SBA OIG Semiannual Report to Congress, October 1, 2022 – March 31, 2023
Summary
Semiannual Report to Congress of the U.S. Small Business Administration Office of Inspector General for October 1, 2022 to March 31, 2023, with a message from the Inspector General dated April 28, 2023. The message states that during the 6-month period OIG issued 5 reports with 50 recommendations, and that its investigations resulted in 184 indictments and 112 convictions. It also states that OIG pandemic oversight and investigative work had resulted in 860 indictments, 687 arrests, and 486 convictions as of March 2023. The contents list sections on pandemic response oversight, notable investigations and agency management, followed by appendixes including reports issued and a legal actions summary.
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“SBA OIG Semiannual Report to Congress, October 1, 2022 – March 31, 2023.”
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Semiannual Report to Congress
October 1, 2022 – March 31, 2023
U.S. Small Business Administration | Office of Inspector General
Message from the Inspector General
April 28, 2023
I am honored to submit our Semiannual Report to Congress for the first
half of fiscal year 2023. Every 6 months, we report to Congress our
independent oversight of the U.S. Small Business Administration (SBA),
as required by law.
The Office of Inspector General (OIG) provides independent and
objective oversight of SBA programs for the benefit of the American
people by identifying key issues facing the agency, recommending
corrective actions, and promoting a high level of integrity.
Hannibal “Mike” Ware
OIG provides taxpayers with an exponential return on investment, rooting
out fraud, waste, and abuse in SBA programs. In the past 2 years alone,
OIG’s work has resulted in more than $9 billion in dollar accomplishments. Our work also has
played a major role in the return of more than $30 billion in pandemic relief funds from
borrowers and financial institutions. Dollar accomplishments include investigative recoveries,
fines, and forfeitures, as well as review findings of disallowed costs.
Key Priority: Pandemic Response Oversight
For the last 3 years, our goal has been to set a standard of excellence in overseeing the $1 trillion
in pandemic assistance obligated to SBA programs for the economic recovery of America’s small
businesses. When SBA expedited relief to those in need during the pandemic, the agency relaxed
internal controls, increasing the risk of program fraud, abuse, and improper payments.
As the landscape continues to unfold, we are collaborating across government to shine a light on
rampant potential fraud in pandemic relief programs. OIG pandemic oversight and investigative
work has resulted in 860 indictments, 687 arrests, and 486 convictions as of March 2023.
Leveraging supplemental resources provided by Congress, we have published 30 reports on
pandemic oversight.
In coordination with the Pandemic Response Accountability Committee (PRAC), we contributed
to the fraud alert PRAC Identifies $5.4 Billion in Potentially Fraudulent Pandemic Loans Obtained
Using Over 69,000 Questionable Social Security Numbers. We also assisted with the expansive
Tracking Pandemic Relief Funds that Went to Local Communities Reveals Persistent Data Gaps
and Data Reliability Issues, conducted with PRAC and 10 other offices of Inspector General.
Spring 2023 Semiannual Report to Congress | i
U.S. Small Business Administration | Office of Inspector General
We have issued dozens of recommendations for corrective action aimed at strengthening
internal controls so eligible small businesses receive the economic aid promised by Congress, not
fraudsters or other unscrupulous borrowers abusing taxpayer resources.
The true magnitude of fraud in SBA pandemic assistance programs will be coming to light for
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 years to come and will require
adequate oversight resources.
Our Work this Period
During the 6-month period from October
2022 to March 2023, OIG issued 5 reports
with 50 recommendations to improve SBA
operations and reduce fraud and
unnecessary losses in agency programs. In
addition, OIG investigations resulted in 184
indictments and 112 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.
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
Spring 2023 Semiannual Report to Congress | ii
U.S. Small Business Administration | Office of Inspector General
Contents
SBA’s Top Management and Performance Challenges ........................................................................................................................ 1
Summary of OIG Oversight Work .......................................................................................................................................................... 2
Pandemic Response Oversight .............................................................................................................................................................. 2
White Paper ...................................................................................................................................................................................... 3
Notable Investigations ..................................................................................................................................................................... 4
Small Business Access to Capital ........................................................................................................................................................... 8
Disaster Assistance Program .................................................................................................................................................................. 9
Contracting and Counseling Programs ................................................................................................................................................ 10
Investigations .................................................................................................................................................................................. 11
Agency Management ........................................................................................................................................................................... 12
Audits, Inspections, and Evaluations ............................................................................................................................................. 12
Other Significant OIG Activities............................................................................................................................................................ 15
Background Investigations Ensure Integrity ................................................................................................................................. 15
Debarment and Other Administrative Enforcement Actions....................................................................................................... 15
Stakeholder Presentations on PPP and EIDL Fraud ...................................................................................................................... 15
Reviews of Proposed Agency Regulations, Operating Procedures, and Other Initiatives Lead to Improved Program Controls
......................................................................................................................................................................................................... 16
Approval of Small Business Development Center Surveys........................................................................................................... 16
OIG Hotline ........................................................................................................................................................................................... 17
Significant Increases ....................................................................................................................................................................... 17
Organizational Overview ...................................................................................................................................................................... 18
U.S. Small Business Administration ............................................................................................................................................... 18
Office of Inspector General ............................................................................................................................................................ 19
Appendixes ........................................................................................................................................................................................... 22
Appendix A: Reporting Period Statistical Highlights ..................................................................................................................... 22
Appendix B: Reports Issued ........................................................................................................................................................... 24
Appendix C: Reports, Recommendations, and Management Decisions ..................................................................................... 25
Appendix D: Investigations Reporting Statistics ........................................................................................................................... 56
Appendix E: Legal Actions Summary ............................................................................................................................................. 58
Appendix F: Cosponsored and Other Activities ............................................................................................................................ 66
Appendix G: External Peer Reviews ............................................................................................................................................... 70
Appendix H: Office of Inspector General Reporting Requirements............................................................................................. 71
Make a Difference ................................................................................................................................................................................ 73
Spring 2023 Semiannual Report to Congress | iii
U.S. Small Business Administration | Office of Inspector General
SBA’s Top Management and Performance
Challenges
Each year, OIG is required to report on the
Management & Performance
most serious management challenges Challenges FY 2023
facing the agency. In accordance with the
Reports Consolidation Act of 2000 and Challenge 1
Office of Management and Budget (OMB) SBA’s Economic Relief Programs Are Susceptible to
Significant Fraud Risks and Vulnerabilities
Circular A-136, SBA includes this
information in the agency financial report. Challenge 2
Inaccurate Procurement Data and Eligibility Concerns
The management challenges represent
in Small Business Contracting Programs Undermine
areas OIG considers particularly vulnerable the Reliability of Contracting Goal Achievements
to fraud, waste, abuse, or
mismanagement, or which otherwise pose Challenge 3
SBA Faces Significant Challenges in IT Investment,
significant risk to the agency, its
System Development, and Security Controls
operations, or its credibility. Each
management challenge generally has Challenge 4
originated from one or more reports SBA Risk Management and Oversight Practices Need
issued by OIG or the Government Improvement to Ensure the Integrity of Loan
Accountability Office (GAO). Programs
Challenge 5
We do not usually rank the top challenges
SBA’s Management and Monitoring of the 8(a)
in order of importance or magnitude,
Business Development Program Needs Improvement
except for the Coronavirus Disease 2019
(COVID-19) pandemic challenge. We view Challenge 6
all eight challenges as critically important Identification of Improper Payments in SBA’s 7(a)
to SBA operations in the upcoming year. Loan Program Remains a Challenge
However, we placed COVID-19 economic Challenge 7
relief programs at the top of the list for SBA’s Disaster Assistance Program Must Balance
the 2023 report in recognition that it is Competing Priorities to Deliver Prompt Assistance but
the agency’s most acute challenge. You Prevent Fraud
can find the Top Management and Challenge 8
Performance Challenges Facing the Small SBA Needs Robust Grants Management Oversight
Business Administration in Fiscal Year
2023 in the Reports section of the SBA OIG
website.
1 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Summary of OIG Oversight Work
Pandemic Response Oversight
To support businesses adversely affected by the COVID-19 pandemic, Congress tasked SBA with
the lending authority of approximately $470 billion in COVID-19 Economic Injury Disaster Loans
(EIDL) and $20 billion in COVID-19 EIDL Advances. In FY 2021, Congress appropriated additional
funds for new disaster assistance programs: $35 billion for Targeted EIDL Advances and
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, 2021, the Economic Aid to Hard-Hit Small Businesses,
Nonprofits, and Venues Act extended the program through March 31, 2021. The Economic Aid Act
provided an additional $147.5 billion in program funding. The American Rescue Plan Act of 2021
provided an additional $7.2 billion, which increased the total program funding to $813.7 billion. On
March 30, 2021, the PPP Extension Act of 2021 extended the program through June 30, 2021, with
May 31, 2021 as the last day for acceptance of applications.
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.
Spring 2023 Semiannual Report to Congress | 2
U.S. Small Business Administration | Office of Inspector General
White Paper
White Paper: 7(a) Loan Program During SBA’s Response to
the COVID-19 Pandemic (Report 23-05)
We identified factors that could impact SBA’s 7(a) loan program and should be
considered in SBA’s program risk strategy. Specifically, in FY 2021, the total amount of loans
increased to $31.4 billion from $19.4 billion in FY 2020 (62 percent increase) and $20.6 billion in FY
2019 (53 percent increase), as did the average loan amount. Loan approvals decreased in FY 2020
and returned to pre-pandemic levels in FY 2021. Default and charge-off rates also significantly
declined after implementation of the CARES Act. The relief payments likely attributed to declining
default and charge-off rates. Small businesses also had access to additional support during the
COVID-19 pandemic, which included the PPP.
The effects of the pandemic combined with the rising interest rates could increase the risk for
subsequent defaults and charge-offs. These program trends could increase SBA’s liability and have
a negative impact on its ability to achieve its zero-subsidy rate goal. To ensure 7(a) loan program
integrity, reduce the risk of financial loss and facilitate meeting its zero-subsidy rate goal, SBA
should consider potential risks related to higher loan amounts, rising interest rates, staffing
shortages, delayed defaults, and charge-offs in its 7(a) risk strategy. SBA management generally
agreed with our findings and key considerations and acknowledged that the lasting impact of the
relief payments, the effects of the higher loan amounts, and rising interest rates were unknown.
Management stated they will continue to consider our key considerations in their risk strategy.
Access this White Paper on the SBA OIG Reports site.
3 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Notable Investigations
CEO of PPP Lender MBE Capital Pleads Guilty in Connection
with Fraudulent Loan and Lender Applications
A New York man pled guilty to conspiring to commit wire fraud in connection with
submitting loan and lender applications for the SBA-administered PPP program. The CEO used
false representations and documents to fraudulently obtain SBA approval for his company and
then engaged in criminal conduct to fraudulently secure hundreds of millions in PPP loans and to
collect approximately $71 million in lender fees. In addition, the CEO engaged in a scheme to
obtain a $283,764 PPP loan for his company by using false statements regarding the number of
employees and their wages and using the forged signature of the company’s tax preparer.
