Transcripts For CSPAN2 Small 20240704 : vimarsana.com

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 like sba ildid. Sba manual review does not meet the qualifications of a manual review for lower office. Reported they had 7300 employees and contractors reviewing the files. Somewhere easy to clear. For example, a fake drivers license, sba could identify that loan is fraud quickly. I also understand that sba level of review will not be asking as the oig review which can take up to 250 days. The review hones in on the amount of likely fraud is opposed to reported, reporting on the upper limit of potential fraud. So, if there is a reason you issued this report on potential fraud given the significant discrepancies and you are saying that you have been working hand in hand up to this point where two reports show a clear discrepancy in terms of the numbers. S. So, rather work with them to come up with a better estimate for likely fraud, why did you wish you the report . This isor not just semantics. It is 650 billion. That is no assurance. Potentialwe fraud to us means we will open an investigation on every single onef of them thate have identified. If we have the resources. Okay. That is the point. If you have the resources. Going forward, 10 years. The resources we gave you through the law we enacted as a result of the work that we did. Based on the budget that the republicans are going to pass, that are calling for fiscal year 2022 levels, definitely you will not have the resource, would you. If i do not have my 24 budget. Thank you. I yield back. Next i now recognize the representative from the great state of missouri for five minutes. Thanknk you. Thank you for being here today. Appreciate your hard work. And the integrity of that work. I have a quick question for you here with regards to, the chairman talked a little bit ago about the 100,000 level of sba not going underneath that. Are you going after that it all . Are you identifying those folks yourself . If they show up as a fraudulent actor for our office, they go through the same triage process in terms of our prioritization strategy. They say it is not costeffective to do this. They dont have the manpower to do this. Is there any thoughts of handling this with the Collection Agency . Our position on it in the pp p report and the idle report is they have not done a sufficient study to determine whether or not it is cost effective. Well, okay, we need to go back to the sba, ms. Guzman who conveniently is not here today to be able to answer a question. If they do not think its costeffective for them, handed to a Collection Agency and the irs to also be a backup to get those funds. Do you not . Do you have an idea roughly what the recoverable amount would be in that 100,000 range . That would be very difficult for me to provide. Thank you for that. In your report you say certain lenders added to the fraud list by prioritizing to the applicant eligibility, can you tell me who though certain lenders are . I could definitely get back to you on the names of the certain lenders. Certain industry. If i am not mistaken they were the main culprit here, were they not . In many instances, yes. I know that they are getting ready to expand some of the programs to allow them to participate. Is that correct . Are you working with them to make sure that the folks that are our problem children here will not be problem children in the new program. I am on record with sba on this matter. In ensuring that they have the same rules that properly regulate more traditional commission to apply here as well. That is all we are after. It does not matter to me. It matters they are on a level Playing Field and the environment is set correctly to avoid what happened. Whenever they are allowing the folks that are bad actors in the Previous Program to participate in it again. It makes no sense to me. Another question for you here with regards to the money that is called back. Does that money go to the treasury . For the idle program, that money went back to sba. Their account within the treasury. For ppp a lot of that money went to the banks. It goes back to the bank says lenders. Are you tracking those dollars . We are. Are they all going back to where they need to go. Yes. That part is tracked. We have others and we are still working with the agency on creating a better more efficient way to track the money. You are telling me that you ondont have all the money tracd yet . The agency does not have all the money tracked. We know of money still in the pipeline. Money and where to pull it back. We issued a report on this on giving them some recommendations and how better to do this. This is my concern. We have 30 billion running around that we dont know where its at. We know where it is. And i look back at one person real quick . [laughter]so allui right. Yes, we know. Okay. Luall right. I have one more question before time runs out here. In the sba data as of may 2223 report it shows 1. 