Clyburn and Velázquez Seek Documents on Role of SBA Employees in EIDL Fraud Schemes
Jul 14, 2021
Request Expands Ongoing Investigation into Trump Administration Management of EIDL Program Following Reports that SBA Employees and Contractors Received Bribes to Facilitate Fraudulent Loans
Washington D.C. (July 14, 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 a letter to Administrator of the Small Business Administration (SBA) Isabella Guzman requesting documents and information on how SBA sought to prevent personnel from enabling fraud in the Economic Injury Disaster Loan (EIDL) program. The letter follows recent reports that SBA employees and contractors intentionally aided in the distribution of fraudulent federal loans.
The Chairs wrote:
“Much of the scrutiny of fraud in the EIDL program during the Trump Administration has focused on the agency’s lack of anti-fraud controls and vulnerability to unwitting approval of fraudulent loan applications. But the recent indictment and guilty plea of Joel Greenberg—the former Tax Collector of Seminole County, Florida—for a successful conspiracy to bribe an SBA loan officer to approve fraudulent EIDL applications raises further concerns about SBA’s security measures to prevent employees and contractors from using their access to SBA systems to knowingly approve fraudulent loans.”
On March 25, 2021 the Select Subcommittee released a staff memorandum finding that the Trump Administration had severely mismanaged the EIDL program and that the SBA had approved $79 billion in potentially fraudulent EIDL loans and advances. While the majority of the potentially fraudulent loans involved loans to applicants using duplicated addresses or account information, the SBA Inspector General identified instances in which SBA employees and contractors intentionally aided in the distribution of fraudulent loans through the EIDL program, including that SBA and two major financial institutions fired hundreds of “employees and contractors who were involved in approving loans to themselves or who inappropriately influenced loan approval” and “have warned all their remaining staff to report any instances of suspicious activity.”
More details of SBA employee-facilitated fraud schemes that occurred during the Trump Administration were revealed in May, when a former public official in Florida, Joel Greenberg, pled guilty to bribing an SBA loan specialist to receive approval for fraudulent EIDL program loans in July 2020, raising further questions about damage to the program’s integrity.
“[R]eports of fraudulent and criminal conduct require scrutiny to determine whether the EIDL program was unnecessarily vulnerable to criminal exploitation. The criminal conduct at issue here, coupled with the high rates of unwitting approval of fraudulent EIDL applications, make clear the need for the Select Subcommittee to better understand SBA’s vulnerabilities.” the Chairs continued.
The Committees launched their investigation into the EIDL program 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.”
Today’s letter requests documents and information by July 28, 2021.
Click here to read today’s letter to Administrator Guzman.