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June 28 (UPI) -- More than $200 billion in federal funds intended to help small businesses during the pandemic were fleeced by scammers, the U.S. Small Business Administration says in a report assessing rampant fraud in government programs. The watchdog report, titled "Protecting the Integrity of the Pandemic Relief Emergency Programs: SBA's Actions to Prevent, Detect and Address Fraud," was published Tuesday by the SBA Office of Inspector General.
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The findings serve as the first official accounting of massive amounts of money stolen from the federal Paycheck Protection Program and Economic Injury Disaster Loan Program, which both emerged as part of a $1.2 trillion economic recovery package signed by former President Donald Trump.
The SBA also spelled out a number of specific cases in which fraudsters bilked taxpayer dollars through various kickback schemes.
The report highlights actions the Biden administration has since taken to enhance fraud controls in addition to growing law enforcement efforts to arrest and prosecute those who were gaming the system.
"Pandemic relief programs, including those supported by President Biden's American Rescue Plan, have driven a historic economic recovery, including saving millions of businesses and creating over 13 million jobs since 2021," said SBA Administrator Isabella Casillas Guzman, who suggested the immense scale of the relief programs had likely helped to fuel rampant fraud.
"With this report, SBA is detailing the effective measures added to fight fraud and hold bad actors responsible, as well as recommendations of best practices to ensure future emergency small business programs are optimized from the start," Guzman said.
The SBA estimates $64 billion in PPP funds were lost to fraud in addition to more than $136 billion in EIDL program funds.
At the same time, about $106 billion in fraudulent loans had been distributed from both, the SBA inspector general found as investigations continued into more suspected financial crimes.
The report blamed the Trump administration for "inadequate fraud mitigation measures implemented in 2020" at the outset of the pandemic.
The report highlights new anti-fraud measures that were put in place after President Joe Biden took office in 2021, which have helped to identify existing fraud while establishing a Fraud Risk Management Board to oversee any future cases.
The report called for increased fraud prevention measures and recommended an expansion of government data-sharing in an effort to validate applications.
The SBA said it has already started crosschecking Do Not Pay databases and tax transcripts to verify that applicants were being truthful in their quest for federal funds.
The efforts have led to more than 21 million suspect applications being blocked, which has prevented about $511 billion in government losses, according to the report.
Fraud peaked very early in the pandemic, with 86% of cases originating during the first nine months of the global health emergency, the report shows, adding that internal fraud reviews had "covered the entire portfolio of disbursed funding."
The watchdog report estimates $36 billion in funds was lost to fraud during that time.
So far, about $30 billion in funds have been recovered thanks to seizures, and voluntary repayments by borrowers and financial institution, the report states.
In March, Biden called for sweeping anti-fraud measures in his budget proposal to Congress which includes a request for $1.6 billion to ensure enough resources to investigate and prosecute what has become a massive administrative caseload across the country.
The plan includes $600 million to implement newer technology to help fight identity theft.
