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There are “strong indicators of widespread potential fraud” in the small business Economic Injury Disaster Loan (EIDL) program, says SBA’s inspector general.

WASHINGTON – The Small Business Administration’s (SBA) Office of Inspector General (OIG) issued a management alert on Tuesday to “inform the agency of strong indicators of widespread potential fraud in the Economic Injury Disaster Loan (EIDL) and Advance grant programs that require immediate attention and action.”

Hannibal “Mike” Ware, the inspector general, said his office has been “inundated with contacts to investigative field offices and the complaint hotline.” He says OIG received more than 5,000 complaints about suspected fraud from financial institutions receiving economic injury loan deposits.

Ware says almost 3,800 of those reported complaints came from six financial institutions, and 1,220 reports of suspected fraud came from other financial institutions. Just nine of the financial institutions reported a combined total of $187.3 million in suspected fraudulent transactions.

“The details of the suspected COVID-19 EIDL fraud recently uncovered by the SBA OIG are alarming,” Florida Sen. Marco Rubio said in a statement after the OIG report was released. Rubio says that he helped craft language in the CARES Act to ensure that the SBA verifies eligible applicants before disbursing COVID-19 Emergency EIDL Grants.

Ware says his office’s investigation found “indications” of internal-control deficiencies related to COVID-19 disaster assistance. “Our review of SBA’s initial disaster assistance response has identified $250 million in economic injury loans and advance grants given to potentially ineligible recipients,” he says. “We have also found approximately $45.6 million in potentially duplicate payments.

OIG suggested swift management action to identify disbursements that may have been obtained fraudulently, recover disbursed funds and prevent additional taxpayer losses.

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media/news-articles/2020/07/sba-issues-warning-suspects-fraud-eidl-loans