As a result of the fraudulent misrepresentations, the CEO, through his company, issued
approximately $823 million in PPP loans to approximately 36,600 businesses. These loans earned
the CEO approximately $71.3 million in fees. He spent the proceeds from his criminal conduct on
the purchase of a villa in the Dominican Republic for over $10 million and a $3.5 million mansion in
Franklin Lakes, New Jersey; a chartered jet service; and several luxury vehicles, including a 2018
Porsche 911 Turbo, a 2017 Ferrari 488 Spider, a 2017 Bentley Continental GT, a BMW 750, and a
1962 Mercedes-Benz 190.
Former Florida State Representative Pleads Guilty to Counts
Related to COVID-19 Relief Fraud
A Florida man pled guilty to wire fraud, money laundering, and making false
statements in connection with COVID-19 relief fraud. The former Florida state
representative devised a scheme to defraud SBA and obtain small business loans by means of
materially false and fraudulent pretenses, representations, and promises and, while executing the
scheme, transmitted wire communications in interstate commerce. He also submitted to SBA a
false and fraudulent EIDL application in the name of one of his dormant business entities. Through
this conduct, he fraudulently obtained $150,000 in COVID-19 relief funds from SBA.
Spring 2023 Semiannual Report to Congress | 4
U.S. Small Business Administration | Office of Inspector General
Former Army Warrant Officer Sentenced in $3.7 million
Government Fraud
A Georgia woman, who is a former U.S. Army Chief Warrant Officer, was found guilty
and sentenced in the Southern District of Georgia to 42 months in prison, followed by 24 months
of supervised release and 40 hours of community service. She was also ordered to pay $3.6 million
in restitution. She submitted more than 150 fraudulent PPP loan applications and more than a
dozen fraudulent federal student loan discharge applications on behalf of herself and her co-
conspirators. This resulted in banks dispersing more than $3.5 million of PPP funds to members of
the conspiracy and efforts to discharge more than $1 million in federal student loans.
North Central Florida Blimp Company Executive Sentenced to
Over 5 Years in Federal Prison for COVID-19 Relief Fraud
A Florida man was sentenced to 66 months in federal prison for his role in submitting
16 fraudulent PPP applications to multiple federally insured financial institutions and other
qualified lenders in the names of multiple businesses, including his blimp companies. The man’s
false PPP loan applications included several discrepancies, including having no records of some
employees, listing the number of employees in multiple applications that did not match the
number previously listed in employer tax records, and claiming some non-established businesses
in the applications.
The man’s fraudulent PPP loan applications sought over $11.9 million in PPP loan funds, and he
received over $4.9 million. Between March and July 2020, he submitted a total of 18 fraudulent
applications to SBA for EIDLs in his own name and in the name of his wife. SBA approved these
false EIDL applications, which totaled over $2.8 million.
Liberty County Man and Woman Behind My Buddy Loans
Sentenced for Fraud Related to COVID Relief
A Texas man and woman pled guilty and were sentenced to federal prison for wire
fraud violations. The man was sentenced to 121 months in federal prison, followed by 24 months
of supervised release, and the women was sentence to 66 months in federal prison, followed by 24
months of supervised release. They were also ordered to forfeit $680,710 and pay more than $3.7
million in penalties.
5 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
The duo operated a sophisticated telemarketing scheme in exchange for a fee. Their fraudulent
business took personally identifiable information from victims and promised to file applications for
agricultural grants, which they said was available to those who owned as little as one acre of land.
Instead, they fraudulently submitted EIDL applications with SBA that contained the victims’
personal information. Based on these fraudulent applications, SBA issued more than $1.56 million
in EIDL advances to ineligible people. They used the illegal proceeds to stay at luxury resorts and
pay off debt.
Louisiana Man Pleads Guilty to Fraudulently Obtaining
COVID-19 Relief Funds and Money Laundering
A Louisiana man pled guilty to one count of money laundering in the Western
District of Louisiana. In total, he sought more than $7.6 million in PPP and EIDL
program loans and fraudulently obtained more than $1.1 million. He submitted nine fraudulent
PPP and EIDL program loan applications on behalf of several companies that he purportedly
owned. He falsified information in the loan applications and supporting documents, including
claims that some of his businesses had over 100 employees. He also submitted falsified federal tax
returns. He misused the loan proceeds by, among other things, transferring the funds to personal
bank accounts and purchasing cars and luxury goods.
Oregon Dentist Sentenced for Stealing Millions in Relief Funds
and Illegally Distributing Controlled Substances
An Oregon man pled guilty and was sentenced to 70 months in federal prison,
followed by 36 months of supervised release, and ordered to pay more than $10.5
million in restitution to SBA. He submitted more than 100 fraudulent COVID-19 relief program
applications, stole the identities of more than 40 victims, and caused SBA to pay out more than
$11.5 million in loans, grants, and associated lender fees. He used the names and employer
identification numbers of fictitious business entities on his fraudulent applications. He provided
false information about business start dates, number of employees and locations, and the
identities of the purported applicants and business owners. He used the stolen funds to speculate
in stocks and cryptocurrencies through online brokerage accounts.
Spring 2023 Semiannual Report to Congress | 6
U.S. Small Business Administration | Office of Inspector General
Man Convicted for Multimillion Dollar COVID-19 Relief Fraud
A Texas man was convicted on one count of conspiracy to commit wire fraud, one
count of wire fraud, and one count of unlawful monetary transactions by a federal
jury in the Eastern District of Texas for his role in a scheme to fraudulently obtain
and launder millions of dollars in forgivable PPP loans. He conspired with others to submit
fraudulent PPP loan applications by falsifying the number of employees and the average monthly
payroll expenses of the applicant businesses. In total, the co-conspirators sought over $35 million
through more than 80 fraudulent PPP loans. He distributed over $500,000 in fraudulent loan
proceeds to his co-conspirators and himself using bogus payroll checks and laundered a portion of
the proceeds by transferring the funds from one of his bank accounts to another bank account he
controlled. In addition, 15 other individuals pled guilty to their involvement in the loan fraud
scheme.
7 | Spring 2023 Semiannual Report to Congress
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 $173
billion as of December 2022, after the forgiveness of over $755 billion in Paycheck Protection
Program loans. 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.
Spring 2023 Semiannual Report to Congress | 8
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 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
• 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.
9 | Spring 2023 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.
During this semiannual period, our audit and investigations work in this program area was focused
on the pandemic response programs.
Spring 2023 Semiannual Report to Congress | 10
U.S. Small Business Administration | Office of Inspector General
Investigations
Couple Sentenced for Conspiracy, Wire Fraud, and Major Fraud
Against the United States
A North Carolina couple were sentenced to serve federal prison terms of 48 months
and 24 months, respectively, and forfeiture of their bank accounts for their role in a
conspiracy that took place from 2005 to 2013. The couple conspired to fraudulently obtain federal
contracts intended for businesses lawfully participating in the Department of Veterans Affairs’
Service-Disabled Veteran-Owned Small Business program and the SBA’s 8(a) Business
Development program. The couple falsely represented that two companies they controlled were
eligible for these programs. Their actions also deprived legitimate service-disabled veteran and
minority-owned businesses from obtaining government contracts on which they were eligible to
bid.
As part of the scheme, $14 million of government funds was deposited into accounts controlled by
the couple. They used those accounts to pay for extravagant vacations, monthly payments on a
personal private airplane, a Mercedes-Benz, mortgage payments for their personal residence, real
estate purchases, shoes, clothing, food, and souvenirs while on vacation. The couple received
almost $3 million in financial benefit from the scheme.
Military Contractor Pleads Guilty to Bid Rigging
A Texas man pled guilty in the Eastern District of Texas to rigging bids on public
military contracts in Texas. He conspired with others to rig bids on certain
government contracts from May 2013 to January 2018 to give the false impression of competition
and to secure government payments in excess of $17.2 million. The plea agreement detailed six
contracting bids that he and his co-conspirators rigged, which included work performed for the
Red River Army Depot in Texarkana, Texas. The projects included heavy military equipment work
such as refurbishing armor kits for military trucks and turrets for Humvees. He falsely represented
himself to be an employee of one business so that he could obtain government contracts that
were set aside for qualifying businesses required to be owned and operated by certain categories
of minority, disadvantaged or disabled persons. In fact, the work for some of the contracts was
performed by businesses that had not placed any bids. He provided government employees with
tickets to a 2011 World Series game, tickets to two college football games, two all-expenses paid
family vacations to Las Vegas, donations to youth sports teams coached by the government
employee, and meals at restaurants.
11 | Spring 2023 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
Independent Auditors’ Report on SBA’s Fiscal Year 2022
Financial Statements (Report 23-02)
We contracted with the independent certified public accounting firm KPMG LLP
to conduct an audit of SBA’s consolidated balance sheets as of September 30, 2022 and 2021 and
the related notes to these statements. KPMG reported 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 balance sheet as of September 30, 2022. KPMG issued a disclaimer of opinion on the
consolidated balance sheets as of September 30, 2022 and 2021.
SBA was unable to provide adequate evidential matter in support of a significant number of
transactions and account balances related to the PPP, EIDL program, the Restaurant Revitalization
Fund, and the Shuttered Venue Operators Grant program due to inadequate processes and
controls. As a result, KPMG was unable to determine whether any adjustments might have been
necessary to the following: Credit Program Receivables and Related Foreclosed Property, Net;
Other than Intragovernmental Advances and Prepayments; Downward Reestimate Payable to
Treasury; and Loan Guarantee Liabilities. KPMG identified six material weaknesses and two
significant deficiencies in internal control over financial reporting. SBA’s Chief Financial Officer
concurred with findings and recommendations and agreed to implement the recommendations.
Access this Audit Report on the SBA OIG Reports site.
Spring 2023 Semiannual Report to Congress | 12
U.S. Small Business Administration | Office of Inspector General
FY 2022 Federal Information Security Modernization Act
Review (Report 23-03)
SBA OIG contracted with the independent certified public accounting firm KPMG
LLP for our FY 2022 Federal Information Security Modernization Act (FISMA) evaluation on the
effectiveness of the information security program in nine information security areas, or domains,
and practices of SBA. Though SBA responded to previously identified vulnerabilities, we rated its
overall cybersecurity as “not effective” because there are still security control challenges in areas
such as risk management, user access, and contingency planning.
In addition to two outstanding FISMA recommendations from prior reports, we made
recommendations for improving six of the nine security domains. We recommended designing and
implementing a quality assurance program to ensure that SBA system hardware inventory is
maintained as required by the National Institute of Standards and Technology; implementing a
process to ensure SBA reviews its external service providers for supply chain risks and documents
all supply chain risk assessments; communicating and reinforcing to program offices the
requirement to review and remove system and use accounts; updating policies and procedures to
conduct formal workplace assessments; developing, documenting, and implementing a process
that requires managers to review information security data and report information security
threats; and ensuring that owners of high value asset systems carry out functional testing of
contingency plans annually and initiate corrective actions. SBA management agreed with our
recommendations and provided an action plan to address deficiencies.
Access this Audit Report on the SBA OIG audit reports site.
SBA’s Controls Over Cash Contributions and Gifts, Fiscal Year
2022 (Report 23-04)
We found SBA complied with the 2022 Consolidated Appropriations Act and SBA
regulations and policies regarding soliciting and accepting cash contributions for National Small
Business Week 2022. We determined SBA complied with applicable laws and SBA regulations and
policies regarding the acceptance, holding, and use of gift funds. Specifically, the agency accepted
a $505,879 unsolicited gift from the cosponsors of business week activities held between 2020 and
2022. This gift represented the cosponsor’s share of excess cash contributions that remained at
the conclusion of the activities.
13 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
We made two recommendations to improve controls over 2022 business week closeout reporting
and government purchase card use. SBA management agreed with both recommendations and
has fully implemented corrective actions for Recommendation 1.
Access this Audit Report on the SBA OIG Reports site.