6 totaling 56 are passed do, delinquent or in liquidation totaling 114 billion. Are you aware of that number . Yes. U a number the agency provided to us. 114 billion more in these idle programs that while not being fraudulent is in really big trouble. I am not certain about that. I am just certain about the number. Liquidation, to me, that means we have some problems there some fraudulent problems. They are going to people that either cant pay it back or wont pay it back. Right. With that i yield back. Thank you, mr. Chairman. I never represent the representative from the great state of kentucky for five minutes. Thank you. Thank you for being here. I understand you have some family in the great commonwealth of kentucky. Thank you for being here today. Thank you for the incredibly important work that your office carries out to protect Small Business administration and in this case taxpayer dollars. We are talking about fraud that happened during the pandemic. Fraud and pandemic Relief Programs. I am glad youve had an opportunity to talk about what works and how we can recover fraudulent loans issued during the pandemic. Nobody on this committee wants money to go out to fraudulent businesses or fraudulent members. I want to take a second to set the stage and remember what it was like to get the pandemic started. We were putting together things and two weeks and saying we have to get money out to these businesses. I know the businesses in my Community Many a film are still here today. Between the Biden Administration, they administered over a trillion dollar of loans. Only a small percentage of the money went to fraudulent buyers. According to your analysis a vast majority of it went to people that needed it. Just this week i met with headliners in my office as they were appear on another issue. They would not be here today if it were not for a Successful Program like this that enabled this business to be here. These Program Saved our economy and they saved the businesses in our communities that we cherish. Theree are some bad actors that took advantage of this. Weve got to make sure that we go after them. As you have already testified today, the vast majority of the fraud took place in the first nine months, i will point this out, of 2020. March of 2020 and january 2021. Who was the Small Business administrator at that time . Well, it was it was not ms. Guzman, was it . [inaudible] i guess that there is an empty seat here for them, too. Because they are not here to answer why all the fraud took place under their watch. And, so, i am glad you point that out. The fbi analyzed the data and reported 74 of covid idle borrowers already made a payment and once the 30 month deferral. Lapsed they expected 85 of borrowers will have made a payment. This contradicts your findings worth of covid fraudulent. Why did you not take consideration which wouldve lowered it in the idle program . Let me say two things about that. That data, they gave it to us probably two days prior. And then they came with the other information after. The payment data for us was not a factor for idle. It is a factor for ppp. Where those loans were intended to be forgiven and basically become a threat. If you dont come back for forgiveness, you dont try to repay, clearly, that is an indicator. We are arresting people almost daily that are making payments. Our criminal investigated across the nation are telling us that fraudulent actors do repay those loans. We know why. They could be businessmen that fraud is there thing. Right. They are conducting business in paying loans back never to be found. Also the plea agreements. Trying to show good faith to u. S. Attorneys and Everything Else. People pay their loans. With the publicity that this is getting, a whole government approach to this, people pay. Im glad you bring that up. We want to go after the fraudulent actors. We want to make sure we are getting this money back because it was used inappropriately. Taking advantage during a time that we needed it. The vast majority of the fraud took place during the Trump Administration. 2021 administratorru guzman in e Biden Administration reinstated the longtime fraud controls and new safeguards. Flagging this is fraudulent. Can you take a moment to just let us know, are these security measures, are they being effective in our they combating fraudulent borrowing since their implementation . To what extent, we are still reviewing. Awe have reviews that are comig to an end real shortly on exactly how to control. More importantly, if the controls promise were indeed implemented as they promised. Thank you. I appreciate that. I appreciate you being here. This is a community that works together. I hope your presence here is not an attack on the administrator. I now recognize the representative from the great state of pennsylvania for five minutes. Mr. Inspector general, great to be with you. Mr. Chairman, thank you. We are not really trying to assign blame here over on this side of the aisle. We would like to try to find some answers and solutions. You know, the numbers that are being offered by my colleagues are not just accurate. I mean, the idle was the primary loss from fraud. The ppp as stated was her heroic savior of our economy. 