Small Business Administration OIG (SBA OIG Spring 2022 Semiannual Report to Congress)
Summary
The SBA Office of Inspector General's Spring 2022 Semiannual Report to Congress covers October 1, 2021 to March 31, 2022. In his April 29, 2022 message, Inspector General Hannibal "Mike" Ware reports $4.6 billion in joint monetary recoveries and savings for the period. He writes that OIG pandemic work had resulted in 366 indictments and 142 convictions related to the Paycheck Protection Program and EIDL as of December 2021, that work with the U.S. Secret Service led to the seizure of more than $1 billion stolen from the EIDL program, and that OIG helped financial institutions return another $3.1 billion to it. During the period OIG issued 9 reports with 70 recommendations, and its investigations resulted in 98 indictments and 85 convictions.
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“Small Business Administration OIG (SBA OIG Spring 2022 Semiannual Report to Congress).”
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Semiannual Report to Congress
October 1, 2021 – March 31, 2022
U.S. Small Business Administration | Office of Inspector General
Message from the Inspector General
April 29, 2022
I am honored to submit our Semiannual Report to Congress for the first half
of fiscal year 2022. Every 6 months, we report to Congress our independent
oversight of the U.S. Small Business Administration (SBA), as required by law.
Two years have passed since the start of the Coronavirus Disease 2019
(COVID-19) pandemic economic crisis, and the SBA Office of Inspector
General (OIG) continues to provide independent and objective oversight. This
semiannual period we are reporting an unprecedented statistic: $4.6 billion
in joint monetary recoveries and savings. Without a doubt, this achievement
would not have been possible without our partner organizations.
We oversee the integrity, accountability, and performance of SBA and its
Hannibal “Mike” Ware programs for the benefit of the American people. OIG works to improve SBA
Inspector General programs by identifying key issues facing the agency, recommending
corrective actions, and promoting a high level of integrity.
Pandemic Response Oversight
Working with our law enforcement partners, we have set a standard of excellence in overseeing SBA
pandemic response for America’s small businesses. Independence and objectivity are critical in the
oversight of taxpayer funds allocated by the Coronavirus Aid, Relief, and Economic Security (CARES) Act
and subsequent Congressional economic stimulus funds and mandates.
We are deeply appreciative of the close partnership we have with the U.S. Attorneys across the nation
and in the Criminal and Civil divisions of the U.S. Department of Justice in Washington D.C. We have
sought to expand this partnership by detailing several attorneys to serve as Special Assistant U.S.
Attorneys to the Criminal Division Fraud and Public Corruption Section’s Market Integrity and Major
Frauds Unit. Our mission is momentous, and it requires a strategic allocation of resources.
SBA has expended more than a trillion dollars in lending authority and entrepreneurial assistance in the
wake of the pandemic. When SBA expedited relief to those in need, the agency relaxed internal
controls, increasing the risk of program fraud, abuse, and improper payments.
As the fraud landscape continues to unfold, we are collaborating across government to bring
wrongdoers to justice. OIG pandemic oversight and investigative work has resulted in 366 indictments
and 142 convictions related to the Paycheck Protection Program and Economic Injury Disaster Loan
(EIDL) as of December 2021. Our collaboration with the U.S. Secret Service has resulted in the seizure
of more than $1 billion stolen by fraudsters from the EIDL program. We also played a key role in
assisting financial institutions in the return of another $3.1 billion to SBA’s EIDL program.
Leveraging supplemental resources provided by Congress, we have published 20 reports on pandemic
oversight. We have issued dozens of recommendations for corrective action aimed at strengthening
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internal controls so eligible small businesses receive the economic aid promised by Congress, not
fraudsters or other unscrupulous borrowers abusing taxpayer resources.
And this is just the tip of the iceberg. The true magnitude of fraud in SBA pandemic assistance
programs will be coming to light for many more years as these programs move into new stages. We
will continue to evaluate and recommend corrections for the most critical risks facing SBA, but
oversight of pandemic relief funds and combating fraud in these programs will be a top priority for
many years to come.
Our Work this Period
During the 6-month period from October 2021 to
March 2022, OIG issued 9 reports with 70
recommendations to improve SBA operations and
reduce fraud and unnecessary losses in agency
programs. In addition, OIG investigations resulted in
98 indictments and 85 convictions.
We are also keeping watch over government
contractors for business ethics, integrity, honesty,
and competency, ensuring taxpayer dollars are
spent efficiently according to intent.
OIG Staff Dedication and Success
I am proud that our OIG staff members are engaged change agents who set the standard for oversight
excellence in support of American small businesses and entrepreneurs. We carry out our duties and
responsibilities with integrity, never losing sight of this vision, committed to protecting the interests of
all American taxpayers by promoting positive change within SBA and across government.
Hannibal “Mike” Ware
SBA Inspector General
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Table of Contents
SBA’s Top Management and Performance Challenges ...........................................................................................1
Summary of OIG Oversight Work ............................................................................................................................2
Pandemic Response Oversight .................................................................................................................................2
Audits, Inspections, and Evaluations ......................................................................................................................2
SBA’s Emergency EIDL Grants to Sole Proprietors and Independent Contractors (Report 22-01) ................2
COVID-19 EIDL Program Recipients on the Department of Treasury’s Do Not Pay List (Report 22-06) ......3
SBA’s Oversight of the Grant Recipient’s Implementation of the CARES Act Resource Partners Training
Portal (Report 22-07) ...........................................................................................................................................3
SBA’s Paycheck Protection Program Loan Review Processes (Report 22-09)...................................................4
Notable Investigations ..............................................................................................................................................4
Members of Los Angeles-Based Fraud Ring Sentenced in Multimillion-Dollar Scheme .................................4
Oakland Woman Sentenced to 3 Years in Million Dollar Pandemic Relief Fraud ...........................................5
Texas Man Sentenced to More Than 9 Years in COVID-19 Fraud and Money Laundering Scheme ..............5
California Man Convicted in $27 Million PPP Fraud Scheme ..........................................................................5
Two Florida Men Pled Guilty to $35 Million COVID-19 Relief Fraud Scheme ................................................5
Man Who Evaded Justice Sentenced to Federal Prison for Pandemic Relief Fraud ........................................6
Arizona Man Sentenced to 32 Months in Federal Prison for Fraudulent EIDL Applications .........................6
Oregon Dentist Faces Federal Charges for Stealing About $8 Million in COVID-Relief Program Funds ......6
Small Business Access to Capital.............................................................................................................................7
Investigations ............................................................................................................................................................7
Jury Convicts Five Former Officers and Employees of Banc-Serv Partners in $5 Million Scheme ................7
Disaster Assistance Program ...................................................................................................................................9
Contracting and Counseling Programs .................................................................................................................. 10
Audits, Inspections, and Evaluations .................................................................................................................... 10
SBA’s Business Development Assistance to 8(a) Program Participants (Report 22-08) ................................ 10
Investigations .......................................................................................................................................................... 11
Former Construction Company Owner Indicted for Defrauding Federal Program Intended for Service-
Disabled Veteran-Owned Small Businesses ..................................................................................................... 11
Agency Management............................................................................................................................................... 12
Audits, Inspections, and Evaluations .................................................................................................................... 12
SBA’s Controls Over Cash Contributions and Gifts, Fiscal Years 2021 and 2020 (Report 22-03) ................ 12
Independent Auditors’ Report on SBA’s Compliance with DATA Act Reporting (Report 22-04) .................. 12
Independent Auditors’ Report on SBA’s FY 2021 Financial Statements (Report 22-05) ............................... 13
Other Significant OIG Activities ............................................................................................................................ 14
Background Investigations Ensure Integrity ........................................................................................................ 14
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Debarment and Other Administrative Enforcement Actions ............................................................................... 14
Stakeholder Presentations on PPP and EIDL Fraud............................................................................................ 14
Reviews of Proposed Agency Regulations, Operating Procedures, and Other Initiatives Lead to Improved
Program Controls ................................................................................................................................................... 14
Approval of Small Business Development Center Surveys .................................................................................. 14
OIG Hotline ............................................................................................................................................................. 15
Significant Increases............................................................................................................................................... 15
Organizational Overview ........................................................................................................................................ 16
U.S. Small Business Administration ..................................................................................................................... 16
Office of Inspector General ..................................................................................................................................... 16
Appendixes .............................................................................................................................................................. 19
Appendix A. Reporting Period Statistical Highlights ........................................................................................... 19
Summary of OIG Dollar Accomplishments (dollars) ........................................................................................ 19
Efficiency and Effectiveness Activities Related to Audit, Other Reports, and Follow-up Activities ............. 19
Indictments, Convictions, and Case Actions .................................................................................................... 19
SBA Personnel Actions Taken as a Result of Investigation ............................................................................ 19
Program Actions Taken During the Reporting Period as a Result of OIG Action .......................................... 19
Agency Legislative and Regulatory Proposals Reviewed ................................................................................. 20
Appendix B. Reports Issued ................................................................................................................................... 21
Agency Management ......................................................................................................................................... 21
Credit/Capital Programs ................................................................................................................................... 21
Disaster Assistance............................................................................................................................................ 21
Contracting and Counseling Programs............................................................................................................. 21
Top Management Challenges ............................................................................................................................ 21
Appendix C. Reports, Recommendations, and Management Decisions ............................................................... 23
Reports with Questioned Costs (dollars) .......................................................................................................... 23
Reports with Recommendations that Funds Be Put to Better Use ................................................................. 23
Reports from Prior Periods with Overdue Management Decisions ................................................................. 23
Reports from Prior Periods with Open Recommendations as of March 31, 2022 (dollars) ........................... 24
Significant Recommendations from Prior Reporting Periods Without Final Action as of March 31, 2022 ... 25
Significant Recommendations from this Reporting Period.............................................................................. 31
Significant Management Decisions with which OIG Disagrees ...................................................................... 40
Significant Revised Management Decisions ..................................................................................................... 40
Federal Financial Management Improvement Act .......................................................................................... 40
Instances of Interference ................................................................................................................................... 40
Appendix D. Investigations Reporting Statistics .................................................................................................. 41
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Investigative Reports Issued ............................................................................................................................. 41
Persons Referred for Prosecution ...................................................................................................................... 41
Pandemic-Related Investigative Statistics ....................................................................................................... 41
Whistleblower Retaliation Cases ...................................................................................................................... 41
Investigations Involving a Senior Government Employee Where Misconduct Was Substantiated .............. 41
Investigations Involving a Senior Government Employee That Are Closed and Not Disclosed to the Public
............................................................................................................................................................................ 41
Appendix E. Legal Actions Summary .................................................................................................................... 42
Legal Actions, October 1, 2021–March 31, 2022 .............................................................................................. 42
Appendix F. Cosponsored and Other Activities..................................................................................................... 48
Appendix G. External Peer Reviews ...................................................................................................................... 50
Audits Division........................................................................................................................................................ 50
Investigations Division ........................................................................................................................................... 50
Appendix H. Reporting Requirements in the Inspector General Act of 1978, As Amended ............................... 51
Make a Difference ................................................................................................................................................... 52
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SBA’s Top Management and Performance
Challenges
Each year, OIG is required to report on the
most serious management challenges facing SBA Top Management &
the agency. Performance Challenges FY 2022
In accordance with the Reports Challenge 1
Consolidation Act of 2000 and Office of SBA’s Economic Relief Programs Are Susceptible to
Management and Budget (OMB) Circular A- Significant Fraud Risks and Vulnerabilities
136, SBA includes this information in the Challenge 2
agency financial report. Inaccurate Procurement Data and Eligibility Concerns in
the Small Business Contracting Programs Undermine the
The management challenges represent areas
Reliability of Contracting Goal Achievements
that OIG considers particularly vulnerable to
fraud, waste, abuse, or mismanagement, or Challenge 3
which otherwise pose significant risk to the SBA Faces Significant Challenges in IT Investment, System
agency, its operations, or its credibility. Development, and Security Controls
Challenge 4
Each management challenge generally has
SBA Risk Management and Oversight Practices Need
originated from one or more reports issued
Improvement to Ensure the Integrity of Loan Programs
by OIG or the Government Accountability
Office (GAO). Challenge 5
SBA’s Management and Monitoring of the 8(a) Business
We do not usually rank the top challenges in Development Program Needs Improvement
order of importance or magnitude, except
Challenge 6
for the COVID-19 challenge. We view all
Identification of Improper Payments in SBA’s Loan
eight challenges as critically important to Programs Remains a Challenge
SBA operations in the upcoming year.
Challenge 7
However, we placed COVID-19 economic SBA’s Disaster Assistance Program Must Balance
relief programs at the top of the list for the Competing Priorities to Deliver Prompt Assistance but
2022 report in recognition that it is the Prevent Fraud
agency’s most acute challenge. Challenge 8
You can find the Top Management and SBA Needs Robust Grants Management Oversight
Performance Challenges Facing the Small
Business Administration in Fiscal Year 2022 in
the Reports section of the SBA OIG website.
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Summary of OIG Oversight Work
Pandemic Response Oversight
To support businesses affected by the Coronavirus Disease 2019 (COVID-19) pandemic, in FY 2021,
Congress tasked SBA with lending $470 billion in COVID-19 Economic Injury Disaster Loans (EIDL) and $20
billion in COVID-19 EIDL Advances. Congress appropriated additional funds for new disaster assistance
programs: $35 billion for Supplemental Targeted Advances, $16.25 billion for the Shuttered Venue
Operators Grant program, and $28.6 billion for the Restaurant Revitalization Fund.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided $349 billion for the creation of
the Paycheck Protection Program (PPP) under Section 7(a) of the Small Business Act. Congress added an
additional $310 billion to the PPP on April 24, 2020, through the Paycheck Protection Program and
Health Care Enhancement Act.
