The SBA is an independent federal agency tasked with providing support to small businesses and entrepreneurs. During the COVID-19 pandemic, it provided struggling small businesses and nonprofit organizations up to $2 million in loans each through the COVID-19 Economic Injury Disaster Loans (EIDL) program, as well as other grants and advances.
The EIDL program was only meant to provide grants to businesses located within the United States that were impacted by the pandemic. But the SBA acknowledged that it failed to properly screen its loan approvals.
The SBA awarded 41,638 grants totaling $1.3 billion to applicants that applied for the aid using computers believed to be located abroad. This includes 3,097 approved grant applications from people located in six unspecified "high risk" countries. These people received more than $14 million in EIDL money. (Related: Biden is still spending TRILLIONS of taxpayer dollars that were set aside for COVID-19 stimulus.)
The report noted that these foreign recipients of EIDL grant money are different from Americans and foreigners living abroad who may have qualified for EIDL relief if they met "certain eligibility requirements," noted the report.
"The numerous applications submitted from foreign IP addresses are an indication of potential fraud that may involve international criminal organizations," the inspector general's report stated. It added that the risk of fraud in the program was very high "because of the history of fraud originating from transnational crime organizations that have stolen funds from U.S. programs in the past."
"The federal government's response to COVID was panicked and not thought out," noted E.J. Antoni, an economics fellow at The Heritage Foundation's Center for Data Analysis, in an interview with the Daily Caller. "The careless, shotgun approach to disbursing unneeded aid was an invitation for fraud, both at home and abroad."
Ranking member of the House Small Business Committee Rep. Blaine Luetkemeyer of Missouri, in an interview with the Free Beacon, noted that the report shows the SBA does not have the necessary measures in place for it to track down and prevent fraud.
"The SBA is not outfitted with the necessary infrastructure to manage large-scale and direct loan programs such as EIDL," he said. "With the already challenging task of recovering fraudulent funds now compounded with potential foreign criminal elements, the SBA requires significant programmatic reforms to prevent even more losses."
In response to the inspector general's report, SBA spokeswoman Christina Carr said that the issues stemmed from a technical decision made during the administration of former President Donald Trump, which has since been rectified.
Carr claimed that the $1.3 billion in questionable funds represented less than 0.04 percent of the $342 billion allotted for the EIDL.
Furthermore, Carr claimed that the SBA's systems successfully stopped "millions of attempts" to access its online application portal from foreign IP addresses and that the agency is "committed to ensuring that effective fraud controls are in place for future programs."
Another SBA spokesperson laid the blame solely on the Trump administration. "Under the previous administration, a decision not to require a static IP address for EIDL applicants was made," said a spokesman.
He added that under the leadership of current SBA Administrator Isabel Guzman, "this administration immediately set to work to implement risk control measures designed to help prevent fraud, including monitoring of the IP static address for EIDL applicants."
Guzman began her tenure as SBA administrator in March 2021. The agency stopped accepting EIDL applications on Jan. 1 and the program's portal was shut down in May, strongly suggesting that Guzman didn't really oversee any changes to how EIDL applications were made and should not take any credit for preventing fraud.
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Watch this clip from "The Evening Edit" on Fox Business as host Elizabeth MacDonald talks to Florida Rep. Byron Donalds about who is to blame for the massive amounts of COVID-19 relief fraud.