Fraud Friday – House Committee Meets with Private Sector to Discuss Returning Pandemic Loan Fraud Funds

September 28, 2023

Delaney Sexton
Contributing Editor

Fraud Friday – House Committee Meets with Private Sector to Discuss Returning Pandemic Loan Fraud Funds

“When the pandemic started, the SBA took on an outsized role in restarting our nation’s economy. The PPP and EIDL programs were vital to saving small businesses, but that fact does not excuse $200 billion in fraud.” says Chairman Williams of the House Committee on Small Business. “It’s a top priority of this Committee to recoup these stolen funds, and yesterday’s hearing looked at new, innovative private sector solutions to do just that. I’m very grateful for our four witnesses, and we’ll continue our work on holding these fraudsters accountable.”

“When I first heard about the $200 billion in potential fraud in the SBA pandemic lending programs, it made me think about how a business owner would act in this situation. They would have to decide whether to do all they can to collect the $200 billion that is on their books as a receivable or to write it off as a loss. No private entity has the luxury of writing off such a massive number, so I think it is our duty to be good stewards of the taxpayers and find ways to get this money back, which we’ve already begun to talk about. The SBA’s Inspector General told us they currently have over 100 years of casework and that they’re going to investigate all the loans that have flagged with fraud. This is obviously an impossible task, and there must be a better way to help them get this money back,” states Chairman Williams.

Richard Breeden, Chairman of Breeden Capital Management, LLC says: I love technological systems. Our victim trust, we use systems to scan things all the time, but the most effective tool is an experienced person sitting looking at the analytics and deciding that there’s a problem that needs greater follow up. Big data can do a lot of things, but it isn’t going to haul crooks in to identify and have someone go after them. So, it’s a mix of systems and trained people.

Dean Zerbe, the National Managing Director of Alliantgroup says of the SBA forming a whistleblower program, “I do, I’ve seen it in a number of government agencies have created these whistleblower award programs. And so, I think very much the SBA is a good possibility in terms of also looking at creating a whistleblower reward program. You already have the Qui Tam False Claims Act, where they’re bringing in a few cases in right now from out from attorneys, from whistleblowers, and that’s had some success. But I think having in parallel with that, an in-house whistleblower award program will very much be a way to, as you say, commission to bring in the energy of the whistleblowers, their attorneys, their advisors to help the SBA move forward. So, yes, I think it’s a very good candidate for the SBA to look at doing this.”

Mary Miller (CEO of Audient Group, LLC) and Dean Zerbe mentioned a possible solution to some of the fraud: provide amnesty to those who committed fraud and are willing to return the funds. They stated some might be willing to do so if they knew they would not be prosecuted.

To see the full hearing and what the private sector has to say on recouping stolen pandemic loan funds, click here.