The Consolidated Appropriations Act of 2021, the Economic Aid to Hard-Hit Small Businesses, Nonprofits,
and Venues Act, extended the program through March 31, 2021, providing an additional $147.5 billion in
PPP funding. Lastly, the American Rescue Act provided an additional $7.25 billion, which increased the
total program funding to $813.7 billion.
SBA’s need to quickly provide relief to small businesses led to reduced controls on pandemic-related
loans and grants, substantially increasing the fraud risk. It was immediately clear that pandemic relief
efforts had drawn the attention of unscrupulous and greedy criminals. Complaints from lenders and
allegations of misuse of funds overwhelmed OIG’s Hotline. A growing national narrative told of
widespread fraudulent activity involving funds intended to provide economic relief to qualifying small
businesses and entrepreneurs. We launched investigations and audits to root out the fraud and abuse
endangering these critical resources.
The following summarizes our pandemic oversight work this period.
Audits, Inspections, and Evaluations
SBA’s Emergency EIDL Grants to Sole Proprietors and Independent
Contractors (Report 22-01)
We determined if the agency complied with its internal policy that set emergency EIDL
advance grants at $1,000 per employee up to the CARES Act mandated maximum
amount of $10,000. We examined emergency EIDL grants to sole proprietors and independent
contractors from March 29 to July 10, 2020, when the funds were exhausted.
We found the agency provided $4.5 billion more in grants to sole proprietors and independent
contractors than they were entitled to receive based on established policy. We determined that 542,897
sole proprietors applied for the grants without an Employer Identification Number (EIN) and claimed
more than one employee on their applications.
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The absence of an EIN indicates the sole proprietor applicants should have claimed no employees and
were entitled to a maximum of $543 million ($1,000 per applicant). However, SBA disbursed $4 billion in
Emergency EIDL grant funds to these sole proprietors, an over disbursement of $3.5 billon.
We also found 161,197 independent contractors also applied but did not provide an EIN and claimed
more than one employee on their COVID-19 EIDL application. The independent contractors were entitled
to a maximum of $161 million ($1,000 per applicant). However, SBA disbursed $1.1 billion to the
independent contractors, an over disbursement of about $1 billion.
We recommended SBA remedy $4.5 billion in funds disbursed over its policy allowance. The agency
disagreed with the prior Administration’s policy determination, which was the criteria we used to
premise our findings. Despite management’s disagreement, the agency is taking corrective actions to
implement our recommendation.
Access this Inspection Report on the SBA OIG Reports site.
COVID-19 EIDL Program Recipients on the Department of Treasury’s
Do Not Pay List (Report 22-06)
Our review of the Department of Treasury’s analysis of processed COVID-19 EIDLs and
emergency EIDL grants from March to November 2020 revealed that SBA’s lack of
adequate pre-award controls during this period of review led to 75,180 COVID-19 EIDLs, totaling over
$3.1 billion, and 117,135 emergency EIDL grants, totaling over $550 million, being disbursed to
potentially ineligible recipients.
To prevent potential improper payments, we recommended SBA use the batch match or continuous
monitoring functions available in Treasury’s Do Not Pay Do Not Pay portal to identify potentially ineligible
applicants before disbursing COVID-19 EIDL program funds.
SBA managers partly agreed with our recommendations. Starting April 6, 2021, SBA implemented
procedures which included Treasury Do Not Pay monitoring. The agency started using Do Not Pay
functions and data sources for all COVID-19 relief programs to identify potentially ineligible applicants
before disbursing funds.
Access this Management Advisory on the SBA OIG Reports site.
SBA’s Oversight of the Grant Recipient’s Implementation of the
CARES Act Resource Partners Training Portal (Report 22-07)
We evaluated SBA’s handling of the grant to establish a single centralized hub for
federal resources available to small businesses in the wake of the COVID-19 pandemic.
SBA awarded $18.6 million for the informational and training hub in the critical first year of the disaster
response. After launch, less than 1 percent of the 30 million small businesses it was intended to help
used it, and only 62 of about 14,000 resource partner counselors and mentors completed any of the
training modules.
We found SBA did not ensure the grant recipient developed and implemented an effective marketing
and outreach strategy to ensure the hub successfully achieved its legislative purpose. In addition, neither
SBA nor the grant recipient set targets for any of the performance goals. We found the grant recipient
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awarded contracts without assessing the reasonableness of contract costs. We also questioned $14.8
million in costs that either did not adhere to procurement requirements or were not properly supported.
SBA agreed or partially agreed with three of our five recommendations. The agency plans to implement
corrective actions that will align performance goals with agency goals. It will also enhance oversight of
the grant recipient’s compliance with award terms and federal requirements.
Access this Evaluation Report on the SBA OIG Reports site.
SBA’s Paycheck Protection Program Loan Review Processes (Report
22-09)
We found SBA’s online loan forgiveness platform used by lenders to submit PPP
forgiveness requests is adequate to support SBA’s loan review process. However, SBA
did not meet the 90-day statutory requirement to remit forgiveness payments to lenders for 98.2
percent of loans over $2 million. Not completing reviews of loans and remitting payment promptly
creates uncertainty for borrowers and PPP lenders who are unsure if SBA will forgive the loans.
We also identified other matters that SBA should address, including how SBA made changes to allow
certain loans to be reviewed for fraud and eligibility after they had been forgiven. These changes could
affect SBA’s ability to recover funds for forgiven loans later determined to be ineligible. Outstanding loan
forgiveness applications are a potential indicator of fraud. Borrowers who fraudulently obtained a PPP
loan are unlikely to apply for loan forgiveness. We identified 1.9 million loans totaling $177.3 billion with
no forgiveness application as of May 2021.
We recommended SBA develop a plan to ensure remaining forgiveness reviews and remittances are
completed within 90 days as required by the CARES Act. SBA management agreed with the report finding
and recommendation.
Access this Evaluation Report on the SBA OIG Reports site.
Notable Investigations
Members of Los Angeles-Based Fraud Ring Sentenced in Multimillion-
Dollar Scheme
Seven members of a Los Angeles-based fraud ring were sentenced in a scheme that
involved submitting 150 PPP and EIDL applications, obtaining more than $20 million in
pandemic economic relief funds.
The defendants used dozens of fake, stolen, or synthetic identities, including names belonging to elderly
or deceased people and foreign exchange students. The defendants also submitted false and fictitious
documents to lenders and SBA, including fake identity documents, tax documents, and payroll records.
The defendants then used the funds intended to help struggling small businesses for down payments on
luxury homes in Tarzana, Glendale, and Palm Desert, California. They also used the funds to buy gold
coins, diamonds, jewelry, luxury watches, fine imported furnishings, designer handbags, and a Harley-
Davidson motorcycle. The leader of the fraud ring was sentenced to 17 years in prison. Two others were
sentenced to 6 years and another conspirator to 5 years.
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U.S. Small Business Administration | Office of Inspector General
Oakland Woman Sentenced to 3 Years in Million Dollar Pandemic Relief
Fraud
A California woman pled guilty to bank fraud and money laundering and received 36
months in prison. She obtained pandemic relief funds from both the PPP and EIDL for
multiple fictitious businesses, fraudulently claiming 89 employees and a monthly payroll of
more than $700,000.
The woman admitted receiving $992,291 in PPP loans and $150,900 in EIDLs and advances. She used the
money for a buying spree of high-end luxury items and services, such as $184,000 on private jet travel
and hotel expenses; $124,000 on luxury purchases from Louis Vuitton, Neiman Marcus, and Nordstrom;
and $16,000 on boat and car rentals. She spent another $150,000 on Mercedes-Benz, Land Rover, and
Nissan automobiles. She was also ordered to pay $1.1 million in restitution.
Texas Man Sentenced to More Than 9 Years in COVID-19 Fraud and
Money Laundering Scheme
A Texas man pled guilty to charges of wire fraud and money laundering for fraudulently
obtaining over $1.6 million in PPP funds. He falsely represented the number of employees
and payroll expenses in PPP loan applications.
After he received the PPP loan funds, he bought a Lamborghini Urus, a Ford F-350 truck, and a Rolex
watch. The U.S. Department of Justice, along with other law enforcement partners, seized over $700,000
of the funds. This case was investigated by SBA OIG, the Federal Housing Finance Agency Office of
Inspector General, and the U.S. Postal Inspection Service Criminal Investigations.
California Man Convicted in $27 Million PPP Fraud Scheme
A California man who submitted 27 PPP fraudulent loan applications seeking $27 million
was convicted of bank fraud, submitting false statements to a financial institution, and
money laundering. In his fraudulent applications, he stated that these shell companies had
100 employees and average monthly payrolls of $400,000.
Evidence showed he also submitted Internal Revenue Service documents falsely stating that each of the
companies had an annual payroll of $4.8 million. He used the $3 million in PPP funds he received for
personal expenses, including renting an oceanfront apartment in Santa Monica.
Two Florida Men Pled Guilty to $35 Million COVID-19 Relief Fraud
Scheme
Two Florida men pled guilty to conspiracy to commit wire fraud in the Northern District of
Ohio for leading a nationwide scheme to fraudulently obtain over $35 million in PPP loans.
They recruited additional PPP loan applicants, preparing and submitting fraudulent loan
applications in exchange for a share of the proceeds. They submitted or facilitated at least 79 fraudulent
loan applications worth at least $35 million—and planned to submit more.
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Man Who Evaded Justice Sentenced to Federal Prison for Pandemic
Relief Fraud
After fleeing federal prosecution and being re-arrested, a former Oregon man was
sentenced to about 5 years in federal prison for stealing funds intended to help small
businesses during the COVID-19 pandemic.
According to court documents, a small business owner contacted the Clackamas County Sheriff’s Office
to report that an unknown person had obtained and used personal information belonging to him, his
wife, and their business to establish accounts at a bank in Boston, Massachusetts. A review of SBA
records revealed that six EIDL applications had been submitted using that small business owner’s social
security number.
Of the six applications, two were funded for a total of $295,000. Investigators traced wire transferred
funds made by the fraudster to the purchase of a Ford F-350 Lariat truck for $77,898 using a counterfeit
California driver’s license. The suspect was later found to have provided business services to the small
business owner whose identity he had stolen.
Arizona Man Sentenced to 32 Months in Federal Prison for Fraudulent
EIDL Applications
An Arizona man was sentenced to 32 months in federal prison for submitting fraudulent
EIDL applications on behalf of more than 70 limited liability companies. He received $3.8
million in loans and $336,000 in grants.
In these applications, he made false statements about the number of employees, the amount of gross
revenues, and cost of goods sold. He also falsely agreed to use the funds as working capital and instead
used the economic assistance money to purchase a new home.
Oregon Dentist Faces Federal Charges for Stealing About $8 Million in
COVID-Relief Program Funds
An Oregon man who attempted to defraud the EIDL program of millions and then set his
sights on the Restaurant Revitalization Fund is facing federal charges for obtaining nearly
$8 million in funds meant to help small businesses adversely affected by the pandemic.
He submitted three restaurant revitalization applications for restaurants allegedly located in Sarasota,
Miami, and Daytona Beach, Florida. The suspect’s applications contained false business information and
listed his personal residence as the business mailing address.
He had first attempted to steal EIDL funds using the names and Employer Identification Numbers of
fictitious business entities. He further provided false information about the business start dates, number
of employees, locations, and the identities of the purported applicants and business owners.
All of the applications were submitted online from an internet protocol address associated with the
defendant’s dental practice.
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U.S. Small Business Administration | Office of Inspector General
Small Business Access to Capital
SBA provides small businesses with capital and financial assistance through several key programs. SBA
has a financial assistance portfolio of guaranteed and direct loans that totaled about $453 billion as of
September 30, 2021. Over the years, OIG has worked closely with the agency to identify potential points
of risk and improve SBA’s oversight and controls to ensure eligible participants most in need of assistance
benefit from these programs.
The Section 7(a) Loan Program is SBA’s principal vehicle for providing small businesses with access to
credit that cannot be obtained elsewhere. Proceeds from a 7(a) loan may be used to establish a new
business or to assist in acquiring, operating, or expanding an existing business. This program relies on
numerous outside parties (such as borrowers, loan agents, and lenders) to complete loan transactions.
SBA has centralized several loan approval and servicing functions and reduced the number of staff
performing these functions, placing more responsibility on and giving greater independence to lenders.
Past OIG reviews have reported on these trends, and OIG continues to identify weaknesses in SBA’s
lender and loan agent oversight processes.
Criminals use a wide array of techniques to fraudulently get—or induce others to obtain—SBA-
guaranteed loans. The techniques include submitting fraudulent documents, making fictitious asset
claims, manipulating listed property values, using loan proceeds contrary to the terms of the loans, and
failing to disclose debts or previous criminal records.
Consequently, there is a greater chance of financial loss to the agency and its lenders. OIG dedicates a
significant portion of its resources to identifying wrongdoers and, whenever possible, recovering taxpayer
funds.
During this semiannual period, our audit work in this program area was focused on the pandemic
response programs. We have included those reports in the Pandemic Response Oversight section.
Investigations
Jury Convicts Five Former Officers and Employees of Banc-Serv Partners
in $5 Million Scheme
Five former officers and employees of Banc-Serv Partners LLP, a lending service provider,
were convicted in a 13-year conspiracy to defraud the SBA loan guarantee program of $5
million in guaranteed disbursements.
The defendants, including a former president and company founders, fraudulently obtained SBA-
guaranteed loans on behalf of their clients, knowing that the loans did not meet SBA’s guidelines and
requirements for the guarantees.
