Lydia DePilis, Pro Publica - Fleecing the pandemic safety net

Lydia DePilis, Pro Publica
Fleecing the pandemic safety net


Almost from the moment the Paycheck Protection Program (PPP) and Economic Injury Development Loan (EIDL) money was let loose by the federal government to help small businesses and their employees survive the Coronavirus pandemic’s economic recession, fraud has been a persistent problem.

It took just four months, from launch in March 2020 to July when the Inspector General of the Small Business Administration sent what he called “a management alert to [warn] of widespread potential fraud in the Economic Injury Disaster Loan and Advance grant programs that require immediate attention and action.”

Already, and remember, this is last July, the IG reported his complaint hotline was being “inundated” with reports of alleged fraud. “Our review of SBA’s initial disaster assistance response” Inspector General Hannibal“Mike” Ware reported, “has identified $250 million in economic injury loans and advance grants given to potentially ineligible recipients.” In just four months!

The “immediate attention and action” the report recommended did not happen during the SBA’s Trump Time.  In fact, Trump policy went in the opposite direction. The emphasis was getting money out the door before the November election, and where and to whom it went seemed to be of much less concern. According to Carolyn Ciccone, executive director of Accountable.US, a watchdog organization tracking Coronavirus bailouts, the SBA “dramatically lowered” standards for disbursing loans in the wake of the pandemic. “They got rid of a lot of checks and balances within the agency that make sure the loans go to real businesses and businesses that need them. Now, we’re seeing the consequences.” It’s as if Louis DeJoy went “Postal” on the SBA as well as USPS, cutting jobs and assuring inefficient performance.

Hundreds of millions of dollars worth of suspect loans and grants under the EIDL Economic Injury Disaster Loan program may have been dwarfed by fraudulent  applications filled by the much bigger PPP, the Payroll Protection Program. Just one company is suspected of ripping Uncle Sam off for hundreds of millions servicing loans to projects as obviously fraudulent as potato fields in Palm Beach, Florida, an orange grove in Minnesota and a cattle ranch at Ocean Beach, NJ.

Distributing billions of dollars of relief to small businesses hard hit by the COVID-19 recession while simultaneously cutting back on your oversight and accountability functions is an obvious invitation to cheat. But in some ways, the Big Grifter’s invitation seemed engraved for particular beneficiaries.

Congress made traditional banks the lead distributor of PPP money. Trump’s Treasury Secretary Steve “The 2008 Foreclosure King” Mnuchin instructed the banks to give priority to their traditional customers.  This left people without “regular relationships” with  banks waiting without help, and all but forced them to deal with an alternative source, what are called “FinTechs.”



Lydia DePillis joined ProPublica in 2019. Before that, she covered national economics issues for CNN Business, Texas’ economy for the Houston Chronicle, labor and the workplace for The Washington Post, and the business, culture and politics of the technology industry for The New Republic. DePillis was also previously a real estate columnist for the Washington City Paper, where she authored its award-winning Housing Complex blog. Her work has appeared in the New York Observer, Pacific Standard, Slate and various trade publications. She’s from Seattle, and is based in New York.




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