Scheduled commitments. Before we begin we will take a moment to say the opening pledge. We will stand for the pledge. And. [inaudible] we know there are businesses that put food on the table and provide jobs for americans. We know that it is scary out there andnd that it is a challee to run a Small Business. Thank you and protection. May these businesses thrive. We are grateful as a free country those that protect and have protected and well protected. We ask the leaders to do the right thing as we continue to make this the greatest country, the greatest country to do great things around the world. We assess in your name amen. Please join me in the pledge of allegiance. I pledge allegiance to the flag of the United States of america and to the republic for which it stands one nation under god indivisible with liberty and justice for all. Good afternoon everyone. I now call the committee. Without objection the chair is authorized at any time. I now recognize myself or my opening statement. Welcome to todays hearing which will focus on two reports examining fraud during the covid19 pandemic. These reports went from the sbas office of Inspector General in the other from the Small Business administration. The sba Inspector General report concludes they dispersed more than 200 billion and potentially fraudulent loans through pandemic Relief Programs while the sba reported the fraud is closer to 36 billion. This large discrepancy is more than 160 billion certainly demands answers. During the drastically different figures and the lack of inadequate plan to recoup the stolen taxpayer funds we invited the administrator to join us here today. As you can see by her empty seat, she declined the offer. Youu would think that a report from a nonpartisan watch dog claiming hundreds of billions of ondollars were dispersed to criminals through the fda would warn her showing up to the committee today that t obviously is not the case for administer guzman. During the pandemic they oversell an unprecedented amount of lending. Understanding getting money out quickly could lead too higher levels of fraud. Nothing was ever imagined. Estimating one and five loans. The fda is not up to the task. American people needed their help there most and must have tf our minds as the agency looks to take on additional responsibilities. The American People need accountability and transparency. If they were as high as the fdas they would take all actions possible to get this money back. Rt it belongs to them. It does not appear that they are taking every action possible stolen from the taxpayers. We could not write it off for the bottom line. FoInspector General thank you fr taking time to join us today. We look forward to your examination of these reports and their discrepancies. Also, the chair is not here, but they are there. They are independent of you in your office but on behalf of main street america, it is our responsibility to hear about your findings and work towards a solution to combat fraud moving forward. We need to understand what went wrong, how to fix these issues and what we can do to recover these dollars which we must be get to go forward and recover what we can. We stand ready to work to ensure they are the oversight metrics to report their past mistakes m and restore integrity in the agency. I would like to take note that they provide a formal letter declining our invitation in which they accuse the oig of significantly overestimating the fraud and misleading the public. Misleading the public they say. I ask unanimous consent for that letter as well as the two reports we be discussing today. Enteredor into the record. Without objection it is so ordered. I also ask a unanimous consent to waive the chairman of the select subcommittee on the coronavirus pandemic. For the purpose of asking questions and his hearing. Without objection, that will be so ordered. I will yield. Thank you. Welcomeha back. First let me thank you. Thank you to the officers that work for the Inspector General. Extremely challenging in the office as well. The agency executed for the executor of lending for 14 days. To help Small Businesses in the pandemic. It is important to note the agencys effortsn on american Small Business. They took office for Small Businesses whoat have created js at a rapid pace. Paving the way for some of the lowest unemployment rates in recent time and weve got more good news yesterday of final inflation dropped to its lowest rate since 2021 to 3 . Despite the successes, any program of the magnitude of sba covid measures is bound to encounter serious issues. They have been working aroundtheclock issuing reports and launching an investigation to compact the potential fraud in the pandemic Relief Program. Turning to your report, your office estimates that there is 200 billion and potentially fraudulentnt covid loans which s unsettling. The sba issued a report the same dayy they found that 36 billion of the 1. 2 trillion and pandemic relief was likely obtained fraudulently. Further, 86 of the fraud occurred in the first nine months of the pandemic under the Trump Administration. The findings in this report are likely different and quite frankly confusing. I understand that there would be discrepancies in t the reportin, buteg i am concerned over the degree to which the estimates vary. If our committee is going to conduct proper oversight of the sba, we need to be assured that the reports we are receiving whether from the oig or sba are measured and accurate. I also look forward to continuing to work with the gao on the findings as a nonpartisan entity. It is our duty to drill down to ensure we are prepared in the event of another global catastrophe. To date, your oversight and investigative work has resulted in over 1000, over 800 arrests and nearly 550 convictions. 