The Office of the Inspector General of Small Business Administration released a report on Tuesday citing “serious” concerns about “rampant” fraud within the Economic Disaster Lending Program and the Advance Grants Program of the ‘agency.
There have been over 5,000 complaints from financial institutions receiving loan deposits about alleged fraud.
“Our preliminary examination reveals strong indicators of potential widespread fraud in the program,” Inspector General Hannibal “Mike” Ware wrote in the report.
Examples of suspected fraud include the use of stolen identities, account holders attempting to transfer funds to investment or foreign accounts, deposits to personal accounts, and social media scams.
In addition, $ 250 million appears to have been made to ineligible recipients, while at least 275 duplicate loans are believed to have been made.
The CARES Act allowed the SBA to advance qualifying businesses $ 1,000 per employee, up to a maximum of $ 10,000, as the applicant was awaiting a decision on a disaster loan.
Some of the loans have been frozen by financial institutions, but the report suggests that the SBA take immediate steps to implement internal controls to prevent further fraud.