Spring 2023 Semiannual Report to Congress | 14
U.S. Small Business Administration | Office of Inspector General
Other Significant OIG Activities
Background Investigations Ensure Integrity
During this reporting period, OIG initiated 65 background investigations and issued 1 security
clearance for OIG employees and contractors. OIG adjudicated 10 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 11 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 78 presentations for internal and external stakeholders
to raise awareness of fraud, waste, and abuse related to SBA programs. More than 788
participants attended these events.
15 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
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 58
proposed revisions of these program directives and submitted comments designed to improve 9 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 to OIG review during this reporting period.
Spring 2023 Semiannual Report to Congress | 16
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 OIG 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 20,000 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 240,000
complaints. By contrast, the OIG Hotline received 742 complaints in calendar year 2019.
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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.
Spring 2023 Semiannual Report to Congress | 18
U.S. Small Business Administration | Office of Inspector General
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, four divisions assist
in carrying out the statutory
responsibilities of OIG: the
Audits Division, Investigations Division, Technology Solutions 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. 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.
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U.S. Small Business Administration | Office of Inspector General
The Investigations Division manages programs 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 Technology Solutions Division provides data analytics and information technology support
across OIG, such as artificial intelligence and machine learning solutions. It expands the impact of
OIG’s oversight activities.
The Management and Operations Division provides business support (e. g., budget and financial
management, human resources, 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.
Spring 2023 Semiannual Report to Congress | 20
U.S. Small Business Administration | Office of Inspector General
21 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Appendixes
Appendix A: Reporting Period Statistical Highlights
Summary of OIG Dollar Accomplishments
Dollar Accomplishments as a Result of Investigations and Related Activities —
Potential Investigative Recoveries and Fines $113,112,844
Other Recoveries (e.g., administrative seizures with partner law enforcement agencies) $1,796,053
Asset Forfeitures Attributed to OIG Investigations $33,892,547
Loans/Contracts Not Approved or Canceled as a Result of Investigations —
Investigations Subtotal $148,801,444
Dollar Accomplishments as a Result of Audit Activities —
Disallowed Costs Agreed to by Management $24,317,629
Recommendations that Funds Be Put to Better Use Agreed to by Management —
Audit Subtotal $24,317,629
Total OIG Dollar Accomplishments $173,119,073
Efficiency and Effectiveness Activities Related to Audit, Other Reports, and
Follow-up Activities
Reports Issued 5
Recommendations Issued 50
Dollar Value of Costs Questioned —
Dollar Value of Recommendations that Funds Be Put to Better Use —
Recommendations with Management Decisions 66
Recommendations without a Management Decision 1
Collections as a Result of Questioned Costs $1,367,417
Indictments, Convictions, and Case Actions
Indictments from OIG Cases 184
Convictions from OIG Cases 112
Cases Opened 118
Cases Closed 150
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U.S. Small Business Administration | Office of Inspector General
SBA Personnel Actions Taken as a Result of Investigation
Dismissals —
Resignations and Retirements —
Suspensions —
Reprimands —
Program Actions Taken During the Reporting Period as a Result of OIG
Action
Present Responsibility Referrals to the Agency 11
Pending at the Agency as of March 31, 2023 3
Suspensions Issued by the Agency 5
Proposed Debarments Issued by the Agency 6
Final Debarments Issued by the Agency 13
Proposed Debarments Declined by the Agency 0
Administrative Agreements Entered by the Agency in Lieu of Debarment 1
Present Responsibility Actions by Other Agencies 6
Agency Legislative and Regulatory Proposals Reviewed
Legislation, Regulations, Standard Operating Procedures, and Other Issuances Reviewed 58
Comments Provided by OIG to Improve Legislation, Regulations, Standard Operating Procedures, and
Other Issuances 9
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Appendix B: Reports Issued
Agency Management
Title Report Number Issue Date Questioned Costs Unsupported Funds for Better
Costs Use
Independent 23-02 11/15/2022 — — —
Auditors’ Report
on SBA’s Fiscal
Year 2022
Financial
Statements
FY 2022 FISMA 23-03 12/13/2022 — — —
Review
SBA's Controls 23-04 12/19/2022 — — —
Over Cash
Contributions and
Gifts FY 2022
Program Subtotal 3 — — — —
Credit/Capital Programs
Title Report Number Issue Date Questioned Costs Unsupported Funds for Better
Costs Use
White Paper: 7(a) 23-05 3/21/2023 — — —
Loan Program
During SBA's
Response to the
COVID-19
Pandemic
Program Subtotal 1 — — — —
Top Management Challenges
Title Report Number Issue Date Questioned Costs Unsupported Funds for Better
Costs Use
Top Management 23-01 — — — —
and Performance
Challenges Facing
the Small Business
Administration in
FY 2023
Program Subtotal 1 — — — —
Spring 2023 Semiannual Report to Congress | 24
U.S. Small Business Administration | Office of Inspector General
Appendix C: Reports, Recommendations, and Management
Decisions
Reports with Questioned Costs
Unsupported
IG Act Reporting Requirement Reports Recommendations* Questioned Costs** Costs***
No management decision made by — — — —
September 30, 2022
Issued during this reporting period — — — —
Management decisions made during — — — —
this reporting period
(i) Disallowed costs — — — —
(ii) Costs not disallowed — — — —
No management decision made by — — — —
March 31, 2023
*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
No management decision made by — — —
September 30, 2022
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, 2023
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U.S. Small Business Administration | Office of Inspector General
Reports from Prior Periods with Overdue Management Decisions
There are no reports from prior periods with overdue management decisions.
Reports from Prior Periods with Open Recommendations as of
March 31, 2023
Aggregate
Report Number of Potential Cost
Number Title Date Issued Recommendations Savings
18-13 Evaluation of SBA's 7(a) Loans to Poultry 3/6/2018 1
Farmers —
19-15 OIG High Risk 7(a) Loan Review Program 7/10/2019 1 $3,000,297
20-03 Audit of SBA's Oversight of High-Risk Lenders 11/12/2019 3 —
20-08 Audit of the SBA's Community Advantage Pilot 3/18/2020 1
Program $2,078,586
20-20 Audit of SBA’s Compliance with the Debt 9/30/2020 9
Collection Improvement Act, as Amended —
21-02 Inspection of SBA’s Initial Disaster Assistance 10/28/2020 4
Response to the Coronavirus Pandemic —
21-07 Inspection of SBA's Implementation of the 1/14/2021 1
Paycheck Protection Program —
21-08 SBA’s Use of Vendors without a Contract 2/3/2021 3 $10,800,476
21-09 Duplicate Loans Made Under the Paycheck 3/15/2021 1
Protection Program —
21-14 Audit of SBA’s Oversight of Women’s Business 5/4/2021 8
Centers’ Compliance with Cooperative
Agreement Financial Requirements $785,961
21-16 SBA’s FY 2020 Compliance with PIIA 5/12/2021 2 —
22-01 SBA's Emergency EIDL Grants to Sole 10/7/2021 1
Proprietors and Independent Contractors $4,500,000,000
22-04 Independent Auditors’ Report on SBA’s 11/8/2021 1
Compliance with DATA Act Reporting —
22-06 COVID-19 EIDL Program Recipients on the 11/30/2021 2
Department of Treasury's Do Not Pay List —
22-07 SBA’s Oversight of the Grant Recipient’s 1/18/2022 3
Implementation of the CARES Act Resource
Partners Training Portal $14,762,774
22-08 SBA’s Business Development Assistance to 8(a) 2/14/2022 7
Program Participants $117,463,921
22-09 SBA’S Paycheck Protection Program Loan 2/28/2022 1
Review Processes —
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U.S. Small Business Administration | Office of Inspector General
Aggregate
Report Number of Potential Cost
Number Title Date Issued Recommendations Savings
22-10 Evaluation of SBA’s Contract for Disaster 4/14/2022 3
Assistance Loan Recommendation Services $13,046,125
22-11 FY 2021 FISMA Review 4/28/2022 2 —
22-12 Independent Auditors’ Report on SBA’s Fiscal 5/17/2022 2
Year 2021 Compliance with the PIIA of 2019 —
22-13 SBA’s Handling of Potentially Fraudulent PPP 5/26/2022 2
Loans —
22-15 Inspection of SBA's Award and Payment 7/5/2022 4
Practices in the Shuttered Venue Operators
Grant Program $35,101,816
22-17 Evaluation of COVID-19 EIDL Applications 9/12/2022 2
Submitted from Foreign IP Addresses —
22-19 COVID-19 and Disaster Assistance Information 9/27/2022 10
Systems Security Controls —
22-20 SBA’s Implementation of the Women-Owned 9/29/2022 5
Small Business Certification Program —
22-21 Paycheck Protection Program Eligibility for 9/26/2022 2
Nonprofit Organizations $3,544,216
22-22 Follow-up Inspection of SBA’s Internal Controls 9/29/2022 2
to Prevent COVID-19 EIDLs to Ineligible
Applicants $1,969,200
22-23 SBA’s Corrective Actions to Improve Monitoring 9/30/2022 1
District Offices’ Customer Service Activities —
22-25 SBA's Guaranty Purchaces for PPP Loans 9/30/2022 2 —
— Total — 86 $4,623,328,765
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Significant Recommendations from Prior Reporting Periods Without Final
Action as of March 31, 2023
Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
18-13 03/06/2018 2 Review the arrangements between 03/01/2018 06/30/2023
integrators 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.
19-15 07/10/2019 1 Require the lender to bring the loan into 07/11/2019 05/27/2022
compliance or, if not possible, seek
recovery of $3,000,297 plus interest on
the guaranty paid by SBA.
20-03 11/12/2019 1 Develop and implement policies and 11/15/2019 09/29/2023
procedures to document OCRM's
justification for (1) not conducting
planned reviews and (2) identifying and
prioritizing additional lenders for review.
20-03 11/12/2019 2 Develop and implement a 11/15/2019 09/30/2023
comprehensive database to manage its
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.
20-03 11/12/2019 5 Develop and implement policies and 11/15/2019 09/29/2023
procedures that require OCRM 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.
20-08 03/18/2020 6 Establish a process to periodically assess 06/30/2020 12/31/2022
the performance of CA loans approved
with SBSS scores under 140, to
determine whether the recently
implemented SBA approval requirement
is adequately mitigating the risk of loss.
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U.S. Small Business Administration | Office of Inspector General
Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
20-20 09/30/2020 1 Review all loans assigned to the 09/16/2020 02/03/2023
resolution 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 09/30/2020 2 Revise SOP 50 52 to clearly communicate 09/16/2020 02/03/2023
that all loans with collateral must be
evaluated for foreclosure and placed in
foreclosure status before they are 180
days delinquent.
20-20 09/30/2020 3 Revise SOP 50 52 2 to clearly 09/16/2020 02/03/2023
communicate that all debts 180 days
delinquent must be transferred to
Treasury Cross-Servicing unless the debt
meets a valid transfer exemption.
20-20 09/30/2020 5 Ensure that information used to monitor 09/16/2020 04/29/2022
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 09/30/2020 6 Review all loans currently assigned to the 09/16/2020 04/03/2023
Center 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 09/30/2020 7 Review all loans currently assigned to the 09/16/2020 04/03/2023
Center 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.
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Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
20-20 09/30/2020 8 Establish policies and procedures to 09/16/2020 04/29/2022
require routine follow-up on delinquent
loans to ensure full compliance with the
Debt Collection Improvement Act.
20-20 09/30/2020 9 Reiterate the requirements for workout 09/16/2020 02/03/2023
agreements to responsible personnel to
ensure compliance with the Debt
Collection Improvement Act.
20-20 09/30/2020 10 Perform a cost benefit analysis to 09/16/2020 04/03/2023
determine if SBA should begin assessing
fees to offset the cost of processing and
handling delinquent disaster loans.