Evidence proved that from 2004 until 2017, the defendants helped originate SBA loans on behalf of
various financial institutions and other lenders and, on multiple occasions, fraudulently obtained
guarantees for loans that SBA had deemed ineligible.
They knowingly misrepresented what the loans would be used for and unlawfully diverted previously
denied loan applications into expedited approval channels at SBA. When the fraudulently guaranteed
loans defaulted, the defendants caused the submission of the reimbursement requests to SBA to
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purchase the defaulted loans from investors and lending institutions, shifting some of the losses on the
ineligible loans to SBA.
The defendants face a maximum sentence of 30 years in prison per count. The charge of conspiracy to
commit wire fraud carries a maximum sentence of 20 years.
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U.S. Small Business Administration | Office of Inspector General
Disaster Assistance Program
Disaster assistance has been part of the agency since its inception in 1953. SBA provides long-term, low-
interest financial assistance to businesses of all sizes, private nonprofits, homeowners, and renters
following a declared disaster. Each year, SBA approves hundreds of millions of dollars in disaster
assistance loans.
The disaster assistance loan program is the only form of SBA assistance not limited to small businesses.
The program’s disaster assistance loans are the primary form of federal assistance for repairing and
rebuilding nonfarm, private sector losses following a declared disaster.
The program includes four categories of loans for disaster-related losses:
• Home disaster loans
• Business disaster loans (includes PPP loans)
• Economic injury disaster loans (includes pandemic relief loans)
• Military reservist economic injury loans
During this semiannual period, our audit and investigations work in this program area was focused on the
pandemic response programs. We have included those reports and investigations in the Pandemic
Response Oversight section.
9 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Contracting and Counseling Programs
The U.S. government is the largest single purchaser of goods and services in the world, awarding over
$550 billion in prime contracts annually. SBA works to maximize opportunities for small businesses to
receive these contract awards. As mandated by the Small Business Act, the government-wide goal is to
award at least 23 percent of contract dollars to small businesses.
SBA has specific programs that focus on strengthening particular types of small businesses, like those
owned by service-disabled veterans and women, as well as small businesses that are disadvantaged or
located in historically underutilized business zones (HUBZones).
The HUBZone program helps small businesses stimulate their economically challenged local economies.
Similarly, to help small, disadvantaged businesses gain access to federal and private procurement
markets, SBA’s 8(a) Business Development Program helps small businesses owned by socially and
economically disadvantaged individuals gain business skills and access to federal contracting
opportunities so that they can better compete in the open marketplace. The program offers free
business development education, training workshops, and match-making opportunities with federal
buyers.
SBA also aids existing and prospective small businesses through a variety of counseling and training
services offered by partner organizations. Among these partners are Small Business Development
Centers, the SCORE mentoring network, Women’s Business Centers, and Veterans Business Outreach
Centers. SBA also started the Community Navigator Pilot Program, an American Rescue Plan initiative.
The program will provide funding to organizations that will work with local community groups to improve
access to SBA and government resources.
Additionally, SBA designed the Boots to Business program, providing transitioning service members
interested in exploring business ownership or other self-employment opportunities with technical
assistance and access to resources. These programs require effective and efficient management,
outreach, and service delivery.
Audits, Inspections, and Evaluations
SBA’s Business Development Assistance to 8(a) Program Participants
(Report 22-08)
We reviewed the business development assistance SBA provided 8(a) program
participants from 2011-20, reviewing the files for 40 of the firms. We also examined
whether the program adapted successfully during the pandemic.
We found that 15 of the 40 firms we reviewed did not have approved business plans, making these firms
ineligible to receive $93 million in 8(a) awards. We also found SBA did not consistently document that its
staff assessed the needs, counseled, or conducted field visits with 8(a) firms to ensure they received the
assistance needed to be prepared to compete for contracts without long-term 8(a) assistance.
However, we found SBA program officials offered program flexibilities to all 8(a) participants during the
pandemic, adapting business development assistance to help firms stay in business and remain in the
Spring 2022 Semiannual Report to Congress | 10
U.S. Small Business Administration | Office of Inspector General
program. We made eight recommendations for the agency to measure, monitor, and better deliver
training and other business development assistance to 8(a) firms.
SBA management agreed with most of our recommendations. SBA plans to identify program-level goals
that align with the agency’s strategic plan. SBA also plans to assess the staffing and resources allocated
for SBA district offices to consistently provide business development assistance and improve program
participants’ customer experience.
Access this Audit Report on the SBA OIG Reports site.
Investigations
Former Construction Company Owner Indicted for Defrauding Federal
Program Intended for Service-Disabled Veteran-Owned Small Businesses
The former owner of several construction companies, along with two co-conspirators,
were charged with conspiracy to defraud the United States in a long-running scheme to
obtain valuable government contracts under an SBA certification program. The two co-conspirators pled
guilty to the scheme in November 2020 and March 2021.
As part of the scheme, one of the defendants installed a service-disabled veteran as the ostensible owner
of a general construction company. The business was then purported to be eligible for contracts set aside
for Service-Disabled Veteran-Owned Small Businesses. The suspects ineligible for the veteran certification
exercised financial and operational control over the company.
According to court documents, the conspirators concealed control of the business to secure over $250
million in government contracts as early as 2004, continuing through to at least 2017. The fraud
prevented qualifying service-disabled veteran businesses from securing these lucrative government
contracts.
For conspiracy to commit wire fraud and to defraud the United States, the defendant faces a maximum
penalty of 5 years in prison and a $250,000 fine. For each wire fraud count, the defendant faces a
maximum penalty of 20 years in prison and a $250,000 fine.
11 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Agency Management
OIG is responsible for ensuring that agency management appropriately safeguards SBA from fraud,
waste, and abuse, and that SBA activities directly further agency goals. As part of this work, OIG
coordinates with the offices of the Chief Financial Officer, the Chief Information Officer, and the Chief
Operating Officer to review financial reporting and performance management, human resources,
procurements and grants, space and facilities, and maintenance of SBA’s information systems and
related security controls.
Audits, Inspections, and Evaluations
SBA’s Controls Over Cash Contributions and Gifts, Fiscal Years 2021
and 2020 (Report 22-03)
We are responsible for semiannual audits to determine the adequacy of SBA controls
over the solicitation, acceptance, holding, and use of cash contributions and gifts and
ensuring the agency is appropriately using and accounting for such gifts. The Consolidated Appropriations
Act in 2021 and 2020 granted SBA the authority to accept gifts of up to $4 million. In addition, SBA must
put any cash gifts into a separate account.
The only activity for this review period relates to cash contributions for 2020 National Small Business
Week. We found SBA complied with the Consolidated Appropriations Act and SBA regulations and
policies regarding soliciting and accepting cash contributions. The 10 entities that cosponsored the
business week were properly vetted through SBA program offices to ensure no business relationship
existed that would cause a conflict of interest. They provided cash contributions totaling $360,000.
Although SBA adequately complied with applicable laws and policies, we noted control deficiencies in the
close out of the event. We made recommendations to ensure all cosponsored activities are closed out in
a timely manner in accordance with SBA standard operating procedures. SBA management agreed with
our recommendations and proposed to clarify language in the National Small Business Week
cosponsorship and joinder agreements to emphasize the 90-day close out requirement. Management
also assigned staff to perform monthly reconciliations to ensure the fiscal agent reporting is accurate.
Access this Compliance Report on the SBA OIG Reports site.
Independent Auditors’ Report on SBA’s Compliance with DATA Act
Reporting (Report 22-04)
The Digital Accountability and Transparency (DATA) Act of 2014 requires OIG to
annually audit SBA’s financial data and adherence to government financial data
standards. We contracted with the independent certified public accounting firm KPMG LLP to conduct
the annual audit.
KPMG’s audit provided findings on the agency’s reporting required under the DATA Act. SBA met the
government-wide financial data standards, and the data submission was of higher quality than in
previous years. The agency has made progress since the 2019 audit increasing the availability, accuracy,
and usefulness of federal spending information.
Spring 2022 Semiannual Report to Congress | 12
U.S. Small Business Administration | Office of Inspector General
However, SBA did not submit certain data completely, accurately, or on time. In addition, SBA needs to
improve the completeness and accuracy of DATA Act reporting.
Access this Audit Report on the SBA OIG Reports site.
Independent Auditors’ Report on SBA’s FY 2021 Financial Statements
(Report 22-05)
The Chief Financial Officers Act of 1990, as amended, requires an annual independent
audit and report on SBA’s consolidated financial statements. We contracted with the
independent certified public accounting firm KPMG LLP to conduct an audit of SBA’s consolidated
balance sheets for Fiscal Years 21 and 20 and the notes related to those statements. KPMG was also
engaged to audit the consolidated statements of net cost and changes in net position and combined
statement of budgetary resources for FY 2020.
KPMG auditors found significant matters for which they were unable to obtain sufficient and appropriate
audit evidence to provide a basis for an audit opinion on SBA’s consolidated financial statements for FY
2021. KPMG issued a disclaimer of opinion on the consolidated financial statements for FYs 21 and 20.
Because of inadequate processes and controls, SBA was unable to provide adequate evidential matter in
support of a significant number of transactions and account balances related to the expanded Paycheck
Protection and Economic Injury Disaster Loan programs and the newly implemented Restaurant
Revitalization Fund and Shuttered Venue Operators Grant program.
For FY 2021, KPMG identified six material weaknesses and two significant deficiencies in internal controls
over financial reporting. We provided a draft of KPMG’s audit report to SBA’s Acting Chief Financial
Officer, who did not concur with the severity of five material weaknesses.
Access this Audit Report on the SBA OIG Reports site.
13 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Other Significant OIG Activities
Background Investigations Ensure Integrity
During this reporting period, OIG initiated 63 background investigations and issued two security
clearances for OIG employees and contractors. OIG adjudicated 16 background investigative reports.
Debarment and Other Administrative Enforcement Actions
OIG promotes program integrity by making present responsibility referrals to SBA and other agencies.
Present responsibility means the business ethics, integrity, honesty, and competence of persons who
participate in SBA programs or otherwise do business with the government. During this reporting period,
OIG sent 43 present responsibility referrals to SBA.
Present responsibility referrals can result in suspensions, debarments, and similar administrative
enforcement actions. These actions protect taxpayer funds from program participants who are not a
good risk for the government.
A typical OIG referral contains a summary of allegations and criminal, civil, administrative, or other
evidence supporting the recommendation. Most OIG administrative referrals involve SBA’s loan and
contract programs. OIG ensures that a suspension and debarment official reviews all appropriate
allegations arising in other contexts, such as the investigation of False Claims Act cases.
Stakeholder Presentations on PPP and EIDL Fraud
During this reporting period, SBA OIG held 97 presentations for internal and external stakeholders to
raise awareness of fraud, waste, and abuse related to SBA programs. More than 3,500 participants
attended these events.
Reviews of Proposed Agency Regulations, Operating Procedures, and
Other Initiatives Lead to Improved Program Controls
OIG reviews changes SBA proposes to make to its program directives, such as regulations, internal
operating procedures, agency policy notices, and SBA forms completed by the public. OIG often identifies
material weaknesses in the proposals and works with the agency to promote more effective controls to
deter waste, fraud, and abuse. During the reporting period, OIG reviewed 81 proposed revisions of these
program directives and submitted comments designed to improve eight of the initiatives.
Approval of Small Business Development Center Surveys
Section 21(a)(7) of the Small Business Act states that until Small Business Development Center
information disclosure regulations are issued, the Inspector General must approve any related client
survey, as well as the use of any survey information. OIG must also include this approval in the
semiannual report. SBA did not submit any surveys OIG review during this reporting period.
Spring 2022 Semiannual Report to Congress | 14
U.S. Small Business Administration | Office of Inspector General
OIG Hotline
OIGs have a Hotline function that takes complaints from anyone who
suspects waste, fraud, abuse, or serious mismanagement within an
agency or its programs by employees, contractors, and the public.
Hotline complaints may result in corrective actions, audits, or
administrative, civil, or criminal investigations.
Our Hotline staff vets complaints and monitors the progress of
matters referred to SBA program offices for action to ensure the
agency has promptly followed up, adequately resolved allegations,
and documented any corrective actions.
Significant Increases
Hotline work has changed dramatically because of the COVID-19 pandemic. OIG’s Hotline team has been
diligently working through a large backlog of complaints. The staff is addressing each complaint received
via online submissions to the SBA OIG website, telephone, e-mail, and posted mail, as well as referrals
from banks and other agencies.
The number of complaints has increased by orders of
magnitude since the COVID-19 pandemic relief programs
were established by Congress, which has overwhelmed the
system and our staff.
During this semiannual period, the OIG Hotline received
more than 33,600 complaints of loan fraud and abuse,
identity theft, and problems with SBA’s customer service.
In total, since the pandemic began in March 2020, OIG has
received more than 200,000 complaints. By contrast, the
OIG Hotline received 742 complaints in calendar year 2019.
15 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Organizational Overview
U.S. Small Business Administration
The mission of the SBA under the Small Business Act, as amended, is to maintain and strengthen the
nation’s economy by enabling the establishment and vitality of small businesses and assisting in the
economic recovery of communities after disasters. The agency’s strategic plan for FYs 2022-26 has three
key goals:
1. Ensure equitable and customer-centric design and delivery of programs to support small
businesses and innovative startups
2. Build resilient businesses and a sustainable economy
3. Implement strong stewardship of resources for greater impact
SBA is organized around the areas of financial, contracting, entrepreneurial development, and disaster
assistance. The agency also represents small businesses through an independent advocate and an
ombudsman.
