Report Finds $4.5B In Fraudulent EIDL Grants
The SBA Inspector General (IG) released a report stating that $4.5B in EIDL Grants were issued fraudulently. These applications were approved, according to the report, because the SBA had no system of controls in place to flag information that was flawed or illogical.
If you’ll remember, the EIDL grant originally sent out $10,000 to all applicants in emergency assistance. Later, given the demand for grants, it was summarily reduced to $1,000 per employee.
The IG Office found 15 sole proprietors who claimed to have 1M employees, while not even having an Employer Identification Number. An additional 40 proprietors claimed over 100K workers.
“The absence of an EIN and the number of employees cited on these applications should have alerted SBA loan specialists that the applicant’s self-certified information was flawed and likely erroneous,” Ware wrote in the report from the IG. “However, SBA never requested additional information from these sole proprietors to verify the number of employees cited on their grant applications before approving and disbursing the grants in amounts in excess of $1,000.”
The report concluded that the EIDL applicants were only entitled to $704M instead of the $5.2B that they received.
Let’s remember that hindsight is 20/20. During the initial weeks of the pandemic, the government was scrambling, trying to get money out the door.
When we think about it, we have to ask, “When would the SBA actually have had time to put controls into place?”
Let’s also remember that most sole proprietors aren’t the most reasonable or educated entrepreneurs on the planet. In actuality, most happen to be the guys hocking “Ice Cold Water” over at Clark and Addison before Cubs Games. It isn’t difficult to imagine them screwing up a form.
The question becomes whether or not the SBA is going to go back after any of that money. Time will tell.
Let me leave you with this.
This weekend I put the walls up on my outdoor hot tub room, effectively turning it into a greenhouse for the winter. We brought in all of the potted plants from the yard that we’d like to keep alive over the cold winter to come.
Next weekend, I’ll put my sailboat away. We’ll take down the sails, winterize the boat, and take it over to Montrose Harbor for the winter.
These two annual jobs are difficult because they signal the end of summer.
As a child, I was never a big fan of the colder months. I can remember being in first grade at St. Philip back in ’71, as the first snowflakes fell. All the other kids in class we’re excited, with their rosy cheeks pressed against the glass, longing to go outside. I sat at my desk, mourning the end of summer.
But over the years, I’ve at least come to tolerate winter.
As tempus fugit runs and our big blue marble does it’s unending dance around the sun, I’ve learned to not despise the inevitable. On the contrary, our winter months usher in additional pleasures.
I certainly won’t be sailing the lake or partying down on the dock with the other captains. I won’t be able to enjoy dinner at an outdoor cafe, or enjoy a walk in my neighborhood as the sun sets.
But I will be able to feel the crisp morning air as we follow the dogs through the fields of Wisconsin, hunting pheasant. I’ll be able to have dinner with my family and enjoy one of the productions at the Shakespeare Theater or at Broadway in Chicago. Of course the holidays are coming, with all of the joy and merriment that time with family entails.
As daylight curtails, and we find ourselves wearing sweaters, we should be thankful for the little things we now can enjoy. Last year they even cancelled Halloween. Who could possibly forget the misery of the winter of 2020?
We’re all going to get through this. Let’s get through it together.
Accounting Solutions stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, PPP Loan Forgiveness, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
www.AccountingSolutionsLtd.com
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