21-02 10/28/2020 1 Review all loans that had a bank account 12/08/2020 05/13/2023
number 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.
21-02 10/28/2020 3 Review duplicate loans to IP addresses, 12/08/2020 05/13/2023
email 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 5 Strengthen or establish controls to 08/10/2021 05/13/2023
ensure multiple loans are provided only
to eligible applicants and prevent the
erroneous duplication of loans.
21-02 10/28/2020 6 Strengthen data integrity to make it 08/10/2021 05/13/2023
possible to determine if the inaccurate
information allowed loans to be made to
ineligible entities and to strengthen
SBA’s ability to service loans
appropriately.
21-07 01/14/2021 1 Review the loans identified as potentially 01/14/2021 04/03/2023
ineligible to determine if the businesses
met eligibility requirements. If not, take
appropriate action related to loan
guaranty and forgiveness.
Spring 2023 Semiannual Report to Congress | 30
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
21-08 02/03/2021 1 Require responsible personnel to 02/01/2021 04/30/2022
execute a 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 02/03/2021 2 Ensure that vendors used to provide 02/01/2021 12/15/2023
foreclosure and real estate services are
registered in SAM, as required.
21-08 02/03/2021 3 Ratify the over $10.8 million in payments 02/02/2023 06/30/2023
in accordance with the FAR and 48 CFR §
1.602-3.
21-09 03/15/2021 1 Review the OIG identified potential 03/31/2021 06/30/2023
duplicate disbursements for eligibility
and take action to recover any improper
payments as applicable.
21-14 05/04/2021 1 Implement financial oversight 05/04/2021 04/30/2023
procedures for the 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 05/04/2021 2 Remedy $523,790 in unsupported 05/04/2021 09/29/2024
matching 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 05/04/2021 3 Recover $31,215 for improperly awarded 05/04/2021 09/29/2024
contracts and $31,424 in unallowable or
unallocable expenses.
21-14 05/04/2021 4 Implement policies and procedures for 05/04/2021 04/30/2023
conducting thorough financial
compliance reviews and coordinate with
the Office of Field Operations to train
field office personnel responsible for
semiannual site visits.
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Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
21-14 05/04/2021 5 Establish policies holding program 05/04/2021 04/30/2023
officials accountable for promptly
following up on financial examination
results and enforcing cooperative
agreement requirements.
21-14 05/04/2021 6 Require higher-level reviewers to clearly 05/04/2021 04/30/2023
justify 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.
21-14 05/04/2021 7 Review expenses for the $28,089 05/04/2021 09/29/2024
reallocation of 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 05/04/2021 8 Require program officials to enforce the 05/04/2021 04/30/2023
cooperative agreement terms and
conditions and deobligate or withhold
payments if WBCs do not submit
accurate financial reports on time.
21-16 05/12/2021 10 Collaborate with the Chief Financial 08/06/2021 02/03/2023
Officer to ensure a timely and complete
reconciliationis performed on the
population subject to sampling for
improper payment reviews.
21-16 05/12/2021 11 Coordinate with the Office of Disaster 08/06/2021 02/03/2023
Assistance’s statistician to ensure the
estimated improper payment amounts
are calculated consistently and the
sampling methodology adequately
describes the criteria for stratification.
22-01 10/07/2021 1 Review the applications of sole 10/04/2021 05/15/2023
proprietors and independent contractors
that included numbers 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.
Spring 2023 Semiannual Report to Congress | 32
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
22-04 11/08/2021 2 KPMG recommends the Administrator 09/01/2022 09/30/2023
coordinate 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.
22-06 11/30/2021 2 Use Treasury’s DNP analysis to 11/30/2021 10/30/2023
systemically flag COVID-19 EIDL and
Emergency 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 3 For all COVID-19 EIDLs and Emergency 02/02/2023 12/29/2023
EIDL grants identified and flagged as
potentially ineligible above, include
those transactions in SBA’s 2021
improper payments estimation process.
22-07 01/18/2022 3 Evaluate whether the contract costs for 01/18/2022 05/15/2023
web development services and media
services are reasonable and remedy any
violations.
22-07 01/18/2022 4 Assess and recover the amount spent on 04/04/2022 05/15/2023
the unallowable contracted project
management services expenses incurred
during the performance of the grant.
22-07 01/18/2022 5 Recover the $100,000 paid for 04/04/2022 05/15/2023
unallowable pre-award project
management expenses.
22-08 02/14/2022 1 Implement a standard process to 11/10/2022 12/29/2023
approve initial 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.
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Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
22-08 02/14/2022 3 Establish outcome-based performance 02/14/2022 12/29/2023
goals and 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 02/14/2022 5 Implement a process to ensure the 11/10/2022 12/29/2023
systematic 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 02/14/2022 6 Implement requirements for 11/10/2022 12/29/2023
management to 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 02/14/2022 7 Ensure all employees performing 02/14/2022 03/17/2023
Business 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.
Spring 2023 Semiannual Report to Congress | 34
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
22-08 02/14/2022 8 Use lessons learned from servicing 8(a) 02/14/2022 01/13/2023
firms in an entirely virtual environment
to coordinate district office resources
and share best practices in order 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.
22-10 04/14/2022 1 Implement procedures to ensure 06/27/2022 09/30/2022
contracting officers use effective
proposal analysis techniques to
determine prices are fair and reasonable
in accordance with FAR 15.404.
22-10 4/14/2022 3 Request a formal size determination in 03/15/2023 03/31/2023
accordance with FAR 19.302 to evaluate
whether the loan processing contractor
exceeded the size standard and remedy
any violation in accordance with 15 USC
645(d).
22-10 04/14/2022 5 Implement procedures to monitor post- 04/14/2022 03/31/2023
award compliance with subcontracting
limitations.
22-11 04/28/2022 1 Design and implement a quality 04/29/2022 07/10/2023
assurance program to ensure that SBA
system software inventory and
contractor managed systems are
maintained, as required by the National
Institute of Standards and Technology
(NIST) Special Publication 800-53.
22-11 04/28/2022 2 Ensure the continuity of operations plan 04/29/2022 07/10/2023
is tested annually, as required by Federal
Continuity Directive 1.
22-12 05/17/2002 5 Formally document and implement 08/29/2022 07/31/2023
additional preventative and monitoring
controls to determine the eligibility of
borrowers prior to approval and
disbursement of loans.
35 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
22-12 05/17/2002 6 Ensure that the sampling and estimation 08/29/2022 07/31/2023
methodology plan and results are
updated and adequately describe the
criteria for stratification of the
population by disaster size, including
how it was determined and whether it
was consistently applied.
22-13 05/26/2022 1 Establish clearly defined and detailed 06/03/2022 06/30/2023
roles, responsibilities, and processes for
all SBA offices and officials responsible
for managing and handling potentially
fraudulent PPP loans to reduce the risk
of ineligible applicants receiving PPP
forgiveness and the risk of fraud and
financial loss in the PPP and when
implementing similar future programs.
22-13 05/26/2022 2 Provide lenders formal guidance to 06/03/2022 06/30/2023
effectively and consistently handle
potentially fraudulent PPP loans and
ensure lenders have sufficient guidance
when implementing similar future
programs.
22-15 07/05/2022 1 Establish procedures to use a risk-based 09/28/2022 03/31/2023
approach for disbursing award funds for
future disaster grant programs.
22-15 07/05/2022 2 Ensure all SVOG program notices of 09/28/2022 04/19/2023
award are signed by an authorized
government official and remedy awards
that were not entered into by an
authorized government official.
22-15 07/05/2022 3 Recover the $1.9 million of 09/28/2022 04/19/2023
overpayments to a grant recipient in
accordance with 2 CFR § 200.345-346.
22-15 07/05/2022 6 Reassess SBA’s flexibility in allowing 09/28/2022 03/31/2023
waivers for budget changes between line
items or implement monitoring
procedures to mitigate risks of recipients
using funds for unallowable expenses
during the grant performance period.
Spring 2023 Semiannual Report to Congress | 36
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
22-17 09/12/2022 1 Thoroughly review each COVID-19 EIDL, 10/06/2022 10/31/2023
grant, and advance application
submitted from foreign IP addresses that
were approved and funded and verify
eligibility. If ineligibility or evidence of
potential fraud is found, SBA should stop
any further or future disbursements,
recover any disbursed funds, and refer
fraudulent loans to OIG for investigation.
22-17 09/12/2022 2 Examine controls related to foreign IP 10/06/2022 10/23/2023
addresses and ensure these controls are
more effective in future disaster
processing systems.
22-21 09/26/2022 1 Review the 179 PPP loans, totaling — —
approximately $684 million, for
compliance with affiliation and size
standards to ensure eligibility
requirements were met and seek
remedy or repayment for all loans
deemed ineligible.
22-21 09/26/2022 2 Seek remedy or repayment of a PPP loan 01/19/2023 05/31/2023
in the amount of $3.5 million.
22-19 09/27/2022 1 Ensure the existing SBA System 11/08/2022 08/25/2023
Development Methodology is updated to
include supply chain risk-management
practices as required by OMB Circular A-
130 and high-value asset system
designation guidance. Also, ensure high-
value asset system risks are incorporated
into the enterprise risk management
framework, as recommended by OMB
M-19-03 and SBA SOP 90 47 6.
22-19 09/27/2022 2 Communicate and enforce the SBA 11/8/2022 11/24/2023
System Development Methodology in
which a traceability matrix is used to
ensure that system requirements can be
tested and demonstrated in the
operational system. Ensure all
requirements are aligned with the
contractual acceptance criteria.
37 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
22-19 09/27/2022 3 Implement in updated agency guidance, 11/23/2022 05/26/2023
the requirements of OMB Circular No. A-
123 that stipulate a SOC 1 Type 2 report
is needed for all new and existing
financial systems. This guidance should
also require confirmation at least
annually that the controls are
functioning as designed.
22-19 09/27/2022 4 Enforce the requirement to establish and 11/09/2022 06/30/2023
implement internal controls to ensure
appropriate program officials perform
and document contract reviews to
ensure that information security is
appropriately addressed in the
contracting language, as required by
OMB Circular A-130 and SBA SOP 90 47
6.
22-19 09/27/2022 5 In conjunction with the Enterprise Risk 11/08/2022 06/16/2023
Management Board, implement
enterprise-wide privacy risk mitigation
practices that can be assimilated into
new and existing system program
designs.
22-19 09/27/2022 6 Complete an initial assessment and 11/08/2022 12/15/2023
authorization for each information
system and all agency-designated
common controls before operation.
22-19 09/27/2022 7 Transition information systems and 11/10/2022 09/29/2023
common controls to an ongoing
authorization process (when eligible for
such a process) with the formal approval
of the respective authorizing officials or
reauthorize information systems and
common controls as needed, on a time
or event-driven basis in accordance with
agency risk tolerance, as required by
OMB Circular No. A-130 and SOP 90 47
6.
22-19 09/27/2022 8 Review and update POA&Ms at least 11/09/2022 09/22/2023
quarterly as required by SOP 90 47 6.
22-19 09/27/2022 9 Ensure data-sharing agreements are 11/09/2022 06/23/2023
reviewed annually as required by SBA
SOP 90 47 6.
Spring 2023 Semiannual Report to Congress | 38
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
22-19 09/27/2022 10 Implement an automated process to 11/09/2022 09/29/2023
document and monitor system changes
as recommended by NIST SP 800-53 Rev.
5.
22-20 09/29/2022 2 Update application instructions and — —
require WOSB applicants to submit
documentation for program officials to
verify the business meets small business
size standards.