SBA headquarters is in Washington, D.C. The agency has staff in 10 regional offices, 68 district offices and
corresponding branch offices, and 4 disaster field offices. SBA also has 6 government contracting area
offices and maintains a network of resource partners in all 50 states, the District of Columbia, Puerto
Rico, American Samoa, the U.S. Virgin Islands, and Guam.
Office of Inspector General
OIG’s mission is to provide
independent, objective, and timely
oversight to improve the integrity,
accountability, and performance of SBA
and its programs for the benefit of all
Americans.
Our strategic plan for FYs 2022-27 has
four goals. In addition to the Office of
Counsel to the Inspector General, three
divisions assist in carrying out the
statutory responsibilities of the OIG:
the Audits Division, Investigations
Division, and the Management and
Operations Division.
Our vision is to be valued and engaged
change agents who set the standard for
oversight excellence in support of
America’s small businesses.
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U.S. Small Business Administration | Office of Inspector General
We seek to demonstrate our values of integrity, commitment, and excellence as we deliver products and
services of the highest quality defined by accuracy, timeliness, fairness, and usefulness.
The Office of Counsel provides legal and ethics advice to all OIG components; protects the OIG’s interests
in litigation arising out of or affecting OIG operations; assists with the prosecution of criminal, civil, and
administrative enforcement matters; processes subpoenas; responds to Freedom of Information and
Privacy Act requests, and reviews and comments on proposed policies, regulations, legislation, and
procedures.
The Audits Division performs and oversees audits and reviews to promote the economical, efficient, and
effective administration of SBA programs and operations. Key areas of emphasis are SBA loan, disaster
assistance, business development, and government contracting programs, as well as mandatory and
other statutory audit requirements involving information technology security, financial reporting, and
other SBA program areas. The balance of the engagements is discretionary and focuses on high-risk
activities and identified management issues.
The Investigations Division manages a program to detect and deter illegal and improper activities
involving SBA’s programs, operations, and personnel. The criminal investigations staff carries out a full
range of traditional law enforcement functions. Within the division, the Hotline reviews allegations of
waste, fraud, abuse, and severe mismanagement within SBA or its programs made by employees,
contractors, and the public.
A preliminary review of all complaints is conducted to determine the appropriate course of action. As
part of the review process, Hotline staff may coordinate reviews of allegations within OIG, SBA program
offices, or other government agencies. The Security Operations Staff within the division conducts
required employee and contractor background investigations to achieve a high level of integrity in the
agency's workforce. It makes adjudications on OIG employees and contractors for issuance of PIV cards
pursuant to HSPD-12 background investigations requirements.
The Management and Operations Division provides business support (e. g., budget and financial
management, human resources, IT, data analytics, and procurement) for various OIG functions and
activities.
OIG’s headquarters is in Washington, D.C. Our field offices are in Atlanta, Georgia; Chicago, Illinois; Dallas-
Fort Worth, Texas; Detroit, Michigan; Denver, Colorado; Herndon, Virginia; Houston, Texas; Los Angeles,
California; Miami, Florida; New York, New York; Philadelphia, Pennsylvania; Federal Way, Washington;
and Washington, D.C.
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U.S. Small Business Administration | Office of Inspector General
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U.S. Small Business Administration | Office of Inspector General
Appendixes
Appendix A. Reporting Period Statistical Highlights
Summary of OIG Dollar Accomplishments (dollars)
Dollar Accomplishments as a Result of Investigations and Related Activities —
Potential Investigative Recoveries and Fines $95,247,267
Other Recoveries (e.g., administrative seizures with partner law enforcement agencies) 44,965,881
Asset Forfeitures Attributed to OIG Investigations 23,766,105
Loans/Contracts Not Approved or Canceled as a Result of Investigations 6,151,506
Investigations Subtotal 170,130,759
Dollar Accomplishments as a Result of Audit Activities —
Disallowed Costs Agreed to by Management 4,462,481,000
Recommendations that Funds Be Put to Better Use Agreed to by Management 0
Audit Subtotal 4,462,481,000
Total OIG Dollar Accomplishments $4,632,611,759
Efficiency and Effectiveness Activities Related to Audit, Other Reports, and Follow-
up Activities
Reports Issued 9
Recommendations Issued 70
Dollar Value of Costs Questioned $4,607,909,066
Dollar Value of Recommendations that Funds Be Put to Better Use 0
Recommendations with Management Decisions 65
Recommendations without a Management Decision 20
Collections as a Result of Questioned Costs 0
Indictments, Convictions, and Case Actions
Indictments from OIG Cases 98
Convictions from OIG Cases 85
Cases Opened 334
Cases Closed 156
SBA Personnel Actions Taken as a Result of Investigation
Dismissals 0
Resignations and Retirements 0
Suspensions 0
Reprimands 0
Program Actions Taken During the Reporting Period as a Result of OIG Action
Present Responsibility Referrals to the Agency 43
Pending at the Agency as of March 31, 2022 41
Suspensions Issued by the Agency 0
Proposed Debarments Issued by the Agency 0
Final Debarments Issued by the Agency 0
Proposed Debarments Declined by the Agency 0
Administrative Agreements Entered by the Agency in Lieu of Debarment 0
Present Responsibility Actions by Other Agencies 0
19 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Agency Legislative and Regulatory Proposals Reviewed
Legislation, Regulations, Standard Operating Procedures, and Other Issuances Reviewed 81
Comments Provided by OIG to Improve Legislation, Regulations, Standard Operating Procedures, and
Other Issuances 8
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U.S. Small Business Administration | Office of Inspector General
Appendix B. Reports Issued
Agency Management
Title Report Issue Date Questioned Funds for
Number Costs Better Use
(dollars) (dollars)
SBA’s Controls Over Cash Contribution and Gifts FY 2021 22-03 10/28/2021 — —
and 2022
Independent Auditors’ Report on SBA’s Compliance with 22-04 11/8/2021 — —
DATA Act Reporting
Independent Auditors’ Report on SBA’s FY 2021 22-05 11/15/2021 — —
Financial Statements
COVID-19 EIDL Program Recipients on the Department 22-06 11/30/2021 — —
of Treasury’s Do Not Pay List
Program Subtotal 4 — $14,762,774 —
Credit/Capital Programs
Title Report Issue Date Questioned Funds for
Number Costs Better Use
(dollars) (dollars)
SBA’s Paycheck Protection Program Loan Review 22-09 2/28/2022 — —
Processes
Program Subtotal 1 — — —
Disaster Assistance
Title Report Number Issue Date Questioned Funds
Costs (dollars) for
Better
Use
(dollars)
SBA Emergency EIDL Grants to Sole Proprietors and 22-01 10/7/2021 4,500,000,000 —
Independent Contractors
Program Subtotal 1 — $4,500,000,000 —
Contracting and Counseling Programs
Title Report Number Issue Date Questioned Funds
Costs (dollars) for
Better
Use
(dollars)
SBA’s Oversight of the Grant Recipient’s Implementation 22-07 1/18/2022 $14,762,774 —
of the CARES Act Resource Partners Training Portal
SBA’s Business Development Assistance to 8(a) Program 22-08 2/14/2022 93,146,292 —
Participants
Program Subtotal 2 — $107,909,066 —
Top Management Challenges
Title Report Number Issue Date Questioned Funds for
Costs (dollars) Better Use
(dollars)
Top Management and Performance Challenges Facing 22-02 10/15/2021 — —
the Small Business Administration in FY 2022
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U.S. Small Business Administration | Office of Inspector General
Program Subtotal 1 — —
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U.S. Small Business Administration | Office of Inspector General
Appendix C. Reports, Recommendations, and Management Decisions
Reports with Questioned Costs (dollars)
IG Act Reporting Requirement Reports Recommendations* Questioned Costs** Unsupported
(dollars) Costs***
(dollars)
No management decision made by 1 1 $10,800,476 10,800,476
September 30, 2021
Issued during this reporting period 3 5 4,607,909,066 4,500,000,000
Management decisions made during 2 2 4,514,262,774 4,500,000,000
this reporting period
(i) Disallowed costs 1 1 4,462,481,000 4,462,481,000
(ii) Costs not disallowed 2 2 51,781,774 37,519,000
No management decision made by 2 4 $104,446,768 10,800,476
March 31, 2022
*Reports may have more than one recommendation.
**Questioned costs are costs found to be improper.
***Unsupported costs may be proper but lack documentation. Unsupported costs are a subset of questioned costs.
Reports with Recommendations that Funds Be Put to Better Use
IG Act Reporting Requirement Reports Recommendations Recommended Funds for Better Use
(dollars)
No management decision made by — — —
September 30, 2021
Issued during this reporting period — — —
Subtotal — — —
Management decisions made — — —
during this reporting period
(i) Recommendations agreed to by — — —
SBA management
(ii) Recommendations not agreed — — —
to by SBA management
No management decision made by — — —
March 31, 2022
Reports from Prior Periods with Overdue Management Decisions
Report Report Title Issue Date Recommendation Reason for Delay Timetable
Number for
Resolution
21-08 SBA’s Use of Vendors 2/3/2021 Ratify the over $10.8 million SBA disagreed that 4/30/2022
Without a Contract in payments in accordance ratification of
with the FAR and 48 C.F.R. § unauthorized
1.602-3. commitments was
necessary.
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U.S. Small Business Administration | Office of Inspector General
Reports from Prior Periods with Open Recommendations as of
March 31, 2022 (dollars)
Report Title Date Issued Number of Open Aggregate
Number Recommendations Potential Cost
Savings (dollars)
17-19 Audit of SBA’s Microloan Program 9/28/2017 2 $137,199.806
18-03 Independent Auditor’s Report on the SBA’s FY 11/14/2017 1 —
2017 Financial Statements
18-13 Evaluation of SBA 7(a) Loans Made to Poultry 3/6/2018 1 —
Farmers
19-08 SBA’s HUBZone Certification Process 3/28/2019 1 —
19-15 OIG High Risk 7(a) Loan Review Program 7/10/2019 1 3,000,297
19-16 Office of Inspector General High Risk 7(a) Loan 8/14/2019 2 2,059,132
Review Program
19-17 Evaluation of SBA’s All Small Mentor-Protege 9/17/2019 2 —
Program
20-03 Audit of SBA's Oversight of High-Risk Lenders 11/12/2019 5 13,313,560
20-08 Audit of the SBA's Community Advantage Pilot 3/18/2020 6 51,472,944
Program
20-18 Office of Inspector General High Risk 7(a) Loan 8/25/2020 1 2,094,574
Review Program
20-20 Audit of SBA’s Compliance with the Debt 9/30/2020 10 —
Collection Improvement Act, as Amended
Total -- -- 69 $209,926,274
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U.S. Small Business Administration | Office of Inspector General
Significant Recommendations from Prior Reporting Periods Without Final Action as
of March 31, 2022
Report Date Issued Recommendation Date of Final Action
Number Management Target Date
Decision
17-19 9/28/2017 Continue efforts to improve the information 1/4/2018 12/31/2021
system to include outcome-based performance
measurements and ensure the data captured
can be used to effectively monitor the Microloan
Program compliance, performance, and
integrity.
17-19 9/28/2017 Update the microloan reporting system manual 1/4/2018 12/31/2021
to reflect current technology capabilities.
18-03 11/14/2017 Monitor and perform procedures over the 1/10/2018 9/30/2021
service organization’s attestation report
regarding user control considerations. This
assessment should be performed annually.
18-13 3/6/2018 Review the arrangements between integrators 3/1/2018 9/15/2022
and growers under the revised regulations, and
establish and implement controls, such as
supplemental guidance, to ensure SBA loan
specialists and lenders make appropriate
affiliation determinations.
19-08 3/28/2019 Implement a plan to mitigate IT issues affecting 3/29/2019 1/31/2022
the HUBZone certification process.
19-15 7/10/2019 Require the lender to bring the loan into 7/11/2019 12/1/2021
compliance or, if not possible, seek recovery of
$3,000,297 plus interest on the guaranty paid by
SBA.
19-16 8/14/2019 Require the lender to bring the loan into 8/15/2019 12/1/2021
compliance or, if not possible, seek recovery of
$1,367,417 plus interest on the guaranty paid by
SBA.
19-16 8/14/2019 Require the lender to bring the loan into 8/15/2019 12/1/2021
compliance or, if not possible, seek recovery of
$691,715 plus interest on the guaranty paid by
SBA.
19-17 9/17/2019 Prioritize staff resources to ensure application 2/4/2020 9/30/2022
reviews and annual evaluations are conducted in
accordance with regulatory and program
requirements.
19-17 9/17/2019 Ensure that certify.SBA.gov has the functionality 9/17/2019 9/30/2022
needed for program officials to conduct
application reviews and annual evaluations.
20-03 11/12/2019 Develop and implement policies and procedures 11/15/2019 7/31/2022
to document justification for not conducting
planned reviews and identifying and prioritizing
additional lenders for review.
20-03 11/12/2019 Develop and implement a comprehensive 11/15/2019 9/30/2022
database to manage oversight of high-risk
lenders to ensure performance of all planned
reviews, implementation of risk mitigation
actions, and identification of noncompliant
lender and systemic material loan deficiencies.
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U.S. Small Business Administration | Office of Inspector General
20-03 11/12/2019 Conduct periodic overall assessments of the 11/15/2019 12/31/2021
high-risk lender review results and
recommended risk mitigation actions to ensure
analysts recommend appropriate and consistent
corrective and enforcement actions.
