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Rep. Josh Gottheimer Leads Bipartisan Effort Focused on Investigating PPP Loan Fraud

Over the past six months, millions of small businesses have received financial assistance through government programs. But growing concerns about fraudulent use of these funds during the COVID-19 pandemic led New Jersey Congressman Josh Gottheimer to take action.

Gottheimer is leading a bipartisan Congressional group seeking to provide the U.S. Small Business Administration (SBA) and U.S. Department of the Treasury with additional support to combat COVID-19-related loan fraud.

Gottheimer, along with 22 other members of Congress, signed a letter sent to Treasury and SBA asking how Congress could provide tools through appropriations and statutory authority as it relates to investigating fraud related to the Paycheck Protection Program (PPP) and other federal aid programs. The letter was written to SBA Inspector General Hannibal Ware and Treasury Acting Inspector General Richard Delmar. 

Funding Supports Millions of Small Businesses

The Coronavirus Aid, Relief and Economic Security (CARES) Act provided support to millions of businesses throughout the United States. Through the CARES Act, the SBA was allowed to use funds from the Disaster Assistance Program to issue Economic Injury Disaster Loans (EIDL) and created the Economic Injury Disaster Loan Advance (EIDL Advance) program and the PPP.

Recipients were permitted to use these funds for payroll, rent and other related operational expenses. It was seen as lifeline for businesses struggling to stay afloat as weeks turned into months of service limitations and shutdowns.

Seek to Support SBA OIG

The office charged with leading PPP investigations has received only limited CARES Act funding for what are expected to be decades-long investigations. The SBA Office of the Inspector General (OIG) has 111 full-time employees, something that has not changed in almost 20 years.

“It is unrealistic to expect this limited workforce to be able to thoroughly investigate more than a small fraction of the possible fraud and negligence in the programs under their purview,” the Members wrote in the letter. “Therefore, we request that you provide, in writing as soon as possible, an accounting of what tools and resources the SBA OIG may still require to achieve their mission and that Congress may provide, including using both appropriations and statutory authority.”

Long-term Oversight Needed

In response to the letter, Ware said CARES Act funds provided to the agency will be used to increase staffing for both the auditing and investigations divisions, but this funding only lasts through 2024.

But investigations will need to be conducted well beyond 2024, as the statute of limitations for fraud will last for decades.

“Hundreds of billions of dollars in loans will perform in SBA’s portfolios for up to 30 years, and the statute of limitations for fraud associated with CARES Act lending and programs will allow for prosecutions for more than a decade into the future,” said Ware.

EIDL Fraud

Another concern of the group was fraud related to EIDL funding.

In their letter, they referred to the SBA Inspector General Report Number 20-16, published on July 28, 2020, that stated that there are “strong indicators of widespread potential fraud” within the EIDL program.

“We request that you provide, in writing as soon as possible, an accounting of what tools and resources the SBA OIG may still require to achieve their mission and that Congress may provide, including using both appropriations and statutory authority,” wrote the group. “We urge you to utilize all tools available to assist our local communities, ensure that these programs are helping the small businesses as intended, and protect the American taxpayer.”

Daily Data

As of Oct. 9, the cumulative number of coronavirus cases in New Jersey reached 212,013 with 881 new cases and six new deaths were reported over the weekend, bringing that total to 14,376. The state probable death is 1,788, bringing the overall total to 16,164.

State officials noted 11 deaths occurred in the last 24 hours of reporting that have not yet been lab confirmed.  

Of the total confirmed deaths in North Jersey, Essex County has the most with 1,899, followed by Bergen at 1,809, Hudson with 1,359, Passaic at 1,114, Morris at 687, Sussex at 161 and Warren with 158.

In regards to probable deaths, Bergen has 242, Essex has 229, Hudson has 159, Morris at 144, Passaic at 141, Sussex has 36 and Warren has 13.

State Testing 

The daily rate of infections from those tested as of Oct. 4 was 3.7%. By region, the North has a rate of 2.1%, Central at 2.9% and the South at 2.6%. The state is no longer using serology tests as health officials explained those results show a past presence of the disease as well as a current one. 

As for the rate of transmission, decreasing to 1.19 from 1.22 the day before. Officials have continually cited transmission rate and positivity rate as health data they rely on to track how the coronavirus is being contained in New Jersey, guiding them in determining when restrictions have to be tightened or lifted.

Officials reported 666 patients are hospitalized; by region, there were 291 in the North, 194 in the Central and 181 in the South.

Of those hospitalized, 150 are in intensive care units and 53 on ventilators, while 52 patients were discharged.

Bergen Tops County Count

Bergen has the most cumulative cases in the state with 23,031, followed by Essex at 21,608, Hudson at 21,079, Middlesex at 20,226, Passaic at 19,484, Union at 18,109, Ocean at 14,923, Monmouth at 12,661, Camden at 10,374, Mercer at 8,795, Morris at 8,092, Burlington at 7,484, Somerset at 5,980, Gloucester at 4,915, Atlantic at 4,387, Cumberland at 3,851, Sussex at 1,566, Warren at 1,472, Hunterdon at 1,434, Salem at 1,111 and Cape May at 1,068.

Another 363 cases are still under investigation to determine where the person resides.

In regards to cases related to in-school transmissions, a total of 16 outbreaks involving 58 cases have been reported in nine of the 21 counties in the Garden State. For North Jersey, Bergen County has two confirmed outbreaks with five cases, Passaic County has one confirmed outbreak with nine cases, and Sussex County has one confirmed outbreak with two cases. 

Long-term Care Facilities

Health officials noted 146 long-term care facilities are currently reporting at least one case of COVID-19, accounting for a total of 5,619 of the cases, broken down between 3,342 residents and 2,277 staff. 

Cumulatively, 744 long-term care facilities reported a case infecting 25,297 residents and 13,746 staff, for a total of 39,043 cases. 

The state’s official death total will now be reported as those that are lab confirmed, sits at 7,176 on Oct. 9. The facilities are reporting to the state 6,797 residents deaths and 121 staff deaths. 

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