22-20 09/29/2022 4 Implement a plan to mitigate or remedy 01/13/2023 06/05/2023
beta.Certify.sba.gov issues affecting
SBA’s ability to maintain records,
accurately report data, and work with
other federal databases, minimizing the
possibility of awarding contracts to
ineligible businesses.
22-20 09/29/2022 5 Assess the technological resources, 09/29/2022 05/01/2023
staffing levels, and service contracts
needed to reduce application wait time
and ensure application reviews are
conducted in a prompt manner in
accordance with regulatory
requirements in 13 CFR 127.300. Use the
results of the assessment to improve
processing times.
22-20 09/29/2022 6 Develop standard operating procedures 09/29/2022 10/01/2022
to ensure program officials assess third-
party certifications, establish a risk-based
sampling plan for selecting files to
review, and document the results of the
compliance reviews.
22-22 09/29/2022 1 Review the 20 loans identified in this 11/09/2022 09/30/2023
report as ineligible for the COVID-19 EIDL
that the applicants received and recover
approximately $2 million improperly
disbursed to the applicants.
39 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Recommendation Recommendation Date of Final Action
Number Number Management Target Date
Decision
22-22 09/29/2022 2 Review the COVID-19 EIDL 11/09/2022 09/30/2023
disbursements with suspect Taxpayer
Identification Numbers made after
December 27, 2020 to determine if the
loan file contains conclusive evidence
that the applicant business existed on
January 31, 2020, and therefore, met the
CARES Act eligibility requirements. If not,
flag the borrower as ineligible and
recover the funds.
22-25 09/30/2022 2 Explore alternative means of collections — —
for PPP loans with an outstanding
balance of $100,000 or less.
22-25 09/30/2022 3 Conduct an initial and periodic cost 12/07/2022 09/29/2023
benefit analysis on PPP purchase
guarantees with comprehensive
estimates to sufficiently assess whether
the cost of collecting loans of $100,000
or less is more than the recovery amount
and pursue collections based on results
of the analysis.
Spring 2023 Semiannual Report to Congress | 40
U.S. Small Business Administration | Office of Inspector General
Significant Recommendations from this Reporting Period
Report Date Issued Title Recommendation Recommendation
Number Number
23-02 11/15/2022 Independent Auditors’ 1 Design and implement controls to
Report on SBA’s Fiscal ensure the population of
Year 2022 Financial nonreporting loan status reports or
Statements loan status reports with errors is
complete and accurate.
23-02 11/15/2022 Independent Auditors’ 2 Determine and enforce policies and
Report on SBA’s Fiscal controls to hold lenders
Year 2022 Financial accountable for submitting loan
Statements status reports timely and correctly.
23-02 11/15/2022 Independent Auditors’ 3 Design and implement controls to
Report on SBA’s Fiscal monitor incomplete or inaccurate
Year 2022 Financial PPP lender loan status reports on
Statements an ongoing basis, including the
review and resolution of loan status
reports with errors.
23-02 11/15/2022 Independent Auditors’ 4 Design and implement controls to
Report on SBA’s Fiscal assess the accounting
Year 2022 Financial considerations, based on the
Statements results of the lender loan status
reports review process for PPP loan
guarantees, including the impact
on the reestimate and balances
presented in the consolidated
financial statements, and record
any necessary adjustments.
23-02 11/15/2022 Independent Auditors’ 5 Develop and enforce a policy and
Report on SBA’s Fiscal controls that require the adequate
Year 2022 Financial review, validation, and monitoring
Statements of the outputs of the case
management system and
maintenance of documentation
evidencing the review.
23-02 11/15/2022 Independent Auditors’ 6 Develop and enforce a policy and
Report on SBA’s Fiscal controls to monitor the results of
Year 2022 Financial the contractor’s loan review
Statements process including a review of loans
with a ‘No Further Action’
determination and maintenance of
documentation evidencing the
review.
41 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
23-02 11/15/2022 Independent Auditors’ 7 Perform a thorough review of the
Report on SBA’s Fiscal 2021 cohort of PPP loan
Year 2022 Financial guarantees. Based on the review,
Statements 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.
23-02 11/15/2022 Independent Auditors’ 8 Develop and document an effective
Report on SBA’s Fiscal funds recovery plan and controls to
Year 2022 Financial ensure funds disbursed to ineligible
Statements recipients as part of the forgiveness
review process are recovered and
reported accurately in a timely
manner.
23-02 11/15/2022 Independent Auditors’ 9 Perform a thorough and complete
Report on SBA’s Fiscal analysis of all requirements
Year 2022 Financial communicated to lenders for the
Statements PPP program and determine how
to evaluate whether lenders met
the requirements prior to
disbursing a PPP loan. The analysis
should include evidence to support
the adequacy of SBA’s review
process when determining which
purchase requests will require
additional review.
23-02 11/15/2022 Independent Auditors’ 10 Develop and document an effective
Report on SBA’s Fiscal funds recovery plan and controls to
Year 2022 Financial ensure funds disbursed to ineligible
Statements recipients as part of the purchases
review process are recovered and
reported accurately in a timely
manner.
23-02 11/15/2022 Independent Auditors’ 11 Perform a thorough review of the
Report on SBA’s Fiscal COVID-19 EIDLs and determine
Year 2022 Financial which transactions were not in
Statements conformance with the CARES Act
and related legislation and
provided to ineligible recipients.
Spring 2023 Semiannual Report to Congress | 42
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
23-02 11/15/2022 Independent Auditors’ 12 Implement adequate controls over
Report on SBA’s Fiscal the loan review process to ensure
Year 2022 Financial that COVID-19 EIDLs identified with
Statements eligibility concerns are complete
and the specific eligibility concerns
identified are accurate.
23-02 11/15/2022 Independent Auditors’ 13 Document a comprehensive
Report on SBA’s Fiscal process for the COVID-19 EIDLs
Year 2022 Financial review process, including how
Statements loans with eligibility concerns are
identified, tracked, and resolved.
23-02 11/15/2022 Independent Auditors’ 14 Develop and document an effective
Report on SBA’s Fiscal funds recovery plan and controls to
Year 2022 Financial ensure funds disbursed to ineligible
Statements recipients as part of the COVID-19
EIDLs review process are recovered
and reported accurately in a timely
manner.
23-02 11/15/2022 Independent Auditors’ 15 Assess the accounting
Report on SBA’s Fiscal considerations, based on the
Year 2022 Financial results of the review process for
Statements COVID-19 EIDLs, 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.
23-02 11/15/2022 Independent Auditors’ 16 Continue implementing controls to
Report on SBA’s Fiscal accumulate relevant, complete,
Year 2022 Financial and accurate data on which to base
Statements the subsidy reestimate models for
the PPP and COVID-19 EIDL
portfolios.
43 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
23-02 11/15/2022 Independent Auditors’ 17 Design and implement adequate
Report on SBA’s Fiscal review and approval controls over
Year 2022 Financial the reestimate models for the PPP
Statements and COVID-19 EIDL portfolios by
appropriate levels of management,
and to coordinate with relevant
program offices to assess the
integrity of relevant data inputs
used in the development of
assumptions, and reasonableness
for the selected assumptions used
and the resulting estimates.
23-02 11/15/2022 Independent Auditors’ 18 Continually evaluate the
Report on SBA’s Fiscal established policy for SOC 1 reports
Year 2022 Financial that requires new service
Statements 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 as it
relates to COVID-19 EIDLs. 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 2023 Semiannual Report to Congress | 44
U.S. Small Business Administration | Office of Inspector General
23-02 11/15/2022 Independent Auditors’ 19 Assess the risk posed by the service
Report on SBA’s Fiscal organization’s control environment
Year 2022 Financial and obtain sufficient assurance
Statements over the operating effectiveness of
relevant and significant controls to
determine the integrity of the
COVID-19 EIDL 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, determine and
document the following:
SOC 1 report is sufficiently scoped
to cover transaction processing and
related control activities performed
by the service organization on
behalf of SBA (e.g., that services,
business applications and other
information technology, service
organization departments and
locations, control objectives and
activities, and other aspects of
scope that are relevant to SBA’s
internal controls over financial
reporting are included in the scope
of SOC 1 reports).
All exceptions noted in the SOC 1
report — not just those described
in the independent service
auditor’s report — are evaluated to
determine applicability to SBA’s
internal controls over financial
reporting, the potential impact to
SBA’s financial statements, and
mitigating controls other
considerations made during their
risk assessment.
All complementary user entity
controls described in the SOC 1
reports are evaluated using current
information and with consideration
to their applicability to SBA’s
internal controls overfinancial
reporting.
Evaluation procedures performed
to assess whether complementary
user entity controls and other SBA-
45 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
performed controls were tested
and found effective and, if they are
not, the impact of such deficiencies
on SBA’s internal controls over
financial reporting.
All complementary subservice
organization controls described in
SOC 1 reports are evaluated to
determine whether they provided
services and performed controls
considered relevant to SBA’s
internal controls over financial
reporting and, if relevant
subservice organizations were
identified, an evaluation is
performed to obtain an
understanding of the subservice
organization(s) and their controls.
SOC 1 reports cover the
appropriate period or
corresponding gap letters provide
sufficient coverage to assess
impacts on SBA’s internal controls
over financial reporting.
23-02 11/15/2022 Independent Auditors’ 20 Continually evaluate the
Report on SBA’s Fiscal established policy for SOC 1 reports
Year 2022 Financial that requires new service
Statements 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 as it
relates to loan guarantee
programs. 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 2023 Semiannual Report to Congress | 46
U.S. Small Business Administration | Office of Inspector General
23-02 11/15/2022 Independent Auditors’ 21 Assess the risk posed by the service
Report on SBA’s Fiscal organizations’ control
Year 2022 Financial environments and obtain sufficient
Statements assurance over the operating
effectiveness of relevant and
significant controls to determine
the integrity of loan guarantee
program 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, determine
and document the following:
SOC 1 report is sufficiently scoped
to cover transaction processing and
related control activities performed
by the service organization on
behalf of SBA (e.g., that services,
business applications and other
information technology, service
organization departments and
locations, control objectives and
activities, and other aspects of
scope that are relevant to SBA’s
internal controls over financial
reporting are included in the scope
of SOC 1 reports).
All exceptions noted in the SOC 1
report – not just those described in
the independent service auditor’s
report – are evaluated to
determine applicability to SBA’s
internal controls over financial
reporting, the potential impact to
SBA’s financial statements, and
mitigating controls considerations
made during their risk assessment.
All complementary user entity
controls described in the SOC 1
reports are evaluated using current
information and with consideration
to their applicability to SBA’s
internal controls over financial
reporting.
All complementary subservice
organization controls described in
SOC 1 reports are evaluated to
determine whether they provided
47 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
services and performed controls
considered relevant to SBA’s
internal controls over financial
reporting and, if relevant
subservice organizations were
identified, an evaluation is
performed to obtain an
understanding of the subservice
organization(s) and their controls.
SOC 1 reports cover the
appropriate period or
corresponding gap letters provide
sufficient coverage to assess
impacts on SBA’s internal controls
over financial reporting.