20-03 11/12/2019 Develop and implement policies and procedures 11/15/2019 7/31/2022
to communicate systemic lender issues and
material loan deficiencies to the appropriate SBA
loan approval and purchase centers to facilitate
proactive portfolio management and to mitigate
the risk of improper guaranty purchases in the
event of default.
20-03 11/12/2019 Determine whether the lenders corrected the 11/15/2019 4/30/2022
deficiencies on the 21 loans purchased for a
total of $13.3 million. If not, require the lenders
to bring the loans into compliance or, if not
possible, seek recovery of the guaranty paid by
SBA from lenders.
20-08 3/18/2020 Evaluate options that facilitate the Community 6/30/2020 3/31/2022
Advantage pilot program’s ability to effectively
expand access to capital in underserved markets.
20-08 3/18/2020 Evaluate whether it is feasible to align the 6/30/2020 3/31/2022
maximum interest rates charged under the
Community Advantage pilot program with
comparable 7(a) program rates, excluding SBA
Express.
20-08 3/18/2020 Provide criteria to lenders to assist them with 8/5/2020 12/31/2021
assessing the borrowers’ management and
technical assistance needs.
20-08 3/18/2020 Establish methods to assess whether lenders 6/30/2020 3/31/2022
have the expertise needed to provide
management and technical assistance to
underserved borrowers and to address any
lender deficiencies.
20-08 3/18/2020 Require lenders to complete the data fields 6/30/2020 3/31/2022
related to the management and technical
assistance provided and enhance the annual
Community Advantage performance analysis by
including the evaluation of the performance
associated with the various types of
management and technical assistance.
20-08 3/18/2020 Establish a process to periodically assess the 6/30/2020 12/31/2021
performance of Community Advantage loans
approved with Small Business Scoring Service
scores under 140 to determine whether the
recently implemented SBA approval requirement
is adequately mitigating the risk of loss.
20-18 8/25/2020 Require the lender to bring the loan into 8/25/2020 12/1/2021
compliance or, if not possible, seek recovery of
$2,094,574 on the guaranty paid by SBA.
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U.S. Small Business Administration | Office of Inspector General
20-20 9/30/2020 Review all loans assigned to the resolution 9/16/2020 4/29/2022
center that are 180 days or more delinquent and
classified with code 66 (Lien or Mortgage/Refer
to Treasury Offset Program Only) and 00 (Clear
Existing Status Code) and transfer the loans to
Treasury Cross-Servicing, unless verified as
exempt when the temporary suspension of debt
collection activities because of the pandemic is
lifted.
20-20 9/30/2020 Perform a cost benefit analysis to determine if 9/16/2020 4/29/2022
SBA should begin assessing fees to offset the
cost of processing and handling delinquent
disaster loans.
20-20 9/30/2020 Revise SOP 50 52 to clearly communicate that all 9/16/2020 4/29/2022
loans with collateral must be evaluated for
foreclosure and placed in foreclosure status
before they are 180 days delinquent.
20-20 9/30/2020 Revise SOP 50 52 2 to clearly communicate that 9/16/2020 4/29/2022
all debts 180 days delinquent must be
transferred to Treasury Cross-Servicing unless
the debt meets a valid transfer exemption.
20-20 9/30/2020 Establish requirements to provide annual 9/16/2020 4/29/2022
training on Debt Collection Improvement Act
requirements to all staff of the resolution center.
20-20 9/30/2020 Ensure that information used to monitor 9/16/2020 4/29/2022
compliance with the Debt Collection
Improvement Act includes all loans assigned to
the resolution center as identified in the Capital
Access Financial System.
20-20 9/30/2020 Review all loans currently assigned to the Center 9/16/2020 4/29/2022
and designated exempt from Treasury Offset
Program and verify that each of the obligors is
exempt from referral to Treasury Offset
Program, and if not, refer the obligors to
Treasury Offset Program as required.
20-20 9/30/2020 Review all loans currently assigned to the Center 9/16/2020 4/29/2022
and designated as exempt from Treasury Cross-
Servicing that are 180 days or more delinquent
and verify that each of the obligors is exempt
from transfer to Treasury Cross-Servicing, and if
not, transfer the debt to Treasury Cross-
Servicing, as required when the temporary
suspension of debt collection activities due to
COVID-19 is lifted.
20-20 9/30/2020 Establish policies and procedures to require 9/16/2020 4/29/2022
routine follow-up on delinquent loans to ensure
full compliance with the Debt Collection
Improvement Act.
20-20 9/30/2020 Reiterate the requirements for workout 9/16/2020 4/29/2022
agreements to responsible personnel to ensure
compliance with the Debt Collection
Improvement Act.
21-02 10/28/2020 Review all loans that had a bank account number 12/8/2020 3/25/2022
changed from that shown on the original
application to determine if the changes were
legitimate or fraudulent. If not legitimate, work
to recover the funds, deobligate any
undisbursed funds, and refer to the OIG.
27 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
21-02 10/28/2020 Review duplicate loans to IP addresses, email 12/8/2020 3/25/2022
addresses, business addresses, and bank
accounts to determine if there are undisbursed
funds that should be suspended until the
duplicate loans are assessed for eligibility.
21-02 10/28/2020 Strengthen or establish controls to ensure 8/10/2021 3/25/2022
multiple loans are provided only to eligible
applicants and prevent the erroneous
duplication of loans.
21-02 10/28/2020 Strengthen data integrity to make it possible to 8/10/2021 3/25/2022
determine if the inaccurate information allowed
loans to be made to ineligible entities and to
strengthen SBA’s ability to service loans
appropriately.
21-03 12/1/2020 Establish post-payment audit procedures, using 12/1/2020 2/28/2022
a risk-based approach, to verify the accuracy and
completeness of all subsidy payments to lenders
and include reviews of payments made to loans
that changed from liquidation status to regular
servicing status, and remedy improper payments
in accordance with the Payment Integrity Act of
2019.
21-04 12/18/2020 Determine the impact on the outstanding 2/1/2021 9/21/2021
guarantee and eligibility for forgiveness of loans
determined to be not in conformance with the
CARES Act and related legislation.
21-04 12/18/2020 Update and enforce the existing Procedural 3/26/2021 9/17/2021
Notice 5000-20049 to require the adequate
review and approval of Section 1112 payments
made to lenders and to determine that the
necessary documentation is maintained to
substantiate the payment amount.
21-06 1/11/2021 Promptly identify PPP loans that have not been 3/4/2021 2/18/2022
fully disbursed and follow-up with the lenders to
stop $280 million in potential improper loan
disbursements.
21-07 1/14/2021 Review the loans identified as potentially 1/14/2021 12/1/2021
ineligible to determine if the businesses met
eligibility requirements. If not, take appropriate
action related to loan guaranty and forgiveness.
21-08 2/3/2021 Require responsible personnel to execute a 2/1/2021 4/30/2022
contract for foreclosure and real estate services
to ensure the procurement of services are
obtained and authorized in accordance with the
Federal Acquisition Regulation requirements.
21-08 2/3/2021 Ensure that vendors used to provide foreclosure 2/1/2021 4/30/2022
and real estate services are registered in SAM as
required.
21-08 2/3/2021 Ratify the over $10.8 million in payments in — —
accordance with the FAR and 48C.F.R. § 1.602-3.
21-09 3/15/2021 Review the OIG identified potential duplicate 3/31/2021 6/30/2022
disbursements for eligibility and take action to
recover any improper payments as applicable.
21-09 3/15/2021 Review SBA controls related to all PPP loan 3/31/2021 6/30/2022
reviews to ensure that duplicate loans are not
forgiven and not subject to an SBA guaranty, as
appropriate.
Spring 2022 Semiannual Report to Congress | 28
U.S. Small Business Administration | Office of Inspector General
21-09 3/15/2021 Strengthen E-Tran controls for future PPP type 3/23/2021 4/30/2022
programs, which includes keeping E-Tran
controls that align with program requirements
on at all times.
21-09 3/15/2021 Review the issues that SBA identified involving 3/23/2021 4/30/2022
the actions of lenders, such as providing
incorrectly formatted data and submitting the
same application through multiple platforms and
determine how to strengthen controls and
guidance as appropriate to ensure lenders meet
program requirements for future PPP type
programs.
21-11 3/30/2021 Enforce standard operating procedures requiring 3/24/2021 11/30/2021
clearly defined performance goals and include
performance targets in all future SBDC and WBC
cooperative agreements and grants to
objectively measure performance results.
21-11 3/30/2021 Collect and analyze the CARES Act 3/24/2021 11/30/2021
entrepreneurial development cooperative
agreement recipient’s performance results and
establish a framework for setting goals for
technical assistance programs in response to
future disasters. Retain the analysis in program
files for future guidance.
21-14 5/4/2021 Implement financial oversight procedures for the 5/4/2021 12/31/2021
WBC program that ensure the program office
enforces WBC cooperative agreement
requirements. Program officials should ensure
WBCs use federal funds only for allowable,
allocable, and reasonable expenses, adhere to
contract award procedures, and separate project
costs by funding source.
21-14 5/4/2021 Remedy $523,790 in unsupported matching 5/4/2021 9/29/2024
funds, unsupported program income, and the
resulting portion of the federal funds reimbursed
for the unmet match, and $186,537 in
unsupported expenses.
21-14 5/4/2021 Recover $31,215 for improperly awarded 5/4/2021 9/29/2024
contracts and $31,424 in unallowable or
unallocable expenses.
21-14 5/4/2021 Implement policies and procedures for 5/4/2021 12/31/2021
conducting thorough financial compliance
reviews and coordinate with the Office of Field
Operations to train field office personnel
responsible for semiannual site visits.
21-14 5/4/2021 Establish policies holding program officials 5/4/2021 12/31/2021
accountable for promptly following up on
financial examination results and enforcing
cooperative agreement requirements.
21-14 5/4/2021 Require higher-level reviewers to clearly justify 5/4/2021 12/31/2021
and document approving or denying
disbursement of funds if the decisions differ
from the recommendations of lower-level
reviewers; justification documentation should be
kept in the official cooperative agreement file.
29 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
21-14 5/4/2021 Review expenses for the $28,089 reallocation of 5/4/2021 9/29/2024
budget expenses we detailed in this report to
ensure these costs are allowable and document
the rationale for the reallocation or recover
costs that are unallowable.
21-14 5/4/2021 Require program officials to enforce the 5/4/2021 12//31/2021
cooperative agreement terms and conditions
and deobligate or withhold payments if WBCs do
not submit accurate financial reports on time.
21-15 5/6/2021 Develop a process to remove any fraudulent 3/3/2022 3/31/2022
loans and related UCC filing fees from its
financial records.
21-15 5/6/2021 Review over 150,000 returned billing statements 3/3/2022 3/31/2022
and resolve any that involve identity theft then
refer fraudulent loans to OIG.
21-16 5/12/2021 Collaborate with the Chief Financial Officer to 8/6/2021 9/30/2021
ensure a timely and complete reconciliation is
performed on the population subject to
sampling for improper payment reviews.
21-16 5/12/2021 Coordinate with the Office of Disaster 8/6/2021 9/30/2021
Assistance’s statistician to ensure the estimated
improper payment amounts are calculated
consistently and the sampling methodology
adequately describes the criteria for
stratification.
21-16 5/12/2021 Implement additional preventative and 2/3/2022 5/31/2022
monitoring controls to determine the eligibility
of borrowers prior to approval.
21-16 5/12/2021 Ensure there is adequate training of staff at the 2/3/2022 5/31/2022
National Guaranty Purchase Centers.
21-16 5/12/2021 Collaborate with the Chief Financial Officer to 2/3/2022 5/31/2022
ensure a timely and complete reconciliation is
performed on the population subject to
sampling for improper payment reviews.
21-16 5/12/2021 Formally document and implement additional 8/6/2021 9/30/2021
preventative and monitoring controls to
determine the eligibility of borrowers prior to
approval and disbursement.
21-16 5/12/2021 Ensure there is adequate training of staff at the 8/6/2021 9/30/2021
Processing and Disbursement Center.
21-18 7/12/2021 Enforce the requirements of the February 2021 7/12/2021 6/30/2022
COVID-19 Workplace Safety Plan by consistently
applying occupancy and exposure tracking and
accurately recording and maintaining supporting
documentation for all reported COVID-19 cases.
Spring 2022 Semiannual Report to Congress | 30
U.S. Small Business Administration | Office of Inspector General
Significant Recommendations from this Reporting Period
Report Date Issued Title Recommendation
Number
22-01 10/7/2021 SBA's Emergency EIDL Grants to Sole Review the applications of sole proprietors and
Proprietors and Independent independent contractors that included numbers
Contractors of employees but no Employer Identification
Number; and remedy the $3.5 billion disbursed
to sole proprietors and $1 billion disbursed to
independent contractors that exceeded the
amount allowed by SBA’s policy.
22-03 10/28/2021 SBA’s Controls Over Cash Contributions Establish and implement additional controls to
and Gifts, Fiscal Years 2021 and 2020 ensure responsible officials follow SOP 90 75 4, as
amended, closing out all cosponsored activities
within 90 days as required.
22-03 10/28/2021 SBA’s Controls Over Cash Contributions Revise the cosponsorship agreement used for
and Gifts, Fiscal Years 2021 and 2020 National Small Business Week to eliminate and
clarify conflicting instructions to ensure all
cosponsored activities can be closed out within
90 days in accordance with SOP 90 75 4, as
amended.
22-03 10/28/2021 SBA’s Controls Over Cash Contributions Reconcile cash contributions reported by the
and Gifts, Fiscal Years 2021 and 2020 fiscal agent using the cosponsors joinder
agreements or the Small Business Week
Cosponsorship Account bank statements to
ensure the report is accurate and reliable.
