents or ask any related follow-up questions,
please contact the Committee on Small Business Staff at (202) 225-5821. The Committee on
Small Business has broad authority to investigate “problems of all types of small business” under
House Rule X. Thank you in advance for your cooperation with this inquiry.

                                     Sincerely,



                                     ___________________________
                                     Beth Van Duyne
                                     Chairman
                                     Subcommittee on Oversight,
                                     Investigations, and Regulations
                                     Committee on Small Business


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