Spring 2023 Semiannual Report to Congress | 48
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
23-02 11/15/2022 Independent Auditors’ 22 Assess the risk posed by the service
Report on SBA’s Fiscal organizations’ control
Year 2022 Financial environments and obtain sufficient
Statements assurance over the operating
effectiveness of relevant and
significant controls to determine
the integrity of SVOG program
transactions processed on behalf of
and recorded by SBA and
communicate the results to the
relevant program offices. If a SOC 1
report is obtained for the relevant
control environment at the service
organization, determine and
document the following:
SOC 1 report is sufficiently scoped
to cover transaction processing and
related control activities performed
by the service organization on
behalf of SBA (e.g., that services,
business applications and other
information technology, service
organization departments and
locations, control objectives and
activities, and other aspects of
scope that are relevant to SBA’s
internal controls over financial
reporting are included in the scope
of SOC 1 reports).
All exceptions noted in the SOC 1
report — not just those described
in the independent service
auditor’s report — are evaluated to
determine applicability to SBA’s
internal controls over financial
reporting, the potential impact to
SBA’s financial statements, and
mitigating controls considerations
made during their risk assessment.
49 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
23-02 11/15/2022 Independent Auditors’ 23 Design and implement a sufficient
Report on SBA’s Fiscal ongoing review of RRF and SVOG
Year 2022 Financial awards disbursed and identify
Statements recipients that may not have been
eligible to receive the awards in
accordance with the program’s
terms, especially for recipients with
flagged PPP loan guarantees.
23-02 11/15/2022 Independent Auditors’ 24 Design and implement effective
Report on SBA’s Fiscal monitoring controls to ensure that
Year 2022 Financial RRF and SVOG award recipients are
Statements complying with the program’s
terms and to ensure complete,
accurate, and timely reporting for
the use of the award.
23-02 11/15/2022 Independent Auditors’ 25 Develop and document an effective
Report on SBA’s Fiscal funds recovery plan and controls to
Year 2022 Financial ensure funds disbursed to ineligible
Statements recipients as part of the RRF and
SVOG review process are recovered
and reported accurately in a timely
manner.
23-02 11/15/2022 Independent Auditors’ 26 Design and implement controls to
Report on SBA’s Fiscal ensure the accounting treatment
Year 2022 Financial established to record the balances
Statements related to the RRF and SVOG
programs are in accordance with
U.S. generally accepted accounting
principles and the basis for the
appropriate treatment is
sufficiently documented.
Spring 2023 Semiannual Report to Congress | 50
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
23-02 11/15/2022 Independent Auditors’ 27 In conjunction with the Office of
Report on SBA’s Fiscal the Chief Financial Officer,
Year 2022 Financial complete the internal control risk
Statements assessments for programs that
have a material impact on the
financial statements at a process
level in a timely manner. The risk
assessments should include the
consideration of whether controls
designed and implemented are
operating at a sufficient precision
level in accordance with
management’s materiality
threshold and will be sufficient for
financial reporting purposes.
23-02 11/15/2022 Independent Auditors’ 28 Develop and implement monitoring
Report on SBA’s Fiscal controls as required by the GAO’s
Year 2022 Financial Standards for Internal Control in
Statements the Federal Government to ensure
implementation of an effective
internal control environment.
23-02 11/15/2022 Independent Auditors’ 29 Perform and document a thorough
Report on SBA’s Fiscal risk assessment at the financial
Year 2022 Financial statement assertion level to
Statements identify process level risks and
communicate the results to
relevant program offices.
23-02 11/15/2022 Independent Auditors’ 30 In conjunction with relevant
Report on SBA’s Fiscal program offices, assess the
Year 2022 Financial effectiveness of key process level
Statements controls to respond to the
identified risks.
23-02 11/15/2022 Independent Auditors’ 31 In conjunction with relevant
Report on SBA’s Fiscal program offices, develop and
Year 2022 Financial implement processes to ensure the
Statements timely completion of the testing
and monitoring of the design,
implementation, and operating
effectiveness of key, relevant
controls that affect financial
reporting and compliance with
relevant laws and regulations.
51 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
23-02 11/15/2022 Independent Auditors’ 32 Perform a review of the payments
Report on SBA’s Fiscal made by SBA for covered loans
Year 2022 Financial under the Debt Relief Program to
Statements identify, review, and remediate any
potential over or under payments
made on the related loans.
23-02 11/15/2022 Independent Auditors’ 33 Review and update current
Report on SBA’s Fiscal processes and procedures for
Year 2022 Financial notifying program offices of
Statements personnel separations to ensure
inclusion of current primary and
secondary points of contacts for
each program office responsible for
managing information systems.
23-02 11/15/2022 Independent Auditors’ 34 Review the activities of the
Report on SBA’s Fiscal terminated employees and
Year 2022 Financial contractors to ensure that their
Statements accounts were not used after they
separated from SBA.
23-02 11/15/2022 Independent Auditors’ 35 Update the Office of Capital Access
Report on SBA’s Fiscal procedures to identify the control
Year 2022 Financial activities, responsible parties, and
Statements the process for the removal of
access for terminated users upon
notification from the Office of the
Chief Human Capital Officer.
23-02 11/15/2022 Independent Auditors’ 36 Implement controls and a
Report on SBA’s Fiscal monitoring process to ensure that
Year 2022 Financial patches applied to the database
Statements and operating system and
application changes are
appropriately tested prior to being
moved into the production
environment.
23-02 11/15/2022 Independent Auditors’ 37 Update the system configuration
Report on SBA’s Fiscal management plan to require
Year 2022 Financial internal control documentation for
Statements patch management and application
changes as required by GAO’s
Standards for Internal Control in the
Federal Government.
Spring 2023 Semiannual Report to Congress | 52
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
23-02 11/15/2022 Independent Auditors’ 38 Periodically train personnel
Report on SBA’s Fiscal involved with the implementation
Year 2022 Financial of database and operating system
Statements 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.
23-02 11/15/2022 Independent Auditors’ 39 Update the risk assessment
Report on SBA’s Fiscal regarding the evaluation of internal
Year 2022 Financial controls to ensure it includes all
Statements significant programs, key
processes, and other material line
items on the consolidated financial
statements.
23-02 11/15/2022 Independent Auditors’ 40 In conjunction with relevant
Report on SBA’s Fiscal program offices, perform and
Year 2022 Financial document the internal control
Statements 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.
23-02 11/15/2022 Independent Auditors’ 41 Update the existing policy and
Report on SBA’s Fiscal implement adequate controls to
Year 2022 Financial ensure that the statement of
Statements 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.
53 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Report Date Issued Title Recommendation Recommendation
Number Number
23-02 11/15/2022 Independent Auditors’ 42 Address the control deficiencies
Report on SBA’s Fiscal over transactions arising from the
Year 2022 Financial implementation of the CARES Act
Statements 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.
23-03 12/13/2022 FY 2022 FISMA Review 1 Design and implement a quality
assurance program to ensure that
SBA system hardware inventory is
maintained as required by the
National Institute of Standards and
Technology (NIST) Special
Publication 800-53.
23-03 12/13/2022 FY 2022 FISMA Review 2 Implement a process to ensure SBA
reviews its external service
providers for supply chain risks and
ensure all assessments of supply
chain risks are documented as
outlined in NIST 800-53.
23-03 12/13/2022 FY 2022 FISMA Review 3 Communicate and reinforce to
program offices the requirement to
review and remove system and
user accounts in accordance with
SOP 90 47 6.
23-03 12/13/2022 FY 2022 FISMA Review 4 Update the policies and procedures
to conduct a formal workforce
assessment as required under the
Federal Cybersecurity Workforce
Assessment Act of 2015.
23-03 12/13/2022 FY 2022 FISMA Review 5 Develop, document, and
implement a process that requires
management review of information
security data and report
information security threats.
23-03 12/13/2022 FY 2022 FISMA Review 6 Ensure owners of high value asset
systems carry out functional testing
of contingency plans on an annual
basis and initiate corrective actions
as required by SOP 90 47 6.
Spring 2023 Semiannual Report to Congress | 54
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 of 1996, 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.
55 | Spring 2023 Semiannual Report to Congress
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 132
Preliminary Case Closing Reports of Investigation 8
Total 140
Persons Referred for Prosecution
Referred to Number of Persons
Department of Justice 84
State Attorney 2
Local Attorney 1
Total 87
* Number includes persons and entities referred for prosecution.
Pandemic-related Investigative Statistics
Investigations
SBA OIG (opened) Indictments/Complaints Arrests Convictions
PPP/EIDL/RFF/SV* 105 184 129 112
Investment Fraud 12 0 0 0
Total 117 184 129 112
* PPP stands for Paycheck Protection Program; EIDL stands for Economic Injury Disaster Loan; RFF stands for Restaurant Revitalization Fund; SV
stands for Shuttered Venue Operators Grant.
Whistleblower Retaliation Cases
There were no OIG investigations involving whistleblower retaliation cases during this semiannual
period.
Investigations Involving a Senior Government Employee in which
Misconduct was Substantiated
There were no OIG investigations involving a senior government employee where misconduct was
substantiated during this semiannual period.
Spring 2023 Semiannual Report to Congress | 56
U.S. Small Business Administration | Office of Inspector General
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.
57 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Appendix E: Legal Actions Summary
Legal Actions, October 1, 2022–March 31, 2023
State Program Jointly Alleged Violation(s) Prosecuted Legal Action
NY BL FBI, IRS/CI, Individuals submitted multiple fraudulent PPP Individual 1 was sentenced to 90
FRB/OIG loan applications, including falsified supporting months of incarceration and 3 years
documentation, for companies they owned and of supervised release.
controlled, totaling over $3.9 million in PPP Individual 2 was sentenced to 42
loans. months of incarceration and 3 years
of supervised release.
Individual 3 was sentenced to 33
months of incarceration and 3 years
of supervised release.
Individual 4 was sentenced to 18
months of incarceration and 3 years
of supervised release.
Individual 5 was sentenced 3 years
of supervised release.
Individuals were ordered to pay over
$12.7 million in restitution.
IL BL/DL IRS/CI Individual defrauded SBA and financial Individual was sentenced to 48
institutions for over $450,000 in loans through months of incarceration, 3 years of
the PPP and EIDL programs. Individual misused supervised release, and ordered to
proceeds for personal use, such as gambling, pay $421,900 in restitution.
vacations, and other personal expenses,
including the purchase of illegal narcotics.
CA BL/DL DHS/OIG As part of the scheme, individual submitted Individual was sentenced to 30
multiple fraudulent PPP and EIDL applications. months of incarceration, 4 years of
Individual successfully obtained over $800,000 supervised release, and ordered to
in loans even though falsified bank records and pay $48,190 in restitution.
fake employee information was submitted.
MO BL SSA/OIG Individual made material misrepresentations to Individual was sentenced to 27
a financial institution to gain approval for PPP months of incarceration, 3 years of
loans and obtained over $350,000. supervised release, and ordered to
pay $357,638 in restitution.
NC BL/DL IRS/CI, Individual defrauded and conspired to submit Individual was sentenced to 66
FDIC/OIG, PPP loans and EIDLs, securing over $1.3 million months of incarceration, 3 years of
TIGTA by using false business operations and providing supervised release, and ordered to
materially false information on loan pay $498,757 in restitution.
applications.
Spring 2023 Semiannual Report to Congress | 58
U.S. Small Business Administration | Office of Inspector General
State Program Jointly Alleged Violation(s) Prosecuted Legal Action
CA BL/DL FBI, Individuals made false statements in an attempt Individual 1 was sentenced to 84
FDIC/OIG, to obtain 12 PPP loans and EIDLs totaling over months of incarceration and 5 years
IRS/CI, FRB, $1.6 million. Individuals made several false of supervised release.
TIGTA statements and manipulated bank statements Individual 2 was sentenced to 51
within their application. months of incarceration and 5 years
of supervised release.
Individuals were ordered to pay over
$2 million in restitution.