22-04 11/8/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
Compliance with DATA Act Reporting with the Associate Administrator for Capital
Access to develop and enforce a plan to monitor
lenders’ execution of their responsibilities in the
loan origination and servicing process, including
accurate and timely 1502 reporting, on an
ongoing basis.
22-04 11/8/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
Compliance with DATA Act Reporting with the Associate Administrator for Disaster
Assistance to enforce that documentation is
maintained to evidence changes to a loan and
ensure that awarding actions are entered into the
source systems in a timely manner.
22-04 11/8/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
Compliance with DATA Act Reporting with the Acting Chief Financial Officer to update
the source of the Awardee/Recipient Legal Entity
Name data element mapping to be the business
legal name field from the application for
Emergency EIDL grants and EIDLs.
22-04 11/8/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
Compliance with DATA Act Reporting with the Acting Chief Financial Officer to
implement validation controls to verify the
accuracy of the Legal Entity Congressional District
and Primary Place of Performance Congressional
District data elements.
31 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation
Number
22-04 11/8/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
Compliance with DATA Act Reporting with the Acting Chief Financial Officer to, in
conjunction with relevant program offices,
establish and implement a consistent and
accurate set of rules to classify the Business
Types data element in accordance with DAIMS
and the appropriate business size and type
criteria.
22-04 11/8/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
Compliance with DATA Act Reporting with the Acting Chief Financial Officer to provide
notification to Treasury’s DATA Act Broker
Program Management Office of the Action Type
element that was reported incorrectly due to the
reporting process in place for resubmissions of
transactions.
22-04 11/8/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
Compliance with DATA Act Reporting with the Acting Chief financial Officer to, prior to
the end of the reporting period, perform a review
of all cross-check warnings on the submission
files and identify action plans for remediation in
the current or subsequent periods.
22-04 11/8/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
Compliance with DATA Act Reporting with the Acting Chief Financial Officer to
implement a sufficient review of the
reconciliation between File B and File C to ensure
all variances are researched and necessary
corrections are made to the submission prior to
the SAO’s certification.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to perform a thorough review of PPP loan
guarantee approvals in the 2021 cohort. Based
on the review, determine the impact on the
outstanding loan guarantee and the eligibility for
forgiveness of loans that are determined to not
be in conformance with the CARES Act and
related legislation and program requirements.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Acting Chief Financial Officer to, based
on the results of the loan guarantee review
process for the 2021 cohort of PPP loan
guarantees, assess the accounting
considerations, including the impact on the
consolidated financial statements, and record any
necessary adjustments for loans determined to
not be in conformance with the CARES Act and
related legislation.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to design and implement controls to
identify and review PPP loan guarantees with
incomplete or inaccurate lender loan status
reports.
Spring 2022 Semiannual Report to Congress | 32
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation
Number
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to determine the correct PPP loan
balances and ensure the loan repository system is
updated with the correct balance.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to develop and enforce a policy and
controls that require the adequate training and
monitoring of lenders to execute their
responsibilities in the PPP loan servicing process.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to develop and enforce a policy and
controls to monitor incomplete or inaccurate PPP
lender loan status reports on an ongoing basis.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Acting Chief Financial Officer to, based
on the results of the lender loan status reports
review process for PPP loan guarantees, design
and implement controls to assess the accounting
considerations, including the impact on the
consolidated financial statements, and record any
necessary adjustments.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to develop and enforce a policy and
controls that require the adequate review and
validation of the outputs of the case
management system.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to develop and enforce a policy and
controls to monitor the results of the contractor’s
loan review process including a review of loans
with a ‘No Further Action’ determination.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to design adequate controls and
processes to ensure forgiveness payments are
not processed for loan guarantees that have not
been sufficiently reviewed.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to develop and execute a thorough,
formal review plan of the COVID-19 EIDLs and
grants portfolios and determine which
transactions were made to ineligible recipients
and did not conform with the CARES Act and
related legislation.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to implement controls that prevent or
detect COVID-19 EIDLs from being approved that
are not in conformance with the related
legislation and program’s eligibility terms.
33 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation
Number
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to update the Reference Guide to require
a more thorough review to clear certain alerts
and enforce the actions recommended by the
Reference Guide to adequately address and
mitigate the alerts prior to COVID-19 EIDLs
approval.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to provide training for loan officers and
team leads to reinforce their responsibilities in
accordance with established and updated
guidance and standard operating procedures.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Acting Chief Financial Officer to, based
on the results of the review process for COVID-19
EIDLs and grants, assess the accounting
considerations, including the impact on the
consolidated financial statements, and record any
necessary adjustments for transactions
determined not to be in conformance with the
CARES Act and related legislation.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Acting Chief Financial Officer to design
and implement controls to continue
accumulating relevant, complete, and accurate
data on which to base the subsidy re-estimate
models for the PPP and COVID-19 EIDLs
portfolios.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Acting Chief Financial Officer to ensure
there are adequate review and approval controls
over the re-estimate models for the PPP and
COVID-19 EIDL portfolios by appropriate levels of
management, including review and
documentation of relevant data inputs,
development of assumptions, and
reasonableness for the selected assumptions
used and the resulting estimates.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to continually evaluate the established
policy for SOC 1 reports that requires new service
organizations to provide a SOC 1 report over the
control environment that is relevant and
significant to the processing and recording of
SBA’s transactions. If a SOC 1 report cannot be
obtained, identify, and evaluate relevant controls
at the service organizations that have an impact
on SBA’s internal controls over financial
reporting.
Spring 2022 Semiannual Report to Congress | 34
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation
Number
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to assess the risk posed by the service
organization’s control environment and obtain
sufficient assurance over the operating
effectiveness of relevant and significant controls
to determine the integrity of transactions
processed on behalf of and recorded by SBA. If a
SOC 1 report is obtained for the relevant control
environment at the service organization.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator of Capital
Access to continually evaluate the established
policy for SOC 1 reports that requires new service
organizations to provide a SOC 1 report over the
control environment that is relevant and
significant to the processing and recording of
SBA’s transactions. If a SOC 1 report cannot be
obtained, identify, and evaluate relevant controls
at the service organizations that have an impact
on SBA’s internal controls over financial
reporting.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator for Capital
Access to perform a thorough review of
Restaurant Revitalization awards issued and
identify recipients that may not have been
eligible to receive awards in accordance with the
program’s terms, especially for recipients with
flagged PPP loan guarantees.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator for Capital
Access to design and implement effective
monitoring controls, to ensure that Restaurant
Revitalization award recipients are complying
with the program’s terms and to ensure
complete, accurate, and timely reporting for the
use of the award.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator for Disaster
Assistance to design and implement effective
monitoring controls, to ensure that SVOG award
recipients are complying with the program’s
terms and to ensure complete, accurate, and
timely reporting for the use of the award.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Acting Chief Financial Officer to design
and implement controls to ensure the accounting
treatment established to record the Restaurant
Revitalization and the SVOG program related
balances is in accordance with U.S. Generally
Accepted Accounting Principles and the basis for
the appropriate treatment is sufficiently
documented.
35 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation
Number
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends that the Administrator
FY 2021 Financial Statements coordinate with the Associate Administrators for
Capital Access and Disaster Assistance to
document the internal control system and
processes related to the implementation of new
or expanded programs from new legislation.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends that the Administrator
FY 2021 Financial Statements coordinate with the Associate Administrators for
Capital Access and Disaster Assistance to develop
and implement monitoring controls to ensure
implementation of an effective internal control
environment.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends that the Administrator
FY 2021 Financial Statements coordinate with the Acting Chief Financial Officer
to, in conjunction with relevant program offices,
assess the effectiveness of key process level
controls to respond to the identified risks.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends that the Administrator
FY 2021 Financial Statements coordinate with the Acting Chief Financial Officer
to develop and implement a sufficient plan to
test and monitor the design, implementation,
and operating effectiveness of key, relevant
controls that affect financial reporting and
compliance with relevant laws and regulations.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statement with the Associate Administrator for Capital
Access to perform a review of the payments
made by SBA for covered loans under the Debt
Relief Program to identify, review, and remediate
any potential over or under payments made on
the related loans.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator for Capital
Access to consider allocating resources to
implement enforcement processes that ensure
the accounts of separated users are removed
timely from SBA systems.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator for Capital
Access to validate that the identified accounts of
separated users were not utilized after
separation had occurred.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator for Capital
Access to ensure individuals responsible for
removing accounts of separated users are aware
of the process and periodically sent reminders of
their responsibilities.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator for Capital
Access to implement controls and a monitoring
process to ensure that patches applied to the
database and operating system and application
changes are appropriately tested prior to being
moved into the production environment.
Spring 2022 Semiannual Report to Congress | 36
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation
Number
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator for Capital
Access to update the system configuration
management plan to require internal control
documentation for patch management and
application changes as required by the
Government Accountability Office’s Standards for
Internal Control in the Federal Government.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Associate Administrator for Capital
Access to periodically train personnel involved
with the implementation of database and
operating system patches, and the review and
approval of application changes, to follow the
respective controls and requirements of the
patch management and application change
management processes in accordance with
existing policies.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Acting Chief Financial Officer to update
the risk assessment regarding the evaluation of
internal controls to ensure it includes all
significant programs, key processes, and other
material line items on the consolidated financial
statements.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Acting Chief Financial Officer to, in
conjunction with relevant program offices,
perform and document the internal control
evaluation over all programs. This should include
entity level controls, manual controls, general
information technology controls, and system
application controls covering key financial
statement line items and risks.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Acting Chief Financial Officer to update
the existing policy and implement adequate
controls to ensure that the statement of
assurances provided by the program offices are
adequately documented and reviewed for
completeness and accuracy to provide a
sufficient basis to support the Administrator’s
statement of assurance.
22-05 11/15/2021 Independent Auditors’ Report on SBA’s KPMG recommends the Administrator coordinate
FY 2021 Financial Statements with the Acting Chief Financial Officer to address
the control deficiencies over transactions arising
from the implementation of the CARES Act and
related legislation by working with the Office of
Capital Access and the Office of Disaster
Assistance to implement the recommendations in
Appendix I–Material Weaknesses.
37 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation
Number
22-06 11/30/2021 COVID-19 EIDL Program Recipients on Use Treasury’s Do Not Pay (DNP) analysis to
the Department of Treasury's Do Not systemically flag COVID-19 EIDL and Emergency
Pay List EIDL grant recipients who were found in
Treasury’s DNP system and not previously
reported by OIG. Review the applications and
determine whether they are deemed ineligible. If
the applicant is deemed ineligible, recover any
disbursed funds, and flag the application as
ineligible.
22-06 11/30/2021 COVID-19 EIDL Program Recipients on Implement prepayment and pre-award
the Department of Treasury's Do Not procedures and use the batch match or
Pay List continuous monitoring functions available in
Treasury’s DNP system to identify potentially
ineligible applicants before disbursing COVID-19
EIDL program funds.
22-07 1/18/2022 SBA’s Oversight of the Grant Recipient’s Require the grant recipient to enhance its
Implementation of the CARES Act marketing and outreach strategy to include plans
Resource Partners Training Portal to reach a greater number of small businesses
and resource partner counselors and mentors.
The grant recipient should also set clear
performance goals with realistic targets before
SBA awards any additional funds for the COVID-
19 resource and training portal, as required by
CARES Act Section 1103(c)(2).
22-07 1/18/2022 SBA’s Oversight of the Grant Recipient’s Implement procedures for enhanced financial
Implementation of the CARES Act oversight of the CARES Act Resource Partner
Resource Partners Training Portal Training Portal program to ensure the program
office enforces the grant requirements and
follows federal procurement standards when
using noncompetitive contracting options. The
requirements include a price or cost analysis for
awards that exceed the simplified acquisition
threshold. Another requirement ensures the
grant recipient adheres to the terms in the notice
of award.
22-07 1/18/2022 SBA’s Oversight of the Grant Recipient’s Evaluate whether the contract costs for web
Implementation of the CARES Act development services and media services are
Resource Partners Training Portal reasonable and remedy any violations.
22-07 1/18/2022 SBA’s Oversight of the Grant Recipient’s Assess and recover the amount spent on the
Implementation of the CARES Act unallowable contracted project management
Resource Partners Training Portal services expenses incurred during the
performance of the grant.
22-07 1/18/2022 SBA’s Oversight of the Grant Recipient’s Recover the $100,000 paid for unallowable pre-
Implementation of the CARES Act award project management expenses.
Resource Partners Training Portal
22-08 2/14/2022 SBA’s Business Development Assistance Implement a standard process to approve initial
to 8(a) Program Participants business plans and monitor to ensure that
business plans are reviewed annually, to include
appropriate updates for specific targets,
objectives, and goals for the business
development of program participants, in
accordance with 13 CFR 124.403(a) and section
7(j)(10)(D) of the Small Business Act.
Spring 2022 Semiannual Report to Congress | 38
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation
Number
22-08 2/14/2022 SBA’s Business Development Assistance Implement a standard process to capture, track,
to 8(a) Program Participants and recognize substantial achievement of the
specific targets, objectives, and goals for the
areas of finance, marketing, and management on
8(a) program participant business plans, in
accordance with 13 CFR 124.112(f) and section
7(j)(10)(A) of the Small Business Act.
22-08 2/14/2022 SBA’s Business Development Assistance Establish outcome-based performance goals and
to 8(a) Program Participants measurements to assess whether the program
achieved business development objectives,
including the number of graduated 8(a) firms in
accordance with the measure of success in
section 101(b)(2) of the Business Opportunity
Development Reform Act of 1988.
