Clyburn and Velázquez Ramp Up Investigation Into SBA Loan Program Plagued By Fraud
Washington, D.C. (February 11, 2021) — Today, Rep. James E. Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, and Rep. Nydia Velázquez, Chairwoman of the Committee on Small Business, sent letters as part of their ongoing investigation of a $750 million contract the Trump Administration awarded to manage the Economic Injury Disaster Loan (EIDL) program. Today’s letters were sent to the prime contractor, RER Solutions, and subcontractors Rocket Loans and Rapid Finance, seeking compliance with the Committee’s overdue requests. The Committees also highlighted new concerns about the program’s fraud controls and whether this sole-source contract was in the best interest of American taxpayers.
In today’s letter to Rocket Loans, the Chairs wrote:
“Documents and information obtained by our Committees have heightened our concerns that Rocket failed to implement adequate fraud controls. Our investigation has also raised questions as to whether the contract is in the best interest of the American taxpayer given the large share of the contract’s value that RER stands to receive relative to the amount of work it is performing on the contract.”
The Committees launched this investigation on July 30, 2020, “to ensure taxpayer dollars are being spent in the best interest of the American people and not diverted to fraud, waste, or abuse.”
On October 28, 2020, the SBA Inspector General issued a report finding SBA approved billions of dollars in potentially fraudulent EIDL loans and advances, including more than $62 billion in loans to applicants using duplicated address or account information and more than $14 billion in loans made to bank accounts that differed from those listed on the original loan applications. The Inspector General noted that “controls in the subcontractor’s system”—meaning controls implemented by Rocket and Rapid—“were not always consistently flagging problematic loan applications.”
Today’s letters highlight new evidence that the prime contractor, RER, appears to be performing only a small portion of the work, while receiving 51% of the contract’s value—over $380 million. The remainder of the work appears to be performed by Rocket and its affiliate, Rapid. The fact that RER appears to be performing only a small percentage of the work while receiving the biggest share financially raises questions about whether the contract is in taxpayers’ best interest.
Today’s letters seek compliance with overdue document and information requests that the Committees first issued on July 30, 2020, prioritizing requests related to fraud controls, contract performance, and the profits received by RER Solutions, Rocket Loans, and Rapid Finance. The letters request the production of these materials by February 25, 2021.
Click here to read today’s letter to RER Solutions.
Click here to read today’s letter to Rocket Loans.
Click here to read today’s letter to Rapid Finance.