August 11, 2020

Hon. Hannibal “Mike” Ware
Inspector General
Office of the Inspector General
U.S. Small Business Administration
409 3rd Street, S.W., Suite 7150
Washington, DC 20416

Dear Inspector General Ware,

We are writing your office to respectfully request an investigation into the Trump administration’s management of the Small Business Administration’s Paycheck Protection Program, which has distributed hundreds of billions of dollars in taxpayer money with little oversight or accountability.  News reports have raised serious concerns about waste, fraud and abuse in the program. Indeed, the U.S. Department of Justice has recently opened investigations into companies over fraud allegations. There are reports that many of the companies indicated there were saving zero jobs, despite a condition for the aid was to keep workers on payroll. There are also reports that the limited public data is rife with errors.

Oversight is more difficult because of the Trump administration’s repeated stonewalling of legitimate inquiries about how federal aid is being spent. In addition to these known problems, there are significant glaring holes in the administration’s disclosure that have received little scrutiny.

No Data Since July 6

On July 6, the Trump administration provided a limited data disclosure on certain PPP loans over $150,000. This only represented 14% of loan recipients at the time. A review of this data showed the failure of these funds to go to those intended. Wealthy, well-connected corporations received funds they did not need as actual small businesses, particularly Black-owned and other minority-owned enterprises, were shut out almost entirely.

However, one gaping hole in this disclosure is that the administration has not released any subsequent loan information, despite the program accepting applications for another entire month, until August 8.

Loan Forgiveness

Another area that warrants more scrutiny is over the issue of loan forgiveness. Loans under the PPP largely rely on self-certifications that companies did the right thing and asks banks to verify the documentation rather than federal officials. And even at this late date, the process surrounding the Trump administration’s forgiveness of loans is still evolving, and there is no guarantee what, if any, company level data on forgiveness will be made public.

Given Waste & Fraud Allegations, Questions Remain

Given the potential fraud that is already being investigated in this program, it is imperative the administration provide more transparency and disclosure, not less. We ask that your office look into the following areas of inquiry:

  • Which companies received PPP funds since July 6, 2020 — and for how much? As loans have continued to flow through the PPP, the SBA has not released any new data on the program’s recipients since July 6th. We need information about who got money in the interim, how much they received, and how the funds were used.
  • Which loans are approved for forgiveness? Forgiveness of these loans hinges on how companies spent the money. Information on which loans are forgiven and how much of each loan is forgiven will provide invaluable data on how much this program will cost taxpayers and how companies spent their taxpayer-backed funds
  • How is loan forgiveness being decided? In a program rife with bias and favoritism, it is essential that the process by which recipients’ PPP loans are forgiven is clear, fair, and transparent to the public in order to ensure that the process is free of ethics violations and corruption.
  • How exactly were funds distributed through the PPP used? Reports and analyses have shown that many recipients of the fund used funds for purposes outside of the program’s original intent. How much of each company’s loans was used to fund payroll, utilities, rent, and other such business expenses? In order to understand the program’s effectiveness and ensure continued success of further relief packages, we need itemized information on exactly how businesses utilized their assistance thus far.

The American public has a right to know how the CARES Act’s historic amount of taxpayer dollars was spent. With billions of dollars funneling through the Paycheck Protection Program, there is need for a comprehensive audit to ensure that recipients acquired and used funds properly, and that forgiveness is not automatically awarded to individuals who have abused, defrauded, or otherwise misused the program.

Sincerely,

Kyle Herrig, President
Accountable.US

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