On September 16, SBA’s Office of Inspector General announced Operation NO DOZE, a targeted push against fraud in the Paycheck Protection Program and COVID EIDL. Inspector General William Kirk said the initiative “makes clear that the passage of time does not diminish our commitment to accountability.” Two days earlier, the Justice Department reported more than 160 criminal defendants and about $245 million in intended loss across 44 U.S. Attorney’s Offices. SBA said it had suspended 870,000 borrowers tied to $39 billion in suspected pandemic loan fraud, and that final 30-day demand letters would go out, starting with about 8,000 borrowers in Kansas and Missouri.
OIG describes the operation as combining its “investigative expertise, data analytics and program knowledge” with the enforcement authorities of the Justice Department, SBA, the FBI and others. I want to talk about the third item on that list, because it’s the one I know.
A suspicious loan is not automatically an ineligible loan. An ineligible loan is not automatically fraud. Data can show that several businesses share an address or an owner. An investigator can establish what a borrower said. Before either becomes a case that holds up, someone has to answer a plainer question: What did the program require of this borrower on the day they applied, and what does the file show?
For PPP, that’s harder than it sounds. The rules didn’t hold still. SBA and Treasury issued interim final rules and FAQs through 2020 and 2021, and the answer could depend on the date.
- Who owned the applicant business when the loan was made?
- Who controlled it?
- Which other businesses counted as affiliates?
- Was the borrower part of a corporate group?
- What did the borrower submit, and what did SBA rely on?
Those are program questions, and the answers should be in the file.
I know that work because I did it. For more than four years, I worked on PPP eligibility reviews and appeals for SBA’s National Guaranty Purchase Center. Much of that time was spent on the PPP Appeals Team, on large, complex affiliation and corporate group appeals, some involving 75 or more entities.
I traced ownership through multi-tier structures, wrote the eligibility analyses, and assembled the record packages. They went through my supervisor to SBA’s Office of General Counsel, the Justice Department, and SBA OIG, including appeals before the Office of Hearings and Appeals, False Claims Act matters, and borrower challenges to final SBA decisions in federal district court. Earlier, I was selected to review loans for a special audit requested by SBA OIG. All of it happened after the money was gone.
Here is where that kind of knowledge matters next.
It matters for sorting. Not every bad loan is fraud. Some borrowers were ineligible and didn’t know it. Some lenders made processing errors. A file that is missing a document is a different case from a borrower who never qualified. An investigator or a prosecutor shouldn’t have to work that out alone, and a case built on the wrong reading of a rule is a case that can be lost.
It matters when borrowers answer. Demand letters will bring responses. Some borrowers will send documents and say they were eligible. Someone has to check that claim against the rules that applied to the loan and the record SBA holds, and do it the same way every time. A recovery demand, an appeal response, or a prosecution is stronger when the eligibility analysis underneath it is right.
And it matters for time. In August 2022, Congress gave the government ten years to bring PPP and EIDL fraud cases. PPP loans were made in 2020 and 2021, so that window starts closing in 2030. Measured against 870,000 suspended borrowers, that isn’t far off.
There is a practical problem behind all of this. The people who learned to read these files were never all in one building. The reviews were done in SBA’s electronic systems, from wherever the reviewer sat. I did mine from Florida, and the people I worked alongside were in other states.
PPP was a temporary program, and the workforce that reviewed it was built to wind down. Most of the people who handled the hardest files, the large, complex affiliated groups and the appeals, have retired, changed agencies, reached the end of their appointments, or left federal service. An effort this size will need more of that experience than any one office still holds.
A new analyst can learn a regulation. Judgment built over years of hard files takes longer to replace, and the ten-year clock doesn’t wait for it. That knowledge still exists. It’s spread across the country, where the work was done. Taxpayers have already paid to build it. It makes sense to use it.
The files have a second use. The executive order that created the White House Task Force to Eliminate Fraud directs it to “develop appropriate controls that operate before funds are obligated or disbursed to prevent improper payments.” That is the lesson of PPP in one sentence. The people who reviewed these loans after the fact know where the front-end checks were missing, because they spent years reconstructing what should have been verified at the start. That knowledge serves the cleanup, and it serves the design of whatever program comes next.
Inspector General Kirk also said, “Fraud is nonpartisan.” He’s right, and getting the file right is nonpartisan too.
I’m a program practitioner, not an investigator, auditor, or attorney. I know how a PPP file is put together and what the rules required at the time. I can write up what a file shows so an attorney can use it. If that’s useful to the people doing this work, I’d like to help finish it.
Traci Harig is a former GS-13 loan specialist at the U.S. Small Business Administration, where her work on 7(a)/PPP covered eligibility and forgiveness reviews, affiliation analysis under 13 CFR §121, appeals, and case reviews and analysis on matters referred by OGC, DOJ, and OIG, including False Claims Act matters. She writes about program design, eligibility verification, and federal program integrity.
This is an independent analysis based on publicly available information and professional experience. The views expressed are my own. I have no clients and no financial or advocacy interest in the matters discussed.
One response
You are spot on, Traci. As a colleague who was in the trenches with you, they absolutely should track down those analysts who were noted to do exceptionally well with this work. But would the current powers that be also be willing to allow telework and appropriate funding for this?