22-08 2/14/2022 SBA’s Business Development Assistance Implement a process that uses outcome-based
to 8(a) Program Participants performance goals for regular data-driven
reviews and align program leaders’ personal
performance plans with the goals so program
office leaders are held accountable for improving
program data quality, identifying effective
practices, and validating promising initiatives that
align with OMB Circular A-11 Part 6–The Federal
Performance Framework for Improving Program
and Service Delivery guidance.
22-08 2/14/2022 SBA’s Business Development Assistance Implement a process to ensure the systematic
to 8(a) Program Participants collection of accurate and complete data on
program results and operations to make sure all
program reporting requirements are met, in
accordance with section 7(j)(16)(A) of the Small
Business Act and Standards for Internal Control in
the Federal Government Principles for
Information and Communication.
22-08 2/14/2022 SBA’s Business Development Assistance Implement requirements for management to
to 8(a) Program Participants monitor that Business Opportunity Specialists
consistently assess program participant’s
development needs, counsel participants,
conduct annual field visits, and maintain required
documentation, as required by standard
operating procedures.
22-08 2/14/2022 SBA’s Business Development Assistance Ensure all employees performing Business
to 8(a) Program Participants Opportunity Specialist duties maintain a current
Federal Acquisition Certification in Contracting
Level 1 Certification within a year of appointment
in accordance with section 4(g) of the Small
Business Act.
22-08 2/14/2022 SBA’s Business Development Assistance Use lessons learned from servicing 8(a) firms in
to 8(a) Program Participants an entirely virtual environment to coordinate
district office resources and share best practices
to equitably serve all 8(a) program participants.
Align assigned Business Opportunity Specialist
staffing levels accordingly to be consistent with
ideal workload ratios as determined by the
program office.
22-09 2/28/2022 SBA’S Paycheck Protection Program Develop a plan to ensure remaining forgiveness
Loan Review Processes reviews and remittances are completed within 90
days as required by the CARES Act.
39 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Significant Management Decisions with which OIG Disagrees
There were no significant management decisions OIG disagrees with during this reporting period.
Significant Revised Management Decisions
There were no significant revised management decisions during this reporting period.
Federal Financial Management Improvement Act
The OIG’s Independent Public Accountant, KPMG, did not render an opinion on the compliance with the
Federal Financial Management Improvement Act, but their test work in the FY 2021 financial statement
disclosed instances in which SBA’s financial management systems did not substantially comply with
federal financial management systems requirements and applicable federal accounting standards. The
results disclosed no instances in which SBA’s financial management systems did not substantially comply
with the United States Standard General Ledger at the transaction level.
Instances of Interference
There were no attempts by SBA officials to interfere with OIG independence during this reporting period.
Spring 2022 Semiannual Report to Congress | 40
U.S. Small Business Administration | Office of Inspector General
Appendix D. Investigations Reporting Statistics
Investigative Reports Issued
Report Type Number of Reports
Report of Investigation 104
Preliminary Case Closing Reports of Investigation 54
Total 158
Persons Referred for Prosecution
Referred to Number of Persons
Department of Justice 77
State Attorney 3
Local Attorney —
Total 80
*Number includes persons and entities referred for prosecution.
Pandemic-Related Investigative Statistics
SBA OIG Investigations Indict/Complaint Arrests Convictions
PPP/EIDL* 334 97 66 84
Investment Fraud 1 1 1 1
Total 335 98 67 85
*PPP stands for Paycheck Protection Program. EIDL stands for Economic Injury Disaster Loan.
Whistleblower Retaliation Cases
There were no OIG investigations involving Whistleblower retaliation during the reporting period.
Investigations Involving a Senior Government Employee Where Misconduct Was
Substantiated
There were no OIG investigations involving a senior government employee where misconduct was
substantiated during the reporting period.
Investigations Involving a Senior Government Employee That Are Closed and Not
Disclosed to the Public
There were no nonpublic, closed investigations of senior government employees during this semiannual
period.
41 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Appendix E. Legal Actions Summary
Legal Actions, October 1, 2021–March 31, 2022
State Program Jointly With Alleged Violations Prosecuted Legal Action
FL BL FBI, IRS-CI Subject submitted fraudulent PPP loan Subject was sentenced to 180
applications to different federally insured months in incarceration and 5-year
credit unions and banks on behalf of supervised release. Also ordered to
businesses that did not exist for residents pay $1.5 million in restitution.
of senior living facilities. Subject received
over $1.5 million in fraudulent loan
proceeds.
TX BL USPIS, FHFA, Subject made material misrepresentations Subject was sentenced to 110
MLARS to a financial institution and filed seven months in incarceration, 3 years
fraudulent loan applications seeking more supervised release and ordered to
than $6.7 million in forgivable loans pay restitution in the amount of
through the PPP. Subject used the loan $1,689,952.
proceeds for lavish personal purchases.
NJ BL FDIC, FBI Subjects participated in scheme to defraud Individual was sentenced to 18
SBA of $5 million by providing false months incarceration and 3 years
statements in multiple PPP applications. of supervised release. Another
suspect was sentenced to 18
months incarceration and 3 years
of supervised release. They were
ordered to pay $3.1 million in
restitution.
FL BL FDIC-OIG, USSS Subjects conspired with others to execute Subject 1 was sentenced to 60
a scheme to defraud various financial months incarceration and 5 years
institutions by opening over 700 bank of supervised release. Suspect 2
accounts and shell companies with stolen was sentenced to 42 months
and synthetic identities. incarceration and 5 years
supervised release. Suspect 3 was
sentenced to 12 months and 2
years supervised release. They
were ordered to pay over $21
million in restitution.
NY BL/DL FBI, IRS-CI Subjects used the identities of other Subject was sentenced to 72
individuals to submit online applications to months incarceration and 3 years
SBA and five financial institutions for over of supervised release. Other
$7 million in loans through the PPP and subject was ordered to pay
EIDL programs. restitution of $3 million.
Spring 2022 Semiannual Report to Congress | 42
U.S. Small Business Administration | Office of Inspector General
CA BL FBI, IRS-CI As part of the scheme, subjects conspired Subject 1 was sentenced to 72
with others to submit over 150 fraudulent months incarceration and 4 years
loan applications and obtain over $18 of supervised release. Subject 2
million in CARES Act funds. Subjects was sentenced to 12 months
purchased luxury homes, gold coins, incarceration and 3 years
diamonds, jewelry, luxury watches, and supervised release. Subject 3 was
cryptocurrency. sentenced to 10 months of
probation. Subject 4 was
sentenced to 30 months
incarceration and 3 years
supervised release. Subject 5 was
sentenced to 30 months
incarceration and 3 years
supervised release. Subjects were
ordered to pay over $14 million in
restitution.
FL BL FBI, IRS-CI Subjects forged bank statements and Subject 1 was sentenced to 37
made material misrepresentations to a months in incarceration and 3
financial institution to gain approval for years supervised release. Subject 2
PPP loans, obtaining over $2.7 million. was sentenced to 20 months in
incarceration and 3 years
supervised release. Subject 3 was
sentenced to 24 months in
incarceration and 3 years
supervised release. They were
ordered to pay $2.7 million in
restitution.
IN GC FDIC, FBI Subjects originated SBA loans on behalf of Subject 1 was sentenced to 68
various financial institutions and months incarceration and 3 years
fraudulently obtained guarantees for loans of supervised release. Subject 2
that the SBA deemed ineligible and was sentenced to 57 months
provided false information in connection incarceration and 3 years of
with SBA loan originations to make them supervised release. Subject 3 was
appear eligible. The subjects hid signs of sentenced to 28 months
ineligibility from SBA by knowingly incarceration and 2 years of
misrepresenting the use of SBA loan supervised release. Subject 4 was
proceeds and unlawfully diverting sentenced to 28 months
previously denied loan applications into incarceration and 2 years of
expedited approval channels. supervised release. They were
ordered to pay over $6.9 million in
restitution.
NY BL FBI Subject made false statements to obtain Subject was sentenced to 96
PPP funding totaling $637,200. Subject months incarceration followed by 5
also made false statements related to years of supervised release and
healthcare fraud scheme. restitution of $3.6 million.
OR BL/DL FBI, IRS-CI Subjects conspired to submit nine PPP and Subject 1 was sentenced to 48
EIDL loans securing over $3.5 million by months incarceration and 5 years
using false payroll information and supervised release. Subject 2 was
providing materially false information on sentenced to 14 days incarceration
loan applications. and 3 years supervised release.
Subjects were ordered to pay $4
million in restitution.
OR BL/DL FBI, TIGTA, Individual defrauded the government of Subject was sentenced to 21
INTERPOL over $884,000 in obligated PPP and EIDL months incarceration and 5 years
funds. supervised release. Subject was
ordered to pay $910,773 in
restitution.
43 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
CA BL FBI, IRS-CI, Several subjects planned a scheme to Subject 1 was sentenced to 12
FRBO, USSS, unlawfully enrich themselves by months incarceration and 3 years
TIGTA submitting false and fraudulent loan of supervised release. Subject 2
applications for over $2 million. was sentenced to 18 months in
incarceration and 3 years of
supervised release. Subjects were
ordered to pay $2 million in
restitution and a fine of $1 million.
SC GC DCIS, USDA, Subjects created fictitious documents Subjects were sentenced to 3 years
AFOSI which were submitted to SBA in order to supervised release, 100 hours of
remain in the 8(a) program. They received community service, and ordered to
over $85 million in contracts, primarily pay a $500,000 fine.
from the US Air Force.
NC BL/DL FDIC, IRS-CI, Individuals defrauded SBA and authorized Subject 1 was sentenced to 72
TICTA lenders within the PPP/EIDL programs by months incarceration and 3 years
claiming false business operations. They supervised release. Subject 2 was
fraudulently received $1.3 million. sentenced to 66 months
incarceration and 3 years
supervised release. Subject 3 was
sentenced to 60 months
incarceration, 3 years supervised
release. Individuals were ordered
to pay $1.3 million in restitution.
OR BL/DL IRS-CI Subject devised a scheme involving PPP Subject was sentenced to 61
and EIDL loans using a false identity, months incarceration, 4 years
purchasing a 2020 Ford F-350 truck and a supervised release, and was
Tesla Model X using a counterfeit driver’s ordered to pay $856,378 in
license. restitution.
GA BL TIGTA Subject made multiple false statements Subject was sentenced to 36
and obtained two PPP loans over $1.2 months of confinement, 36 months
million. of supervised released, and
ordered to pay $802,301 in
restitution.
WA BL/DL FBI, FDIC-OIG, Subject submitted 26 fraudulent PPP Subject was sentenced to 48
TIGTA, IRS-CI, applications and 13 EIDL applications to months in incarceration, 3 years
HSI, HHS-OIG federally insured financial institutions and supervised release, and ordered to
SBA seeking over $3.5 million in COVID-19 pay $1.4 million in restitution.
relief funds.
AZ GC DCIS, Army CID, Several individuals falsely certified that Subject was sentenced to 3 years
AFOSI they met certain requirements to bid on of probation and ordered to pay
contracts that were set aside for $250,000 in restitution.
companies that qualified under the
Historically Underutilized Business Zones
(HUBZone) program.
SC BL TIGTA, IRS-CI Subject submitted PPP application Subject was sentenced to 24
falsifying employee and revenue months incarceration and 3 years
information with resulting losses totaling supervised release. Subject was
over $1 million, misused proceeds for ordered to pay $1 million in
luxury items, gambling, and travel. restitution.
USVI BL IRS-CI, USSS Subject made false statement to obtain Subject was sentenced to 33
several PPP loans in the amount of months of incarceration, 4 years
$794,287. supervised release, and ordered to
pay $383,397 in restitution.
NY BL FBI, IRS-CI Subject submitted fraudulent documents Individual was sentenced to 60
of inflated employee payroll documents to months incarceration, 3 years of
obtain multiple PPP loans over $5 million. supervised release, and $5 million
Subject misused the proceeds for luxury in restitution.
items, vehicle, and travel.
Spring 2022 Semiannual Report to Congress | 44
U.S. Small Business Administration | Office of Inspector General
DC BL FBI Subject made false assertions and Subject was sentenced to 46
certifications concerning PPP loans totaling months in incarceration and 2
$1.1 million. years supervised release. Subject
was ordered to pay $1.4 million in
restitution.
TX BL USPIS Business that was not operating before the Subject was sentenced to 8 months
COVID-19 pandemic applied for and incarceration and 12 months
received $1.1 million in PPP funds. supervised release. Subject was
ordered to pay $997,486 in
restitution.
KY DL USSS Subject made multiple false statements Subject was sentenced to 12
and obtained loan proceeds. months of incarceration and 3
years supervised release.
CO DL USSS Subject submitted fraudulent EIDL Subject was sentenced to 32
applications to SBA on behalf of more than months in incarceration, 3 years
70 companies. Received over $4.4 million supervised release, and to pay
in fraudulent proceeds. $622,683 in restitution.
RI BL FBI, FDIC, IRS-CI Subjects obtained PPP funding purporting Subject was sentenced to 56
to own three restaurants. months incarceration and 3 years
of supervised release. Subject was
sentenced to 6 months home
confinement, a fine $5,000 and 3
years supervised release.
TX GC DOJ ATD, Army Individuals participated in a pass-through Suspects were debarred for 36
CID, GSA-OIG, scheme to defraud the SBA Service- months.
VA-OIG, DCIS Disabled Veteran-Owned small business
program.
CO GC DCIS and Army Fraud involving two construction Civil judgment ordered to pay $1.1
CID companies in violation of the 8a program. million.
