US Senators Race Clock on $200B Covid Fraud, Indian-Owned Businesses at Stake

At a Senate hearing on Small Business and Entrepreneurship on Wednesday (local time), Senator Joni Ernst said weak oversight and rushed disbursement of Covid relief funds created opportunities for abuse.

"Swindlers" may have taken "$200 billion" from taxpayers, she said, adding that "in just a little over a month, many of the swindlers who took advantage of some SBA Covid relief programs can no longer be prosecuted".

The hearing focused on the Restaurant Revitalization Fund (RRF) and the Shuttered Venue Operators Grant (SVOG), both created to support businesses hit by lockdowns. Indian Americans are heavily represented in the US restaurant, hospitality, and small retail sectors -- industries that relied significantly on such relief.

William Kirk, Inspector General of the US Small Business Administration (SBA), told lawmakers there is "no possible way" his office can investigate all outstanding cases before statutes of limitation expire.

"I will acknowledge that the work of the SBA OIG to this point in the RRF and SVOG investigations has been underwhelming," Kirk said. He described having only "a handful of investigations" underway and called that "an embarrassing number".

If deadlines are missed, he warned that ongoing work could collapse. "Indeed, it's my understanding that that work would be for nought."

Ernst is pushing legislation to extend the limitation period to ten years, matching deadlines already in place for other Covid loan programmes. The bill has passed the House and is pending in the Senate.

Ken Dieffenbach, Executive Director of the Pandemic Response Accountability Committee (PRAC), said additional time would yield results.

"With additional time, we will identify more bad actors and more losses, which will lead to more convictions and more arrests, yes," he said.

Dieffenbach outlined a new "artificial intelligence-enabled fraud prevention engine" that can detect "anomalies, trends, patterns and hidden connections" in applications before funds are paid out. "Had our fraud prevention engine been in existence in March of 2020," he said, "Pre-award vetting would have flagged at least tens of billions of dollars in fraudulent claims".

For many legitimate small business owners -- including Indian-origin restaurateurs and motel operators who depended on relief to survive lockdowns -- the debate now centres on accountability without creating fresh compliance burdens.

The Paycheck Protection Program and Economic Injury Disaster Loan programme disbursed more than $1 trillion in emergency aid during the pandemic.

While the funds helped avert mass closures, federal watchdogs have since described the relief effort as vulnerable to identity theft, synthetic identities, and organised fraud schemes.

PRAC was established by Congress to coordinate oversight across pandemic programmes. Inspectors general have continued pursuing "pay-and-chase" investigations, seeking to recover funds years after they were disbursed.

- IANS