The Small Business Administration (SBA) has uncovered nearly $400 million in suspected pandemic loan fraud involving 6,900 borrowers in Minnesota. SBA Administrator Kelly Loeffler announced that the agency, after reviewing thousands of Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) applications, has taken decisive action to address what it described as "widespread suspected fraud."
"After years, the American people will finally begin to see the criminals who stole from law-abiding taxpayers held accountable - and this is just the first state", Loeffler stated.
Loan Fraud Impact and Penalties
According to Loeffler, the loans in question were approved during the height of the COVID-19 pandemic and include 7,900 PPP and EIDL loans. Those identified in the agency's investigation will no longer have access to SBA loan programs, including disaster loans, moving forward. Loeffler also confirmed that the SBA will refer appropriate cases to federal law enforcement for prosecution and repayment.
"These individuals will be banned from all SBA loan programs, including disaster loans, going forward", she wrote on X, the social media platform formerly known as Twitter.
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State-Level Scrutiny Over Fraud
The announcement has placed Minnesota Governor Tim Walz’s administration under scrutiny. Loeffler sent a letter to Walz on December 23, informing the governor that the SBA would halt more than $5.5 million in federal annual support to SBA resource partners operating in Minnesota.
"I am notifying you that effective immediately and until further notice, the SBA is halting the disbursement of federal funds to SBA resource partners operating in the state of Minnesota, totaling over $5.5 million in annual support", Loeffler wrote in the letter.
The SBA’s investigation also highlighted $430 million in PPP funds tied to approximately 13,000 loans that were flagged as potentially fraudulent but were still disbursed. Some of these loans were even forgiven under the Biden administration, according to Loeffler.
"The volume and concentration of potential fraud is staggering, matched in its egregiousness only by your response to those who attempted to stop it", Loeffler wrote to Walz.
Allegations of Organized Fraud
Among the suspicious activity, the SBA identified at least $2.5 million in pandemic-era loans connected to a Somali fraud scheme based in Minneapolis. This revelation is part of a broader series of fraud allegations tied to social services in the state, which have already drawn significant criticism of Governor Walz's administration.
The investigation into Minnesota borrowers marks a significant step in the SBA's efforts to address fraudulent activity stemming from pandemic relief funds. Loeffler emphasized that this is only the beginning of the agency’s work, hinting at possible investigations in other states.
Fox News Digital reached out to Walz’s office for comment, but no response has been reported.
The SBA’s actions underline the federal agency’s commitment to accountability and the recovery of funds misused during the pandemic, which were meant to provide vital support to struggling businesses. As investigations continue, additional repercussions and recoveries are anticipated.
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