U.S. watchdog identifies $5.4 billion in potentially fraudulent COVID-19 loans

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WASHINGTON, Jan 30 (Reuters) - The U.S. government likely awarded about $5.4 billion in COVID-19 aid to people with questionable Social Security numbers, a federal watchdog said in a report released on Monday.

The watchdog, the Pandemic Response Accountability Committee (PRAC), said it "identified 69,323 questionable Social Security Numbers (SSNs) used to obtain $5.4 billion from the Small Business Administration's (SBA) COVID-19 Economic Injury Disaster Loan (COVID-19 EIDL) program and Paycheck Protection Program (PPP)."

The loans were disbursed between April 2020 and October 2022, the watchdog said in its report, which comes ahead of a scheduled Wednesday hearing by the Republican-led House of Representatives Oversight Committee on fraud in pandemic spending.

About 57,500 Paycheck Protection Program forgivable loans worth $3.6 billion were disbursed by August 2020, the report added.

The United States is probing many fraud cases pegged to U.S. government assistance programs, such as the Paycheck Protection Program, unemployment insurance and Medicare. In May 2021, Attorney General Merrick Garland launched a COVID-19 Fraud Enforcement Task Force.

Last year, the U.S. Justice Department tapped federal prosecutor Kevin Chambers to lead its efforts to investigate fraudsters who used the pandemic as an excuse to bilk government assistance programs.

The report demonstrates "the significant fraud and identity theft that occurred under the prior administration due to the lack of basic anti-fraud controls, as well as how consequential were the Biden administration's quick actions to reinstate strong anti-abuse measures in these emergency small business programs," Gene Sperling, a senior adviser to President Joe Biden said in an emailed statement.

The watchdog report mentioned that in 2021 the U.S. Small Business Administration made improvements to its assistance program controls. Biden took office in January that year.

In September, the inspector general for the U.S. Labor Department said fraudsters likely stole $45.6 billion from the United States' unemployment insurance program during the coronavirus outbreak by applying tactics like using Social Security numbers of deceased individuals.

Also in September, federal prosecutors charged dozens of defendants, who were accused of stealing $250 million from a government aid program that was supposed to feed children in need during the pandemic.

Reporting by Kanishka Singh in Washington; Editing by David Gregorio and Christopher Cushing

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Kanishka Singh is a breaking news reporter for Reuters in Washington DC, who primarily covers US politics and national affairs in his current role. His past breaking news coverage has spanned across a range of topics like the Black Lives Matter movement; the US elections; the 2021 Capitol riots and their follow up probes; the Brexit deal; US-China trade tensions; the NATO withdrawal from Afghanistan; the COVID-19 pandemic; and a 2019 Supreme Court verdict on a religious dispute site in his native India.