Congress Responds to COVID Aid Fraud Allegations as Lawmakers Propose New Legislation

EXCLUSIVE: The chairs of the Small Business Committee in both the House and Senate are unveiling a strategic plan designed to tackle the concerning issue of roughly 2 million applications suspected of fraud during the pandemic. This initiative follows a recent government report highlighting a significant lapse in oversight.

Legislative Action in Response to Fraud Findings

Senator Joni Ernst from Iowa and Representative Roger Williams from Texas, both Republicans, are set to introduce the SBA Fraud Enforcement Extension Act. Scheduled for unveiling on Wednesday, the bill aims to hold accountable those who allegedly exploited pandemic funds. Lawmakers argue that these actions have hindered legitimate U.S. small businesses from accessing vital financial assistance.

This new legislation will extend the statute of limitations to 10 years, specifically targeting fraud related to the Shuttered Venue Operators Grant (SVOG) and the Restaurant Revitalization Fund programs established in 2020. Previous efforts by Ernst, Williams, and their colleagues aimed to similarly identify fraudulent actions in the Paycheck Protection Program in 2022.

Insights from the Government Accountability Office Report

A recent report released by the nonpartisan Government Accountability Office, or GAO, revealed that during the Biden administration, the Small Business Administration approved more than $1 trillion in loans, impacting over 10 million small businesses. However, while the SBA implemented a four-step process to manage fraud, its effectiveness came into question when the SBA’s inspector general could not adequately investigate two-thirds of fraud risk referrals due to a lack of correct or complete information provided by the agency.

As a result, the GAO made a formal recommendation to the SBA, which remains classified as “open.” Notably, there has been little recorded action taken to address these recommendations.

The GAO also pointed out that the fraud prevention process lacked full implementation until most of the funding across aid programs had already been distributed. This oversight has raised alarms among lawmakers and citizens alike.

Reactions from Lawmakers

Senator Ernst expressed her determination to ensure accountability for those implicated in fraud. In an interview, she stated that she will not allow criminals to escape justice merely because there was a lack of action from the Biden administration. Ernst emphasized that small businesses were denied essential relief funds due to the actions of fraudulent actors profiting from the pandemic.

Within her home state of Iowa, about 1,800 restaurants qualified for SBA aid but did not receive it, raising questions about the allocation of funds and whether legitimate businesses were unfairly overlooked.

In Texas, Representative Williams noted that while federal aid enabled countless restaurants to maintain operations, some owners reported that funding was insufficient for them to recuperate financially. The Texas Restaurant Association warned that as many as 12,000 restaurants could face closure by 2022.

Allegations of Misuse and calls for Enhanced Oversight

The issue of COVID aid misuse extends beyond typical business applicants. Some reports indicate that certain Hollywood celebrities received substantial SVOG funds and misappropriated them for personal luxury expenditures. These revelations have further angered lawmakers and the general public.

Williams reinforced the importance of prosecuting anyone who exploited taxpayer dollars during a critical time for the nation. He called for a robust extension of the SBA’s powers to pursue fraudulent actors, especially as the five-year mark approaches since the initial COVID lockdowns.

The SBA’s Stance on Fraud Prevention

Fox News Digital reached out to the SBA for comments regarding the report. An SBA spokesperson shared that Administrator Kelly Loeffler has already initiated steps to improve fraud prevention. In a statement, Caitlin O’Dea emphasized the SBA’s commitment to preventing fraud, stating that the agency fully supports all measures aimed at addressing fraudulent activities within its loan programs.

O’Dea contrasted the current efforts with those of the previous administration, which failed to address an estimated $200 billion in pandemic-era fraud. The ongoing commitment of the SBA is to enforce accountability against fraudsters.

Next Steps for Legislative Action

As lawmakers prepare to advance the SBA Fraud Enforcement Extension Act, there is a palpable sense of urgency in legislative discussions. Both Ernst and Williams aim to ensure that the ramifications of COVID aid fraud are thoroughly examined, and that those responsible are held to account. The desire to protect small businesses and taxpayers underscores the necessity for actionable measures in the coming weeks.

A stronger legal framework for investigating and prosecuting fraudulent actions is crucial for safeguarding future federal aid programs. As discussions unfold, stakeholders await Congressional action to bring clarity and reform to the current system.