More Than $200 Billion in COVID Aid Fraud — and That's Just From Two Programs

The Associated Press refers to it as “The Great Grift.” Indeed, the total of fraudulent loans and disbursements from COVID-19 aid programs may never be known. More than $4.2 trillion in assistance went to businesses, individuals, and states during the pandemic, and trying to wrap our heads around the sheer numbers of COVID aid fraud is an exercise in futility.

That said, the inspector general for the Small Business Administration is trying his best to try to frame the amount of aid fraud in terms that we can understand. The SBA’s Hannibal “Mike” Ware said his latest report “utilizes investigative casework, prior (inspector general) reporting, and cutting-edge data analysis to identify multiple fraud schemes used to potentially steal over $200 billion from American taxpayers and exploit programs meant to help those in need.”

The inspector general’s report said, “At least 17 percent of all COVID-EIDL and PPP funds were disbursed to potentially fraudulent actors.”

The fraud estimate for the COVID-19 Economic Injury Disaster Loan program is more than $136 billion, which represents 33 percent of the total money spent on that program, according to the report. The Paycheck Protection fraud estimate is $64 billion, the inspector general said.

In comments attached to the report, a senior SBA official disputed the new numbers. Bailey DeVries, SBA’s acting associate administrator for capital access, said the inspector general’s “approach contains serious flaws that significantly overestimate fraud and unintentionally mislead the public to believe that the work we did together had no significant impact in protecting against fraud.”

The SBA inspector general had previously estimated fraud in the COVID-19 disaster loan program at $86 billion and the Paycheck Protection program at $20 billion.

That’s two programs that fraudsters bled dry. And the government is now trying to figure a total for fraud in the additional aid that Washington sent to the states to augment the unemployment compensation programs. Early estimates claim that fraud was responsible for more than $160 billion, but that is far short of the real number. California alone claims $31 billion in benefits paid out fraudulently.

The Associated Press reported June 13 that scammers and swindlers potentially swiped about $280 billion in COVID-19 emergency aid; an additional $123 billion was wasted or misspent. The bulk of the potential losses are from the two SBA programs and another to provide unemployment benefits to workers suddenly unemployed by the economic upheaval caused by the pandemic. The three initiatives were begun during the Trump administration and inherited by President Joe Biden. Combined, the loss estimated by AP represents 10% of the $4.2 trillion the U.S. government has so far disbursed in COVID relief aid.

The federal government has now reported $276 billion in potential fraud, a figure that aligns with the AP’s analysis.

The final piece of the COVID aid fraud puzzle will be trying to learn how many fraudulent individual stimulus checks were mailed out. More than $800 billion in COVID relief checks were mailed to taxpayers who had information on file with the IRS. How many were dead, how many were fictitious people, and how many received multiple checks is unknown at this point.