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Report: Gov’t agency told workers to not use the word ‘fraud’ for COVID relief applications

Money Mix (Pictures of Money/Flickr)
November 20, 2020

“Fraud” is a word workers are reportedly being told to avoid using if they spot questionable applications as part of the Small Business Administration’s $212 billion COVID-19 Economic Injury Disaster Loan program for pandemic relief.

Bloomberg reported that workers reviewing requests for the U.S. agency have been told by managers to substitute the word “fraud” with other words like “duplicate,” said four people who received the directions and asked to remain anonymous. The individuals added that the substitute words

The group said the alternative terms varied by teams but could be misleading.

Some supervisors at the agency reportedly told employees that the change was implemented in an effort to avoid being targeted by public records requests.

The instructions could make it more difficult for the Small Business Administration to estimate the amount of misuse that occurred under the COVID-19 relief program.

This decision comes in the wake of numerous fraud claims connected to the program. According to Bloomberg, the program, meant to help struggling small-business owners, was doling out $10,000 grants to pretty much anyone who asked. The five-minute online application only required applicants to say they owned a business that employed at least 10 people.

“I’ve never seen anything like it,” said an SBA customer-service representative who spoke on the condition of anonymity to protect her job. “I don’t think they had any processes in place. They just sent the money out.”

Democrat Judy Chu, a California Representative who leads the House Small Business Committee’s oversight panel, plans to hold hearings in an effort to identify any grants and loans given to scammers and get the taxpayer money returned.

The new directions haven’t deterred workers from marking applications as needing additional scrutiny, but the lack of uniform language has caused confusion among employees trying to relay concerns to their colleagues, the group said.

The Small Business Administration denied the group’s claims, asserting the agency has not advised its workers to avoid labeling suspicious applications as fraudulent.

“SBA strongly denies that staff processing EIDL loans were discouraged from identifying suspected fraud,” Michelle Dawi, an agency spokeswoman, said in an emailed statement according to Bloomberg. “If red flags are triggered through system controls or manual review, actions are taken to put the loan application on hold so the agency can conduct additional due diligence. [The Small Business Administration] takes fraud very seriously and is partnering with its Office of Inspector General and other government agencies to investigate and ensure fraud is prosecuted.”