VA BL FDIC, IRS-CI As part of a scheme, subject submitted Subject was sentenced to 33
fraudulent loan applications and obtained months incarceration and 2 years
over $2 million in CARES Act funds. supervised release. Subject was
ordered to pay $2.5 million in
restitution and a $15,000 fine.
AK BL FBI Individual applied for a PPP loan on their Subject negotiated through a civil
joint business without consent and settlement agreement in the
subsequently falsified PPP loan amount of $397,900.
documentation to obtain funding totaling
$1 million.
VA GC NASA Subject falsely certified as a Woman- Subject was sentenced to 6 months
Owned Small Business and misrepresented incarceration and 3 years of
to the federal government and prime supervised release. Subject was
contractors in order to qualify for set-aside sentenced to 12 months of
contracting opportunities. unsupervised release. Two subjects
were sentenced to 12 months of
probation with a $5,000 fine.
Subjects were ordered to pay $1
million in restitution.
RI BL FBI, FDIC, IRS-CI Subject made false statements and Subject was sentenced to 70
fraudulently applied for more than $4.7 months incarceration, 3 years of
million in PPP loans. supervised release, and ordered to
pay $599,251 in restitution.
OK BL BGFRS, FBI Individual created fraudulent documents, Individual was sentenced to 24
businesses and false identities and months incarceration, 1 year of
received $125,900 in loan proceeds. supervised release, and ordered to
pay $25,906 in restitution.
45 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
IA BL FRB-OIG, FDIC- Subject generated unlawful revenue and Subject was sentenced to 9 months
OIG, FBI fees for employers and fraudulently incarceration and 4 years and 2
obtained SBA loan guarantees upward of months of supervised release.
$4.6 million. Subject was ordered to pay $4.5
million in restitution.
GA DL USSS, SSA-OIG Subject unlawfully obtained an EIDL in the Subject was sentenced to 48
amount of $150,000 for a non-existent months incarceration, restitution
business and then used the proceeds for of $150,000 and a $5,000 fine.
personal travel expenses, shopping sprees,
cash withdrawals, and a large wire transfer
to a personal associate.
CO BL/DL USSS, DOJ Subject submitted false and fraudulent Subject was sentenced to 30
EIDL and PPP applications and received months incarceration and 3 years
over $660,000. The individual claimed and of supervised release. Subject was
received over $40,000 in unemployment ordered to pay $708,141 in
insurance benefits on behalf of ineligible restitution.
family members without their knowledge
or consent.
MO GC DCIS, GSA-OIG, Subjects participated in a fraud scheme Subject was sentenced to 28
Army- CID, IRS- and conspired to operate companies with months incarceration and 3 years
CI, VA-OIG, straw owners who qualified as socially and supervised release. Subject was
USDA-OIG, USSS, economically disadvantaged or service- sentenced to 10 years of
DOL-OIG disabled veterans, but who did not actually probation. Individuals were
control the companies. ordered to pay $5.5 million in
restitution.
Note: The following lists define the program codes for legal actions and the abbreviations in the table.
Legal Actions Summary Program Codes
BL………..Business Loans
DL……….Disaster Loans
GC………Government Contracting and Section 8(a) Business Development
IA………..Internal Affairs
OT………Other
Joint Investigation Agency Acronyms
Defense Criminal Investigative Service (DCIS)
Department of Commerce Office of Inspector General (DOC/OIG)
Department of Energy Office of Inspector General (DOE/OIG)
Department of Health and Human Services Office of Inspector General (HHS/OIG)
Department of Homeland Security Homeland Security Investigations (DHS/HSI)
Department of Homeland Security Immigration and Customs Enforcement (DHS/ICE)
Department of Homeland Security Office of Inspector General (DHS/OIG)
Department of Justice Office of Inspector General (DOJ/OIG)
Department of Justice Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF)
Department of Justice Money Laundering & Asset Recovery Section (MLARS)
Department of State Office of Inspector General (DOS/OIG)
Department of Transportation Office of Inspector General (DOT/OIG)
Department of Treasury Inspector General for Tax Administration (TIGTA)
Department of Treasury Special Inspector General for the Troubled Asset Relief Program (SIGTARP)
Department of Veterans Affairs Office of Inspector General (VA/OIG)
Federal Bureau of Investigation (FBI)
Federal Deposit Insurance Corporation Office of Inspector General (FDIC/OIG)
Federal Housing Finance Agency Office of Inspector General (FHFA/OIG)
Federal Reserve Board Office of Inspector General (FRB/OIG)
General Services Administration Office of Inspector General (GSA/OIG)
Internal Revenue Service – Criminal Investigation (IRS/CI)
National Aeronautics and Space Administration Office of Inspector General (NASA/OIG)
State of California Employment Development Department (State of CA/EDD)
Spring 2022 Semiannual Report to Congress | 46
U.S. Small Business Administration | Office of Inspector General
United States Airforce Office of Special Investigations (AFOSI)
United States Army/Criminal Investigation Division (Army/CID)
United States Department of Agriculture Office of Inspector General (USDA/OIG)
United States Naval Criminal Investigative Service (NCIS)
United States Postal Inspection Service (USPIS)
United States Secret Service (USSS)
47 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Appendix F. Cosponsored and Other Activities
SBA’s authorization to cosponsor events requires OIG to report to Congress on the Administrator’s use of
that authority semiannually. The following list of activities was provided by the SBA Office of Strategic
Alliances.
Name/Subject of Event Name of Cosponsor(s) Event Date Fully
Location Executed
Woostapreneurs Forum Massachusetts District Office, Worcester Area Virtual 3/8/2022
Chamber of Commerce
Women’s Business Summit Headquarters/Office of Women's Business Virtual 2/23/2022
Ownership, Nasdaq Entrepreneurial Center
Small Business Initiative New York District Office, City of Newburgh Newburgh, NY 2/11/2022
Workshops and Webinars
2022 Resource Partners Bi- San Francisco District Office, California Association Virtual and San 2/10/2022
Annual Meetings for Microenterprise Opportunity Francisco
District Office
Small Business Community Headquarters/Office of Communications and Virtual 2/8/2022
Engagement Conversations Public Liaison, Public Private Strategies Institute
2022 Virtual Entrepreneurship Vermont District Office, Vermont Small Business Virtual 1/28/2022
Day Development Center, Vermont Business Education
Corporation, Vermont Career and Technical
Student Organizations
2022 Nevada Small Business Nevada District Office, Access Community Capital Las Vegas, NV 1/27/2022
Awards
National Small Business Week Headquarters/Office of Communications and Virtual 1/12/2022
2022 Public Liaison, SCORE Association, Visa USA Inc.,
ADP Inc., Lockheed Martin Corp., Zebra
Technologies, CenturyLink-Lumen Technologies
Inc., Vistage Worldwide Inc., Fidelity National
Information Services Inc., JPMorgan Chase Bank,
Amazon.com Services, Constant Contact Inc.,
Meta Platforms Inc. Facebook Inc., Block Inc.,
Square Inc.
National Small Business Week Utah District Office, Mountain America Federal Salt Lake City, 1/12/2022
Awards Luncheon Credit Union, Utah Small Business Development UT
Center Network
Lender Awards Breakfast Utah District Office, Mountain America Federal Salt Lake City, 1/12/2022
Credit Union UT
Community Resources Lunch & Arkansas District Office, Better Business Bureau of Virtual 1/11/ 2022
Learn with BBB and SBA Arkansas Education Foundation Inc.
Arkansas
Government Procurement North Dakota District Office, North Dakota Small Virtual and 1/10/2022
Training Series, FY 2022 Business Development Center, host of Statewide
Procurement Technical Assistance Center
University of North Dakota
Small Business Digital Alliance Headquarters/Office of the Administrator, Virtual and SBA 1/4/2022
Business Forward Inc. Regional
Offices
Small Business Saturday Headquarters/Office of Communications and Virtual and US 11/1/2021
Public Liaison, American Express, WIPP Statewide
Contracting, Financing and Hawaii District Office, Hawaii Department of Virtual and 10/27/2021
Small Business Outreach Transportation, Office of Civil Rights Hawaii
Disadvantaged Business Enterprise, Minority Statewide
Business Development Center aka Honolulu
Minority Business Center University of Hawaii
Manoa, Shidler College of Business
Spring 2022 Semiannual Report to Congress | 48
U.S. Small Business Administration | Office of Inspector General
Massachusetts Small Business Massachusetts District Office, Office of U.S. Virtual 10/12/2021
B2B Contracting Matchmaker Senator Elizabeth Warren, Massachusetts Small
Business Development Center, Massachusetts
Procurement Technical Assistance Center, Center
for Women and Enterprise, SCORE Boston Chapter
49 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Appendix G. External Peer Reviews
Section 5(a) of the IG Act requires OIGs to report peer review results in their Semiannual Reports to
Congress. The following information is provided in accordance with these requirements.
Audits Division
The Government Auditing Standards, or Yellow Book, issued by the Comptroller General of the United
States requires that audit organizations performing audits and attestation engagements in accordance
with the Yellow Book must have an external peer review performed by reviewers independent of the
audit organization being reviewed at least once every 3 years. OIG’s Audits Division was reviewed by the
National Science Foundation OIG for the period ending March 31, 2021. SBA OIG received a peer review
rating of pass.
Similarly, the Council of the Inspectors General on Integrity and Efficiency requires that organizations that
conduct inspections and evaluations under the Quality Standards for Inspection and Evaluation, or Blue
Book, must have an external peer review at least once every 3 years. During FY 2020, our Audits Division
underwent a Blue Book peer review conducted by the Department of Justice OIG. OIG generally met Blue
Book standards.
In addition, in FY 2022, our Audits Division reviewed the U.S. Department of Education OIG against the
Blue Book standards for the period ending September 30, 2021. Education OIG received a peer review
rating of pass.
Investigations Division
Section 6(e)(7) of the IG Act, Attorney General Guidelines for Offices of Inspector General with Statutory
Law Enforcement Authority, and the CIGIE Quality Standards for Investigations require external peer
reviews of OIG investigative functions be conducted every 3 years.
In September 2017, FDIC OIG reviewed our Investigations Division and issued a final report December 19,
2017. FDIC OIG found that the system of internal safeguards and management procedures for the
investigative function of OIG complied with the quality standards established by CIGIE and the applicable
Attorney General’s Guidelines. No recommendations were offered.
Spring 2022 Semiannual Report to Congress | 50
U.S. Small Business Administration | Office of Inspector General
Appendix H. Reporting Requirements in the Inspector General
Act of 1978, As Amended
Section Reporting Requirement Location
4(a)(2) Review of legislation and regulations Other Significant OIG Activities
5(a)(1) Significant problems, abuses, and deficiencies Throughout
5(a)(2) Recommendations with respect to significant Significant Recommendations from This Reporting
problems, abuses, and deficiencies Period
5(a)(3) Prior significant recommendations on which Significant Recommendations from Prior Reporting
corrective action has not been completed Periods Without Final Action as of March 31, 2019
5(a)(4) Matters referred to prosecutive authorities Legal Actions Summary
5(a)(5) Instances in which requested information was N/A
refused
5(a)(6) List of audit, inspection, and evaluation reports Reports Issued; Reports with Questioned Costs
5(a)(7) Significant reports Throughout
5(a)(8) Audit, inspection, and evaluation statistical tables Statistical Highlights
5(a)(9) Audit, inspection, and evaluation reports with Reports with Recommendations That Funds Be Put to
recommendations that funds be put to better use Better Use
5(a)(10) Audit, inspection, and evaluation reports without Reports from Prior Periods with Overdue
management decision, without comment within Management Decisions; Reports from Prior Periods
60 days, or with unimplemented with Open Recommendations as of March 31, 2019
recommendations
5(a)(11) Revised management decisions Significant Revised Management Decisions
5(a)(12) Management decisions with which the Inspector Significant Management Decisions with Which OIG
General disagrees Disagrees
5(a)(13) Information described under section 05(b) of the Federal Financial Management Improvement Act
Federal Financial Management Improvement Act
of 1996
5(a)(14)(16) Peer review results External Peer Reviews
5(a)(17)(18) Investigative statistical tables and supporting Investigations Reporting Statistics
metrics
5(a)(19) Investigations involving a senior government Investigations Involving a Senior Government
employee where allegations of misconduct were Employee Where Misconduct Was Substantiated
substantiated
5(a)(20) Whistleblower retaliation Whistleblower Retaliation Cases
5(a)(21) Attempts to interfere with the independence of Instances of Interference
OIG
5(a)(22) Each closed inspection, evaluation, and audit not Investigations Involving a Senior Government
disclosed to the public; each closed investigation Employee that Is Closed and Not Disclosed to the
involving a senior government employee not Public
disclosed to the public
51 | Spring 2022 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Make a Difference
To promote integrity, economy, and efficiency, we encourage you to report instances of fraud, waste, or
mismanagement to the OIG Hotline.*
Online: https://www.sba.gov/oig/hotline
Write or Visit:
U.S. Small Business Administration
Office of Inspector General
Investigations Division
409 Third Street, SW (5th Floor)
Washington, DC 20416
*In accordance with Sections 7 and 8L(b)(2)(B) of the Inspector General’s Act, confidentiality of a complainant’s personally
identifying information is mandatory, absent express consent by the complainant authorizing the release of such information.
Spring 2022 Semiannual Report to Congress | 52
File and source
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- SBA_OIG_Spring_2022_Semiannual_Report_to_Congress.pdf
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- 1,330,046 bytes
- SHA-256
- 36cb3940bf6386029d06cce37d3fe9a9f11348bd21d706237975b73121d9007c
- Original
- www.oversight.gov