30 billion was seized or returned. Your efforts are to be commended more work needs to be done to hold wrongdoers accountable and recover taxpayer dollars. I sponsor Bipartisan Legislation to extend the statute of limitations for fraud in the idle programs which contain law. This sent a strong message that unscrupulous behavior will not be tolerated and those that committed fraud will be held accountable in the years to come to capitalize on these two new laws, i understand you will need the full fy 2024 budget requestn unfortunately, republicans in Congress Want to pay or funding back to 2022 levels. The most recent proposal provides 32 million for the oig to recover fraudulent funds. I appreciate your oversight and investigative work. That is why i am supporting the increase funding request for your office. I am fully committed to working with my colleagues to oppose to any shortsighted cutbacks. With that i said, i fully expect he will work closely to further refine this data and help close the gap between the two estimates. In closing i would like to request that the sba respond to your invitation to testify before the committees today and their response to the oig white paper being entered into the record. An mr. Chairman. Thank you. I yield back. Thank you. Introducing our witnesses. Our first witness Isabella Guzman did not come today. She chose not to come. She was asked more than once to attend to defend her position. She chose not to do that. We have an empty seat for her. Secondly, the honorable mike where is here. Holding a degree in accounting in may 2018 following the confirmation by the u. S. Senate. Sworn in by the Inspector General. Private to his appointment the Inspector General. He joined the department of interior Virgin Islands o field office and later became the field office supervisor. Laterr moving the office of Inspector General and served asa Deputy Assistant general. Ntin his current role as inspecr general responsible for the independent oversight of the Small Business operations which normally encompasses more than 100 billion in guaranteed loans and federal contracting dollars. Recently testify before the committee in april and i would like to welcome him back. Thank you for joining the committee. Im looking forward to our conversation. Thank you. Thank you for inviting me to testify today and your continued support by the office of Inspector General. A role in the nation presented an unprecedented challenge. The benefit of the American People. I am more proud of the accomplishments of the hardworking men and women of my office and detecting, deterring and combating fraud while also keeping both the congress and the administrator currently informed. The onset of pandemic relief that sba would face a delicate balancing act of preventing widespread fraud while ensuring timely disbursement of relief funds to americans in immediate need. The biggest concern for our offices quick delivery of capital to qualifying Small Businesses without first establishing internal control necessary to decrease the role of fraud. This is why we issued two reports prior to the first pp loan stressing the importance of the program controlling negating the risk of fraud. We proactively recommended internal control members to sba on policy members in real time to address easy money that created the golden opportunity for even otherwise lawabiding citizens to commit fraud. To date we have issued 33 pandemic related reports with dozens of recommendations and provided about 100 congressional briefings. Both to supply corrective action and strengthen the environment. Over the course of the pandemic they dispersed approximately 1. 2 trillion of covid19 item and ppe funds. Using our investigative casework prior reporting advanced Data Analytics and additional review procedures, we estimate sba disbursed more than 200 billion and potentially fraudulent loans. This estimate represents approximately 17 of dispersed funds in those programs. In conducting the fraud landscape review, our office unleash the power of Data Analytics in our function. Fueled by the expertise and experience of our criminal investigators, auditors and analysts, the report identifies 11 fraud indicators that we used to signal potential fraud. I have offered additional insights on the various fraud indicators in the report on my written statement. Reducing potential false positives by using link analysis. This allowed us to prioritize our focus on loan clusters highly suspected of being fraudulent. Our auditors analysts in investigators whittled down numbers by conducting additional reviews using sampling and professional judgment. Taken intoex consideration Prior Experience and investigative casework across the entire lawenforcement spectrum. The transparency afforded and a wellfounded recommendation serve to medicate fraud, in fact, sba made significant progress to reduce fraud risk and prevent further losses in its pandemic programs. We look forward to continuing to partner with sba to combat fraud within these programs. Our collaboration has resulted in about 30 billion in covid19 idle and ppe funds being seized or returned. With our Law Enforcement partners we have taken the fraud directly to the doorstep of wrongdoers. Our investigative work has resulted in over 1000 indictments 800 arrests and 550 convictions this year. It is important to note that we are not alone in the fight. Every department of Justice National strike force in multiple u. S. Attorney task forces across the country. We continue to work handinhand with the fbi, secret service irs criminal investigations, Homeland Security investigations United States postal service, tiktok and oig too many to mention. It is also important to note that our oversight capacity is dependent on the availability of sufficient budgetary resources to continue addressing the fraud within sba pandemic fraud programs. Absent the total budgetary resources