Conaway Makes Shock Claim: One Third Of Pandemic Small Business Loans Were Fraudulently Obtained

Forbes Breaking News

During a House Small Business and Entrepreneurship Committee hearing in July, Rep. Herb Conaway (D-NJ) claimed that one third of loans made to help small businesses during the pandemic were "fraudulently obtained." The Small Business Administration Office of Inspector General claims that $36 billion of the $1.2 trillion loans were fraudulently obtained.

Transcript

00:00I'll recognize Mr. Conway for a statement on the bill.

00:03Thank you, Madam Chairman, and thank you certainly to my friend and fellow Air Force

00:08Officer Troy Downing for joining me in bringing this, well, this important program to account

00:18for those parts of the program that didn't work according to the expectations of the

00:21American people. American people understood very well how important it is to help during

00:27the pandemic, but these are taxpayer dollars, and the American people expect that those

00:33taxpayer dollars are going to be spent according to the law, and that those who violate the law

00:40should be held to account for those transgressions. More than 30 million small businesses were

00:45negatively impacted by the COVID-19 pandemic. The federal government quite properly took

00:50action in an unprecedented way to ensure that money flowed into our small businesses, which

00:56are so important to our economy. And over the course of 18 months, the SBA administered

01:01four major loan programs and delivered 22 million loans and grants totaling $1.2 trillion.

01:08It's estimated, after the SBA undertook its review and issued a report called Protecting the Integrity

01:17of Pandemic Relief Programs, and an estimated one-third of that $1.2 trillion went to persons

01:26who fraudulently obtain them, and businesses who fraudulently obtain them. As of June this year, the

01:34Office of Investigator General has opened 31, I would say just 31, investigations related to potential fraud

01:40in these programs, with, by opening 25 cases in the Restaurant Relief Program, and six open cases in the

01:50sheltered venue program. To date, the OIG's efforts have resulted in charges against 25 individuals with 14

01:57criminal convictions and more than $61 million in recovery. However, it remains important for OIG

02:04that it has the appropriate amount of time to process these fraudulent claims, and why it's so important

02:10that the Congress act to extend the statute of limitations so that the SBA and the OIG can get after these

02:18fraudsters who have taken advantage of the largesse and generosity and goodwill of their fellow citizens

02:26here in the United States. I would note that in the Restaurant Revitalization Fund, nearly $29 billion

02:37was spent in that program, and in the Shuttered Venues Operators Grant, just about $15 million was spent

02:46in that program. We understand small businesses in Jersey. It's nearly half of our jobs are created.

02:53There we have tens of thousands of restaurants and hundreds of thousands of small businesses.

03:02They're very important in our economy, but all of those people, all of those people work very hard,

03:07and they want their tax dollars spent in a way that meets their expectations

03:12for a competent program that is free of fraud. That's the best way, one certainly good way,

03:20to eliminate fraud and waste in federal spending. So as has been mentioned, the statute of limitation

03:27will be extended, and I only hope that as we look forward in time that we will have enough people

03:32there to actually get after all this money and take whatever other steps we need to take to make

03:37sure that these fraudulent funds are returned to the federal government so that the people who,

03:45through their tax dollars, support them can be confident that we're doing the accountability

03:50job we must do here in the government. Thank you again to my colleague, and thank you,

03:54Madam Chairman, for allowing this bill to move forward.

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