In finding U.S. disaster loan fraudsters, YouTube, Instagram are just the start: watchdog

For small business owners or others searching for advice on applying for a U.S. government disaster loan, there’s plenty to be found on social media. But that’s just the beginning of potentially fraudulent activity the Small Business Administration’s top watchdog is keen to root out.

The inspector general at the SBA, the agency tasked with doling out hundreds of billions of dollars in loans and grants to small businesses amid the coronavirus pandemic, is working with the agency to prevent people from taking advantage of loopholes, Hannibal “Mike” Ware said, acknowledging it is easy to find numerous examples of people online explaining how to get a loan.

U.S. prosecutors, in conjunction with Ware’s office and other authorities, have already pursued charges against people looking to take advantage of the agency’s Paycheck Protection Program and the Economic Injury Disaster Loan Program across the country, including in Florida, Texas, Georgia and Rhode Island.

“There’s far more nefarious actors than what you see on Instagram or YouTube, much more sophisticated and much more complex. And we knew this going into our planning process, before the first loan was issued,” Ware said.

Last month, Ware’s office flagged signs of widespread potential fraud in the U.S. disaster loan program, saying investigators received complaints of more than 5,000 instances of suspected fraud.

That number has grown since the report was issued, Ware said, though he declined to provide more specific figures.

“Ever since we issued that (alert), we’ve gotten even more calls. We continued to hear from financial institutions,” Ware said.

As U.S. leaders sought to mitigate the pandemic’s economic impact earlier this year, they tasked the SBA with running some of the biggest and most high-profile programs.

The agency’s internal watchdog has six ongoing reviews related to the more than $2 trillion coronavirus stimulus, or Coronavirus Aid, Relief and Economic Security Act, agreed by lawmakers in late March.

“This is an environment where there will be a lot of money moving faster than controls,” Ware said. “We’ve never seen this type of volume this quickly, so it required an all-hands-on-deck approach.”