US failed to protect virus fund from fraud

PROVIDENCE, Rhode Island－The United States failed to take basic steps at the start of the coronavirus pandemic to prevent fraud in a federal aid program intended to help small businesses, depleting funds and making people more vulnerable to identity theft, said the chairman of a House panel examining the payouts on Tuesday.

Democratic Representative James Clyburn blamed the administration of former president Donald Trump for the problems in the COVID-19 Economic Injury Disaster Loan program, overseen by the US Small Business Administration, amid revelations that as much as 20 percent of the money－tens of billions of dollars－may have been awarded to fraudsters.

Clyburn said Congress has invested in fraud prevention and accountability.

He said the subcommittee will determine what more must be done to bring perpetrators of fraud to justice and how to protect future emergency programs.

Potential crimes

Clyburn said he supports extending the statute of limitations for this kind of fraud case to give investigators more time to untangle complex potential crimes. Witnesses at the hearing suggested standardizing the data collected by states to make it easier for federal authorities to spot possibly fraudulent patterns.

The SBA's Office of the Inspector General has estimated that at least $80 billion distributed from the $400 billion EIDL program could have been fraudulent, much of it in scams using stolen identities.

Separately, staff for the select subcommittee on Tuesday issued a report that found that some 1.6 million loan applications may have been approved without being evaluated.

The subcommittee's staff found that those loans were approved in batches of up to 500 applications at a time. Applications were allowed to move through even if they had certain red flags for fraud－such as international client locations or phone numbers not associated with the business or the owner－so long as there were not too many of them. The process meant that while software analyzed the applications, they were not even opened by officials before being greenlighted for funding.

Fraud overwhelmed enhanced unemployment insurance programs funded by the federal government and administered by the states. There was so much aid to governments that many struggled to find a way to spend it all under the original regulations. And there have been questions about whether the Paycheck Protection Program to keep employees working was worth it.

The Secret Service said in December that nearly $100 billion has been stolen from COVID-19 relief programs, basing that estimate on its cases and data from the Labor Department and the SBA.

Agencies via Xinhua