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Money from the COVID Paycheck Protection Program was allegedly largely misspent

AYESHA RASCOE, HOST:

The Paycheck Protection Program was supposed to be a lifeline to small businesses during some of the darkest months of the pandemic - $800 billion distributed from April 2020 to May 2021. And as we now know, some 80 billion of those taxpayer dollars ended up in the wrong hands or misspent. Justice Department Inspector General Michael Horowitz chairs the Pandemic Response Accountability Committee, and he joins us now. Welcome.

MICHAEL HOROWITZ: Great to be here, Ayesha.

RASCOE: It's been almost a year since the PPP loan program ended. How many investigations has your office conducted into possible fraud?

HOROWITZ: We actually have now had over 1,200 indictments in total in our investigative work - about 900 arrests and almost 500 convictions. PPP is obviously a very important part of that work. What we've seen is in the first few weeks of the program, when nearly half of the $800 billion went out the door, the SBA - the Small Business Administration - was relying on self-certifications. In other words, if you were going to apply for a PPP loan, you self-certified that the information you were submitting was correct. That is not how programs should operate. There should be some verification of identity, some verification of legitimacy. And what we've seen is that because that didn't occur, there was a substantial amount of fraud, particularly in those first few weeks when, as you said, almost $400 billion went out through the PPP program based solely on self-certification.

RASCOE: Part of the issue at that point was in the pandemic, there was a desire to get money out fast to people who needed it. And a question of - is it more important to get the money out fast or to get it out securely? Do you feel like the right decision was made to just get the money out fast?

HOROWITZ: It's a great question, and it's a key question. I also think it's a question that assumes it's one or the other. Simple steps could have been taken that wouldn't have delayed delivery of the loans, perhaps not even for a day but maybe just for days. Give you an example. Thirteen hundred individuals used the same address in San Francisco, Calif. to apply for a PPP loan. It's a single business address. Now, any listener out there knows that all you have to do is have a database that can match what the address is being used and see if it's being used in multiple loans. That is not that sophisticated. That does not take that much time. And yet 1,300 applications came in that way. In that first few weeks, 57,000 loans worth $3.6 billion went to individuals who are actually on the Treasury Department's do-not-pay list. SBA never checked it. How long would that have delayed the sending of the checks? Probably not even 24 hours.

RASCOE: Even though a lot of money went out the door, there were still a lot of businesses that did not get money, especially in those first rounds of the PPP. Did this fraud keep some people who were legitimate from getting their money?

HOROWITZ: What we found is in just the management of the program, underserved communities were not focused on in the way they should have. As we know, underserved communities and rural communities didn't have wide access and still don't have wide access, in many instances, to broadband. There was an issue with identity theft that has, I think, not received the kind of attention and focus it needs. And it is one of the issues, by the way, we at the Pandemic Response Accountability Committee and the IG community - the inspector general community - are very focused on.

RASCOE: Anytime you give a large amount of money out from the government, there will be some fraud, right? There will be some waste. But this is a massive amount. So who messed up? Like, who's to blame for this?

HOROWITZ: Agencies decided at the outset in those first few months and weeks they were simply going to send the money out on the self-certification and chase the money back later. Those were choices made.

RASCOE: Do you agree with, you know, this number - $80 billion - or do you think it could be higher?

HOROWITZ: I'm not going to rule it out as a possibility. I'm also not going to rule out the possibility it's higher than that. We have a lot of work to do, and it is going to take us months and years to sort through this. But one of the things that we are doing is an oversight community for inspectors general. We have created an analytics platform to find these instances of double dipping, of fraud so that we can go after folks even a year after the program's ended. People will get knocks on their doors, and they will be arrested if we can prove that. And we will look to seize the money and get the money back for the taxpayers.

RASCOE: That's Justice Department Inspector General Michael Horowitz. Thank you so much.

HOROWITZ: Thank you, Ayesha. Great to be here.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.