requested for us in the 2024 budget, we will not have a sufficient operating budget to combat the fraud within the programs or to provide trust and effective oversight over its programs. Critically, we would not have a sufficient operating budget to capitalize on the new laws you wisely passed last year extended in the statute of limitations for 10 years of fraud in the ppe and idle program. The nationan once again can depd on us to provide independent objective and timely oversight of sba. Thank you for the opportunity to speak to you today. I am happy to answer any questions you may have for me. Thank you very much. You know the drill when the light turns red youre five minutes is up, okay. We will now move to the member questions under the five minute rule. I recognizeze myself for five minutes. Before i get started i want to reiterate how disappointed i am that the administrator did not show up today. This is a big deal. I would assume she would have an army of her staff here to coming to defend her work in the sba as a whole. Today, we are having this hearing with her seat as being empty. Shortly after you release your fraud report they released a statement that expressed its ceconcern that the oig approach contain serious laws that significantly overestimated fraud. I do not know if i ever remember a time and agency ever accused their nonpartisan watchdog of misleading the American People. And the congressional committees that are charged with their oversight. T question, did you and all the employees within your office put together this report to lie about what occurred within the pandemic programs . Is that the goal . Absolutely not. Our goal is to keep, to be independent and keep an objective eye so that you can properly oversee these programs along with us. I think we have done that. I am super confident in this report. The two total fraud numbers that are presented in these reports are drastically different or both unacceptable. The sba claims that they had a more diligent process that ruled out much of the fraud that your team has flagged. I have a few questions about these claims. Who has access to more data to more accurately find the levels of fraud. Oig or sba. Office of Inspector General. Your review did not start at 200 billion. What was the initial value of the potential fraud you looked at before you got it down to 200 billion. 650 billion. Has your office ever communicated that starting figure to the sba . We have. Reporting from outside news organizations researchers claimed the levels were much higher than even your number. Your reports as a 200 billion figure is conservative. Do you think it is possible that you are underestimating the fraud numbers rather than overestimating what the sba is claiming . I believe that datasets come available, that the number could be calibrated. It might go up, it might go hdown. We have a capital where we believe that fraud level is currently. We can bring the criminals and take advantage of the justice and give money back to the treasury department. Were not just talking about this, were talking about doing this. It will all be in vain if we do not get this money back for the American People. Just talk about it and dont deliver. So, we have seen deliberate actions that will make it harder to get back illegally obtained funds such as their decision not to collect on idle loans under ct100,000. Can you tell us what action the sba can take immediately that we get more of these illegally obtained funds return for the taxpayers. We have partnered handinhand with the agency to pull back the 30 billion that we have pulled back thus far. Even more in the shoot right now. We are just working through the agency to try to streamline the process to get that money back. The secret service is still working with us on our individual cases. Together we pull back 1 billion. Like i said, quite a bit still in the shoot. We will be working with them to do that as well. To the taxpayers, 100,000 is still a lot of money. Just to ignore it is another problem. I now recognize the ranking number for five minutes of questioning. Thank you, mr. Chairman. Mr. Ware, the sba asserts that 86 of the likely fraud originated in the first nine months of the pandemic under the Trump Administration. Your report include such detailed information on when the likely fraud occurred . What yes or no. No. They put internal controls in place to combat fraud almost immediately of them taking over . Yes. Do you agree that the vast majority of the fraud occurred in the first nine months of the pandemic yes or no . Yes. Did the antifraud controls that the Biden Administration put into place successfully reduce the potential for fraud, yes or no . Yes. Your approach puts a limit on potential fraud. You will weed out a number of loans that have a false positive. Yes or no. Will you then lower the estimate . Yes or no. It could go both ways. Its difficult for me to answer yes or no. Whatever the number is, thats the number. We are all here for the truth. So we can enact legislation for the shortcomings. Your estimate of potential fraud is much higher than the estimates. Sba express concerns that they contain serious flaws that significantly overestimate fraud in the public. How do you respond . I respond that sba is mistaken. I think they know that. Otoo many reasons for that. One, we are the independent watch dog. We have demonstrated that throughout the pandemic and long before that one of the original 12 offices of Inspector General. We have access to datasets that they did not have access to. Okay. They conducted a fourpart antifraud control framework to prevent and detect fraud. They identified 3. 4 million files totaling 400 billion potentially fraudulent and acumen lead review lowering this number to 36 billion and likely fraud. Did they conduct a manual review of each and every file lik