GA BL DCIS, Individual submitted over 150 fraudulent PPP Individual was sentenced to 42
Army/CID, loan applications and over 12 fraudulent federal months of incarceration, 3 years of
TIGTA, student loan discharge applications, resulting in supervised release, and ordered to
VA/OIG over $3.6 million being disbursed. pay over $3.6 million in restitution.
OR DL FBI, TIGTA As part of a fraud scheme, individual provided Individual was sentenced to 8
false information to financial institutions related months of incarceration, 3 years of
to businesses and personal income to obtain supervised release, and ordered to
funds through the SBA guaranteed loan pay $23,900 in restitution.
program.
GA DL/BL FBI As part of a fraud scheme, individual applied for Individual was sentenced to 37
over $4.5 million in PPP loans and EIDLs. months of incarceration, 3 years of
Individual misrepresented the number of supervised release, and ordered to
employees and payroll expenses. pay over $2.1 million in restitution.
FL DL FBI/USSS Individuals made multiple false statements and Individual 1 was sentenced to 132
obtained over five EIDLs totaling over $500,000. months of incarceration and 15
years of supervised release.
Individual 2 was sentenced to 132
months of incarceration and 10
years of supervised release.
Individuals were ordered to pay over
$1 million in restitution.
NY BL FRB, FBI, Individuals submitted six PPP applications, Individual 1 was sentenced to 1
IRS/CI, seeking to obtain over $35,000 in COVID-19 month of incarceration and 2 years
FDIC/OIG, relief funds. of supervised release.
SSA/OIG Individual 2 was sentenced to 1
month of incarceration and 2 years
of supervised release.
In total, individuals were ordered to
pay $38,756 in restitution.
TN BL/DL IRS/CI, As part of a fraud scheme, individual applied for Individual was sentenced to 48
TIGTA over 400 fraudulent EIDL applications, resulting months of incarceration, 3 years of
in a $1.1 million loss to SBA. supervised release, and ordered to
pay $210,000 in restitution.
ID DL FBI Individual made false assertions and Individual was sentenced to 24
certifications concerning EIDLs totaling over months of incarceration, 3 years of
$2.8 million. supervised released, and ordered to
pay over $2.8 million in restitution.
59 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
State Program Jointly Alleged Violation(s) Prosecuted Legal Action
NH BL FBI, Individual made material misrepresentations to Individual was sentenced to 66
DHS/OIG, a financial institution and filed 10 fraudulent months of incarceration, 4 years of
IRS/CI loan applications, seeking more than $2.5 supervised release, and ordered to
million in forgivable loans through the PPP pay over $2.5 million in restitution.
under the CARES Act.
CA BL FBI, Individual submitted false information about Individual was sentenced to 83
FDIC/OIG, employment as an independent contractor and months of incarceration, 108
FHFA, revenue reported. months of supervised release, and
IRS/CI, ordered to pay over $1.3 million in
USPS restitution.
FL DL FBI, As part of a fraud scheme, individual defrauded Individual was sentenced to 66
FDIC/OIG, various financial institutions by creating false months of incarceration, 3 years of
IRS/CI companies and obtaining over $7 million in supervised release, and ordered to
loans. pay over $7.8 million in restitution.
CA DL FBI, Individual was a bank employee who submitted Individual was sentenced to 12
FDIC/OIG multiple fraudulent EIDL applications, including months incarceration and 3 years of
falsified supporting documentation, for supervised release and was ordered
companies owned and/or controlled. to $74,000 in restitution.
GA BL FBI, Individual submitted false and fraudulent PPP Individual was sentenced to 75
DOL/OIG applications and received over $220,000 in months of incarceration, 3 years of
loans. supervised release, and ordered to
pay $220,000 in restitution.
CA DL USSS Individual made false assertions and Individual was sentenced to 2 years
certifications concerning EIDL benefits. of supervised release and ordered to
pay $10,000 in restitution.
TN DL ATF As part of a fraud scheme, individual submitted Individual was sentenced to 15
EIDL applications and attempted to obtained months of incarceration, 3 months
over $300,000 in CARES Act funds. of supervised release, and ordered
to pay $10,000 in restitution.
MI DL FBI Individual used a position within SBA to access Individual was sentenced to 4 years
the SBA database, retrieving personally of supervised release and ordered to
identifiable information to apply for EIDLs. pay $34,786 in restitution.
Individual used the funds to purchase a Land
Rover.
TX DL USSS Individuals made false statements and Individual 1 was sentenced to 121
fraudulently applied for over 400 EIDLs, months of incarceration and 5 years
attempting to obtain more than $7.4 million. of supervised release.
Individuals purchased lavish personal vacation Individual 2 was sentenced to 66
rentals. months of incarceration and 2 years
of supervised release.
In total, individuals were ordered to
pay over $7.4 million in restitution.
Spring 2023 Semiannual Report to Congress | 60
U.S. Small Business Administration | Office of Inspector General
State Program Jointly Alleged Violation(s) Prosecuted Legal Action
FL DL USSS As part of a fraud scheme, individual submitted Individual was sentenced to 15
fraudulent EIDL applications and obtained over months of incarceration, 3 years of
$20,000 in CARES Act funds. supervised release, and ordered to
pay $21,500 in restitution.
AL BL/DL/ DHS/OIG, Individuals made multiple false statements and Individual 1 was sentenced to 60
RRF DOL/OIG obtained multiple PPP loans, totaling over months of probation.
$500,000, and one RRF loan for over $410,000. Individual 2 was sentenced to 24
months of probation.
Individual 3 was sentenced to 12
months of probation.
Individual 4 was sentenced to 12
months of probation.
In total, individuals were ordered to
pay over $1.8 million in restitution.
FL BL USSS Individual submitted false and fraudulent PPP Individual was sentenced to 42
applications and received over $300,000 in months of incarceration, 5 years of
loans. supervised release, and ordered to
pay $306,415 in restitution.
GA DL FBI As part of a fraud scheme, individual submitted Individual was sentenced to 24
more than three fraudulent loan applications months of incarceration, 1 year of
and obtained over $310,000 in CARES Act funds. supervised release, and ordered to
pay $310,400 in restitution.
CA BL FBI, Individual stole PII to apply and receive over 70 Individual was sentenced to 41
FDIC/OIG fraudulent PPP and EIDL disbursements totaling months of incarceration, 5 years of
TIGTA over $4 million. Individual used the funds to supervised release, and ordered to
purchase lavish vehicles and homes. pay over $1.1 million in restitution.
CO DL/BL FBI Individual submitted false and fraudulent PPP Individual was sentenced to 24
applications and received over $120,000 in months of incarceration, 3 years of
loans. supervised release, and ordered to
pay $122,300 in restitution.
OR BL/DL/ FBI, TIGTA As part of a fraud scheme, individual attempted Individual was sentenced to 70
RRF to obtain over $170 million from the SBA EIDL, months of incarceration, 3 years of
PPP, and RRF programs, with approximately supervised release, and ordered to
$11.5 million in funded loans. pay over $10.5 million in restitution.
OR DL FBI Individual created fraudulent documents, Individual was sentenced to 5 years
businesses, and false identities in an attempt to of probation and ordered to pay
receive over $170,000 in loans. $31,302 in restitution.
FL BL FDIC/OIG, Individual conspired with others, submitted Individual was sentenced to 120
FBI false statements, and fraudulently applied for months of incarceration, 3 years of
80 PPP loans, resulting in over $17 million in supervised release, and ordered to
disbursements. pay over $2.5 million in restitution.
OR BL/DL FBI Individual made multiple false statements in an Individual was sentenced to 54
attempt to obtain multiple PPP and EIDLs months of incarceration, 5 years of
totaling over $100,000. supervised release, and ordered to
pay $102,736 in restitution.
61 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
State Program Jointly Alleged Violation(s) Prosecuted Legal Action
CA DL USPIS, ICE, Individual made multiple false statements in an Individual was sentenced to 51
DHS/HSI attempt to obtain an EIDL over $3 million. months of incarceration, 5 years of
Individual used the proceeds to purchase supervised release, and ordered to
jewelry, watches, precious metals and stones. pay over $3.1 million in restitution.
GA DL FBI As part of a fraud scheme, individual submitted Individual was sentenced to 27
fraudulent EIDL applications and obtained over months of incarceration, 2 years of
$425,000 in CARES Act funds. supervised release, and ordered to
pay $429,200 in restitution.
NC DL/BL USSS As part of a fraud scheme, individual submitted Individual was sentenced to 41
fraudulent PPP applications and obtained over months of incarceration, 3 years of
$2 million in CARES Act funds. supervised release, and ordered to
pay over $2 million in restitution.
NC BL FBI, Individual created fraudulent documents and Individual was sentenced to 24
DHS/OIG, received over $460,000 in EIDLs. months of incarceration, 3 years of
IRS/CI supervised release, and ordered to
pay $465,796 in restitution.
NY BL FBI, Individuals created fictitious bank referral fees Individual 1 was sentenced to 14
FDIC/OIG, in connection with SBA guaranteed loans that months of incarceration and 3 years
DHS/OIG were later deposited into a slush fund. of supervised release.
Individual 2 was sentenced 1 year of
probation.
In total, individuals were ordered to
pay over $2.2 million in restitution.
Spring 2023 Semiannual Report to Congress | 62
U.S. Small Business Administration | Office of Inspector General
State Program Jointly Alleged Violation(s) Prosecuted Legal Action
GA DL/BL FBI, TIGTA Individuals made fraudulent material Individual 1 was sentenced to 18
misrepresentations to a financial institution and months of incarceration and 3 years
received PPP and EIDL disbursements totaling of supervised release.
over $4 million. Individuals used the funds to Individual 2 was sentenced to 46
purchase lavish vehicles, jewelry, and vacations. months of incarceration and 3 years
of supervised release.
Individual 3 was sentenced to 3
months of incarceration and 3 years
of supervised release.
Individual 4 was sentenced to 12
months of incarceration and 3 years
of supervised release.
Individual 5 was sentenced to 15
months of incarceration and 3 years
of supervised release.
Individual 6 was sentenced to 17
months of incarceration and 2 years
of supervised release.
Individual 7 was sentenced to 4
months of incarceration and 2 years
of supervised release.
Individual 8 was sentenced to 70
months of incarceration and 5 years
of supervised release.
Individual 9 was sentenced to 15
months of incarceration and 3 years
of supervised release.
Individual 10 was sentenced to 21
months if incarceration and 3 years of
supervised release.
In total, the individuals were ordered
to pay over $4.2 million in restitution.
VA DL FBI, IRS/CI As part of a fraud scheme, individual submitted Individual was sentenced to 20
over 50 fraudulent EIDL applications and months of incarceration, 3 years of
obtained over $500,000 in CARES Act funds. supervised release, and ordered to
pay over $2.6 million in restitution.
FL BL FBI, Individual defrauded the government of over Individual was sentenced to 40
DOI/OIG, $2.6 million in obligated PPP funds. months of incarceration, 3 years of
USSS, supervised release, and ordered to
VA/OIG pay over $2.6 million in restitution.
63 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
State Program Jointly Alleged Violation(s) Prosecuted Legal Action
TN GC DHS/HSI, Individuals participated in a fraud scheme and Individual 1 was sentenced to 24
TIGTA conspired to operate companies with owners months of incarceration and 1 year of
who qualified as socially and economically supervised release.
disadvantaged individuals and service-disabled Individual 2 was sentenced to 48
veterans; the individuals did not actually control months of incarceration 1 year of
the companies. supervised release and ordered to pay
over $24.9 million in restitution.
