Congressman Krishnamoorthi Exposes Lack of Oversight for EIDL Program and Potential for Abuse During Select Subcommittee on the Coronavirus Crisis Hearing
SCHAUMBURG, IL – Today, in the Select Subcommittee on the Coronavirus Crisis hearing, titled “Rooting Out Fraud in Small Business Relief Programs,” Congressman Raja Krishnamoorthi questioned the Inspector General of the Small Business Administration (SBA), Hannibal “Mike” Ware, on the potential of tens of billions of dollars of fraud in the Economic Injury Disaster Loan (EIDL) program.
During the hearing, Congressman Krishnamoorthi asked Inspector General Ware if he was able to rule out whether there was any coordination between applicants and insiders at the SBA, if any foreign actors or entities received money through the EIDL program, if any deceased people received money through the EIDL program, or if any children under the age of 18 received money through the EIDL program. Inspector General Ware could not rule out any of these concerning acts of fraud.
“I was troubled that the SBA’s Inspector General was not able to provide the certainty that the EIDL program was not used by ineligible parties, such as foreign actors, deceased people, or children,” Congressman Krishnamoorthi said. “While the PPP and EIDL programs were lifelines to small businesses, it is evident that the Trump Administration did not set up the proper systems to ensure that these programs – and taxpayer funds – were not exploited by rampant fraud and abuse.”
Congressman Krishnamoorthi also asked Inspector General Ware what was being done to prohibit individuals from applying for multiple EIDL loans with the same email address given the fact that an SBA Office of Inspector General report recently found that the SBA “approved 319,936 potentially fraudulent COVID-19 EIDLs for $26.7 billion, of which $25.4 billion has been disbursed, to applicants using the same email addresses.” In one instance, a singular email address was approved for 10 EIDL loans for non-existent bathroom renovation companies. In response, Inspector General Ware commented that his office is working with the Office of Disaster Assistance on a secondary review process, but that process has not been formalized yet.
In conjunction with the hearing, the Select Subcommittee on the Coronavirus Crisis today released a staff report announcing that there has been $84 billion in potentially fraudulent loans through the PPP and EIDL programs due to the Trump Administration’s failure to implement oversight and fraud prevention policies.
The EIDL program offers financial assistance to small businesses and nonprofit organizations adversely affected by a disaster and has been expanded and utilized during the coronavirus crisis. The PPP was created in the beginning of the pandemic as a loan program for small businesses and nonprofit organizations to be used mainly for payroll, rent, and utility payments.
Congressman Krishnamoorthi’s questioning during this Select Subcommittee on the Coronavirus Crisis hearing is available here.