Articles & Alerts

The pandemic may be over for most, but the fraud findings roll on. With billions of dollars disbursed via federal relief programs since March 2020, accounting for every dollar is an ongoing challenge and government investigators continue to uncover numerous incidents of fraudulent claims and misallocated loans.

The latest investigation centers on the Small Business Administration (SBA)’s two key initiatives – the COVID-19 Economic Injury Disaster Loan (COVID-19 EIDL) program and the Paycheck Protection Program (PPP). Recently, government watchdog the Pandemic Response Accountability Committee (PRAC) found that over 69,000 ‘questionable’ Social Security Numbers had been used to obtain $5.4 billion in loans from these two programs.

Given the speed at which the COVID-19 EIDL and PPP were launched, it’s no surprise that they were particularly vulnerable to this type of fraud. As PRAC notes, the programs attracted significant attention when they first opened, and the sheer volume of applicants, combined with the need for urgent action, created the perfect environment for fraudsters. Oversight took a back seat in the rush to get funds out the door and into the hands of struggling businesses – meaning that thousands of applications escaped even the most basic vetting. Just 14 days after the PPP first opened, lenders had already approved more than 1,661,000 loans worth almost $342.3 billion.

Strengthening Fraud Prevention & Compliance

With more and more criminal cases coming to light around pandemic-related fraud, the number of active investigations will only grow as regulators take a hard look at how government funds were disbursed.

Every program has its own rules and regulations. All parties involved in government entitlement programs – from small business recipients to third-party financial institutions – should be aware of their legal obligations and be able to demonstrate compliance with all regulatory requirements. These should never be ignored. Putting the right fraud protection procedures in place beforehand doesn’t just allow much-needed relief to get to those who legitimately need it, but it also protects businesses against liability and loss. Organizations can’t afford to let their guard down as it’s notoriously difficult to recoup lost funds once the money has gone.

With federal relief programs under growing scrutiny, now’s the time to enlist the experts, whether you’re a small business, or a large lender. Consultants specializing in fraud investigations and consulting can help you identify and resolve potential issues, as well as help you plan for the future with robust fraud protection.

Over its 30-year history in the field, the Regulatory Compliance and Investigations (RCI) team at Anchin has guided both public and private sector clients to proactively manage risk when implementing or applying to federal programs. As highly-experienced professionals, we review all regulatory requirements so that organizations can be confident they’ve checked every box and fulfilled every condition – even those buried in the small print. Our team works with businesses to audit their processes, improve internal transparency, strengthen safeguards, and ensure they’re adhering to all applicable legislation. We also work with lenders, helping financial institutions implement stringent controls so they can be sure they’re protected against liability.

To discuss your organization’s investigation needs or how to protect yourself from fraud, contact Brian Sanvidge, Principal & Leader, Regulatory Compliance & Investigations Group or your Anchin Relationship Partner.