Davids Works to Root Out Fraudulent Pandemic Relief Loans

May 11, 2022

Today, Representative Sharice Davids voted to ensure law enforcement agencies have the time and resources to fully investigate fraud cases involving pandemic relief programs. A member of the House Small Business Committee, Davids voted to advance two bipartisan bills that extend the statute of limitations on certain fraud cases related to the Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loan (EIDL) program.

"We need to hold fraudsters accountable for taking relief away from small business owners who desperately needed it and taking advantage of the pandemic for personal gain," said Davids. "These bipartisan bills will provide federal, state, and local law enforcement agencies with ample time to identify and prosecute fraud. We can't let up on our oversight of taxpayer dollars and I'll continue to target waste and abuse in the system where possible."

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Rep. Davids in the House Small Business Committee markup hearing.

SBA's Office of Inspector General has identified 70,835 loans totaling over $4.6 billion in potentially fraudulent PPP loans. Recent reports have found that financial technology (fintech) companies and their lending partners facilitated only 15 percent of overall PPP loans—but handled 75 percent of the loans connected to fraud by the Department of Justice.

The PPP and Bank Fraud Enforcement Harmonization Act would establish a 10-year statute of limitations for all PPP fraud, whether it came from fintech lenders or banks. Currently, fintech originated loans are prosecuted as wire fraud, which carries only a 5-year statute of limitations—as opposed to bank fraud, which carries 10 years. This discrepancy in the statute of limitations has been identified as one of the biggest challenges in prosecuting PPP fraud and is addressed by this Davids-backed bipartisan bill.

The second bill, the COVID-19 EIDL Fraud Statute of Limitations Act of 2022, would establish a 10-year statute of limitations for fraud cases involving EIDL loans, EIDL Advances, and Targeted EIDL Advances. When nearly $1 million in fraudulent EIDL loans were taken out in the names of Johnson County residents in 2021, Davids called on SBA to investigate these claims and continues to press SBA's Inspector General to combat identity theft in the program.

Additionally, Davids' office continues their commitment to assisting constituents who have experienced issues with fraudulent loans and encourage them to call her district office at (913) 766-3993 if they need assistance reporting these claims.