It’s no secret stimulus programs were a hot mess of fraud. But a new report is revealing just what a mess it was.
A new Government Accountability Office (GAO) study has revealed that 28% of PPP and EIDL loans contained fraud red flags.
The study found that over 10 million businesses collected over $1 Trillion in government funds, but many of those loans may have gone to liars.
They Analyzed 13.4 Million Borrowers And Found Many Had Red Flags
Investigators at the GAO analyzed PPP and EIDL loan data from 13.4 million recipients. They compared what the borrowers said about their businesses and employees and then compared those claims to public record sources from those businesses.
They found that 3.7 million of those loans may have contained material misrepresentations on the loan application.
They Had Access To New Data Set That Revealed New Insights Into Fraud Red Flags
While the OIG has been publically decrying the fraud problem in the stimulus program, the GAO had access to a completely new data set that helped them find hidden red flags – The National Directory of New Hires.
The data is unique because, by law, employers report their new hires to the State Directory of New Hires and their employees’ quarterly wages to the state workforce agency.
While the data is used to help ensure child support, it was used for this study to find discrepancies. This data helped the GAO understand employee counts for each company in a way that no one had ever done before.
The Red Flags Pointed To Fraudulent Companies Or Gross Exaggerations of Employee Counts
The GAO calculated six different red flags that they found on after analyzing the 13.4 million PPP and EIDL loans.
They found some revealing insights:
- 2.1 million businesses reported employees, but they never submitted wage data.
- 894K businesses used the same information for different businesses
- 383K provided far different information across different loans
- 291K businesses reported a higher number of employees than what they reported in the data.
- 446K businesses reported higher wages paid than what they reported in the data.
- 22K businesses received multiple loans
The red flags are broken out in this handy chart here.
Read The Full Report Here
You can download and read the full report.