CA BL FBI Individual made false statements and Individual was sentenced to 48
fraudulently applied for eight PPP forgivable months of incarceration, 3 years of
loans guaranteed by SBA under the CARES Act supervised release, and ordered to
totaling more than $3.8 million. pay over $3.4 million in restitution.
UT GC FBI, Individuals falsified information provided to SBA Individual 1 was sentenced to 60
FDIC/OIG during a protest of the Army contract. months of incarceration and 3 years
Individuals misrepresented information of supervised release.
provided to the SBA’s HUBZone program, which Individual 2 was sentenced to 60
allowed them to remain qualified as a HUBZone months of incarceration and 3 years
business for award of a contract. The company of supervised release.
was paid a total of $93 million in performance In total, the individuals were ordered
of the 5-year Army contract. to pay $5 million in restitution.
TX BL FDIC/OIG, Individual made material misrepresentations to Individual was sentenced 60 months
TIGTA a financial institution and filed 12 fraudulent of incarceration, 3 years of supervised
loan applications, seeking more than $2.5 release, and ordered to pay over $2.5
million in PPP forgivable loans. The individuals million in restitution.
used the loans for lavish personal purchases.
CT BL FBI, IRS/CI Individual submitted five fraudulent PPP Individual was sentenced to 42
applications and received over $2.8 million. As a months of incarceration, 3 years of
further part of the fraud scheme, individual supervised release, and ordered to
purchased various personal expenses: a Porsche pay over $1.7 million in restitution.
Panamera Turbo, Mercedes, and BMW.
TX GC GSA/OIG, Individuals participated in a fraud scheme and Individual 1 was sentenced 27 months
VA/OIG, conspired to operate companies with straw of incarceration and 5 years of
Army/CID owners who qualified as socially and supervised release.
economically disadvantaged individuals and Individual 2 was sentenced 2 years of
service-disabled veterans; the individuals did probation.
not actually control the companies. In total, the individuals were ordered
to pay over $1.7 million in restitution.
NV BL FBI Individual made multiple false statements and Individual was sentenced 60 months
attempted to obtain multiple PPP loans totaling of incarceration, 3 years of supervised
over $2.5 million. release, and ordered to pay over $2.5
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
Spring 2023 Semiannual Report to Congress | 64
U.S. Small Business Administration | Office of Inspector General
RRF = Restaurant Revitalization Fund
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)
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)
65 | Spring 2023 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 Location Date Fully Executed
Disaster Preparedness Campaign HQ/Office of Disaster Assistance — Virtual/Nationwide November 8, 2022
Insurance Institute for Business &
Home Safety, Triple-I
Finance Boot Camp for Women Buffalo DO — NAWBO Buffalo Niagara, Buffalo, NY December 5, 2022
Entrepreneurs Inc.
SBA Connecticut District Office Annual Connecticut DO — Hartford Business Hartford, CT December 5, 2022
Meeting and Lenders Awards Journal & New Haven Biz
2023 Nevada Small Business Awards Nevada DO — Nevada Asian American Las Vegas, NV December 5, 2022
Pacific Islander Chamber of Commerce
T.H.R.I.V.E — Emerging Leaders Maine DO — Bangor Savings Bank Augusta, ME January 10, 2023
Reimagined Graduation Event
Contracting, Financing and Small Hawaii DO — Honolulu Minority Hawaii Statewide January 13, 2023
Business Outreach Events Business Development Center aka
Honolulu Minority Business Center
UHM Shidler College of Business, State
of Hawaii Department of
Transportation, Office of Civil Rights
Disadvantaged Business Enterprise
Government Procurement Training North Dakota DO — North Dakota Small Virtual, North January 13, 2023
Series FY 2023 Business Development Center, host of Dakota Statewide
Procurement Technical Assistance
Center, and the University of North
Dakota
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide January 13, 2023
Public Liaison — Pacific Gas and Electric
Company
Commercial Outlook for 2023: Kicking Office of International Trade — Bankers Virtual January 18, 2023
Off the New Year with Key Economic Association for Finance and Trade
Insight for Businesses, Banks, and
International Trade
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide January 18, 2023
Public Liaison — TriNet USA Inc.
Growing Your Business Lunch & Learn Arkansas DO — Better Business Bureau Virtual January 18, 2023
with BBB and SBA Arkansas of Arkansas Education Foundation Inc.
Jumpstart 2023 — SBA & BBB Minnesota DO — Better Business Virtual January 18, 2023
Resources for Black Business Owners, Bureau of Minnesota and North Dakota
Entrepreneurs, & Allies
Spring 2023 Semiannual Report to Congress | 66
U.S. Small Business Administration | Office of Inspector General
Name/Subject of Event Name of Cosponsor(s) Event Location Date Fully Executed
Black History Month Lunch with Vermont DO — Champlain Valley Office Winooski, VT January 22, 2023
Lenders of Economic Opportunity, Vermont
Small Business Development Center
AANHPI Economic Summits HQ/Office of Field Operations — U.S. Nationwide January 23, 2023
Department of Health and Human
Services Office of Small and
Disadvantaged Business Utilization,
National Asian & Pacific Islander
American Chamber of Commerce &
Entrepreneurship
AANHPI Economic Summits HQ/Office of Field Operations — City of Nationwide January 25, 2023
Philadelphia
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide January 30, 2023
Public Liaison — VISA U.S.A.
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide January 30, 2023
Public Liaison — Worldpay by FIS
ChallengeHer Campaign HQ/Office of Government Contracting Virtual January 31, 2023
— Women Impacting Public Polic, Inc.,
American Express Travel Related
Services Company Inc.
Export Promotion Webinar Series HQ/Office of International Trade — Virtual February 2, 2023
Getting-to-Global Inc.
2023 Black History Month Access to Massachusetts DO — Roxbury Roxbury Crossing, February 2, 2023
Capital Matchmaker and Stakeholders Community College, Massachusetts MA
Roundtable Restaurant Association
6th Annual Mentor Protege Conference HQ/Office of Government Contracting Arlington, VA February 2, 2023
— American Small Business Alliance Inc.
AANHPI Economic Summits HQ/Office of Field Operations — U.S. Nationwide February 3, 2023
Department of Treasury
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide February 7, 2023
Public Liaison — T-Mobile USA Inc.
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide February 7, 2023
Public Liaison — ADP
Information is Power Workshop Series Washington Metropolitan Area DO — Virtual, February 15, 2023
Maryland Black Chamber of Commerce Prince George’s
County,
Montgomery
County, MD
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide February 16, 2023
Public Liaison — Amazon.com Services
LLC
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide February 16, 2023
Public Liaison — Constant Contact Inc.
67 | Spring 2023 Semiannual Report to Congress
U.S. Small Business Administration | Office of Inspector General
Name/Subject of Event Name of Cosponsor(s) Event Location Date Fully Executed
Women’s Business Summit HQ/Office of Women's Business Virtual February 16, 2023
Ownership — Nasdaq Entrepreneurial
Center
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide February 23, 2023
Public Liaison – Block Inc.
2023 Kansas Suppliers Conference Wichita DO — Wichita State University, Wichita, KS February 23, 2023
on behalf of its WSU Strategic
Initiatives; Kansas Small Business
Development Center; Kansas
Procurement Technical Assistance
Center; City of Wichita Purchasing
Office; Wichita Regional Chamber of
Commerce; Sedgwick County
Purchasing Division; SCORE Wichita
Chapter 0143; Evergy Inc.; Stryv Bank;
Textron Aviation; Wichita Public Schools
(USD 259) Operations Division; Kansas
Department of Commerce Office of
Minority and Women Business
Development; Swindoll, Janzen, Hawk &
Loyd LLC; Bank of America; Institute for
Supply Management; Wichita Chapter;
St. Louis Veterans Business Resource
Center
Make Me Bankable Program Illinois DO, Springfield BO — Operation East St. Louis, IL; February 23, 2023
HOPE Inc., Southern Illinois University Carbondale, IL;
Research Park, Black Business Alliance Peoria, IL;
Peoria Chapter (dba Minority Business Bloomington, IL;
Development Center), Decatur Regional Decatur, IL;
Chamber of Commerce, Macedonia Havana, IL
Development Corporation, Spoon River
College
Export Promotion Outreach HQ/Office of International Trade — Virtual February 27, 2023
Collaboration NASBITE International
SBA Connecticut Celebrates National Connecticut DO — Connecticut Hartford, CT February 28, 2023
Small Business Week Business and Industry Association
NH Small Business Matchmaker New Hampshire DO — NH Small Manchester, NH February 28, 2023
Business Development Center, NH APEX
Accelerator (formerly NH PTAC)
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide March 2, 2023
Public Liaison — Zebra Technologies
AANHPI Economic Summits HQ/Office of Field Operations — City of Nationwide March 3, 2023
Seattle
Woostapreneurs Forum Massachusetts DO — Worcester Area Worcester, MA March 7, 2023
Chamber of Commerce
Spring 2023 Semiannual Report to Congress | 68
U.S. Small Business Administration | Office of Inspector General
Name/Subject of Event Name of Cosponsor(s) Event Location Date Fully Executed
Asset Based Lending Webinar Series HQ/Office of International Trade — Virtual March 10, 2023
Secured Finance Network
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide March 13, 2023
Public Liaison — Google LLC
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide March 15, 2023
Public Liaison — Microsoft Corp.
National Small Business Week 2023 HQ/Office of Communications and Virtual/Nationwide March 15, 2023
Public Liaison — Pie Insurance Services
Maine 2023 NSBW Award Event Maine DO — Coastal Enterprises Inc., Freeport, ME March 22, 2023
CEI Women’s Business Center South
Indian Diaspora Focused Event HQ/Office of International Trade — Raleigh, NC March 22, 2023
Hindu Society of North Carolina
2023 SBA West Virginia Small Business West Virginia DO — Bank of Charles Fairmont, WV March 23, 2023
Week Awards Luncheon Town, Citizens Bank of West Virginia,
Community Trust Bank, MVB Financial
Corp., The Huntington National Bank
37th Maryland Small Business Week Baltimore DO — Maryland Small Woodlawn, MD March 29, 2023
Awards Luncheon Business Week Awards Program Inc.
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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.
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 on
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.
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U.S. Small Business Administration | Office of Inspector General
Appendix H: Office of Inspector General Reporting Requirements
Under the Inspector General Act of 1978, as amended, OIG provides independent, objective
oversight to improve the integrity, accountability, and performance of SBA and its programs for
the benefit of the American people.
Although SBA’s programs are essential to strengthening America’s economy, the agency faces
several challenges in carrying out its mission. Access our annual report of the agency’s top
management and performance challenges on our OIG Reports web page.
OIG plays a critical role in addressing these and other challenges by conducting audits to identify
wasteful expenditures and program mismanagement; investigating fraud and other wrongdoing;
and taking other actions to deter and detect waste, fraud, abuse, and inefficiencies in SBA
programs and operations.
OIG’s activities also help to ensure that SBA employees possess a high level of integrity. This is
critical to the proper administration of SBA’s programs because it helps ensure SBA resources are
used by those who need them the most. Copies of OIG reports and other products are available at
our OIG Reports web page.
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 September 30,
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
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U.S. Small Business Administration | Office of Inspector General
Section Reporting Requirement Location
5(a)(10) Audit, inspection, and evaluation reports without Reports from Prior Periods with Overdue
management decision, without comment within 60 Management Decisions; Reports from Prior Periods
days, or with unimplemented recommendations with Open Recommendations as of September 30,
2019
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 metrics Investigations Reporting Statistics
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 OIG Instances of Interference
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
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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.
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