The United States Secret Service has been making efforts to combat fraud in pandemic relief loans by working to identify and recover fraudulent loans issued under the Economic Injury Disaster Loan (EIDL) program.
The EIDL, which began in response to the COVID-19 pandemic, was an agenda established to help small businesses that were seeking capital to replace lost income. Created by the United States Small Business Administration (SBA), the EIDL program and its sister program, the Paycheck Protection Plan (PPP), issued more than $1 trillion of government aid to struggling small businesses. Loans were forgiven if small businesses used most of the capital on their payroll.
But now, evidence has come to light that fraud was perpetrated by businesses that were not struggling and simply took advantage of what they saw as free government funds. As a result, the Secret Service has already recovered $286 million in fraudulent loans and is continuing to investigate potential fraud cases. Most of the suspects used a financial technology (fintech) institution called Green Dot Bank to hold and move their money, and more than 15,000 domestic accounts were involved. The recovered funds have been returned to the Small Business Administration (SBA), but the impact on small businesses that needed economic aid cannot be undone.
The Secret Service's efforts to combat fraud in pandemic relief loans are an essential step towards ensuring the funds are used to help those who need them most. Fraudulent loans can drain the resources of the SBA while making it more difficult for legitimate small businesses to access the funds they need to stay afloat. Some small businesses were even victims of identity theft, with their personal information used to obtain loans fraudulently. But this story is far from over, and the Secret Service is still working closely with the SBA and other law enforcement agencies to investigate fraud cases and bring those responsible to justice.