70 of the ppp went out under the Previous Administration, slightly 30 under the other. There is a lot of blame to go around. My goodness, it is just a shame that that is the majority of the time being spent. G it does not, it does not dismiss the fact that the administrator under this terrible situation, okay, where fraud exists is not here. I know damn well if i was the administrator if this was the case, i would be sitting there trying to help solve the problem and explain it to the American People about how this occurred and where things are and what is being done to create, to gain the collections. What is being done to those that committed the fraud. Whether its institutions, republicans or democrats. That is why, mr. Inspector general, we appreciate you being here in your forthrightness and your honesty and your courage. In moving this to help solve some of these issues. So, let me ask you this, sir, did you work with the banks and the lending institutions to gain the information to figure out which buckets the 200 billion estimated fraud came from . In some instances, yes. We were able to conduct reviews to validate our findings. The banks were obviously cooperative. Even though i did not know the customer, you probably worked that data as well. The banks were incredible partners w to us throughout the oversight of these programs. As a matter of fact, within the first month, the banks had given me 5000 fraud referrals. Out of the first month. Did you know the customer was less fraud, lack thereof. Yes, i did. Quickly identify, not only identify, basically gift wrap cases, at least the evidence of the cases for us. Probably why the idle was a heck of a lot higher. 135 billion estimate out of i think 300. Meanwhile, ppp was 880 billion. We still had a lot of big numbers. 60 billion or so of potential fraud. Well, that is part of it for sure. Different rules, different requirements. You know, it was an issue. Working in cooperation with banks knowing the customers showing a tremendous level, less percentagess of fraud. What about one hearing 85 fraud that came there came from five players. Have those players been arrested i cannot speak on the ongoing investigations. Someme arrests have been mad. Some have been brought to justice. The arrests that have been made are public. I cannot specify in this forum. Okay. Thank you. That is fine. So, what would you like to see us help you with in order, in order to claw back and provide resources to you as we are working to bring these fraudulent people to justice. As well, i would like to ask, can you provide the data . It was a huge discrepancy. That is another reason why the administrator should be here. 100 billion in difference here. There are a couple things to point out. The administrator and i are normally in lockstep. We have worked together, we have worked together very, very closely. I actually was surprised about the report, about the report or that those words would be used. We meet every other week. We discuss these things. We are very transparent and open with each other. We can have heated discussions. Probably a little perplexed that they so quickly refuted your findings. Caught a little off guard. We obviously need full support for our budget. But there is one other thing. It is access to already available government data. I will call you on that and we will discuss it if its all right with you. I yield back, mr. Chairman. I now recognize the representative from the great state of california for five minutes. I have worked with administratorr guzman on numeros occasions at various events and i have known her to be nothing but conscientious when invited to meetings. I certainly know that had she been a apprised of some alternae date she would have been here as she has been at your numerous meetings during this entire time. In fact, i would like to submit for the record the letter to chairman Roger Williams which says that administrator guzman was unable to testify due to previously scheduled commitments that required her to be outside of washington, d. C. On this day. I wouldve hope that there would have been some consideration for her schedule. Let me say, mr. Ware, i do find it unsettling that your white paper estimate 200 billion in potential fraud in the sba report is so different with the 36 billion and likely fraud. I know that in the sbas letter they state that nearly 86 of all pandemic funding originated under the Previous Administration without important controls in place. That is why the biden and Harris Administration took action to strengthen antifraud such as checking the database and verifying tax income. A sba learned from the mistakes of the 2020 implementation of ppe and covid idle to design the two major Relief Programs that launched in 2021. Which both achieved estimated rates well below 1 . Mr. Ware, do you acknowledge that that is true . I cannot validate. We are conducting work right now on this. Our work will dictate what that is. I could tell you that they did implement many of our recommendations like do not pay. These are recommendations that we made in writing to everyone. And they have been a very willingn partner in doing this. Okay. I would also say found over 400 billion worth of further investigation. But, then, they continued beyond that initial automated screening with additional layers of review manna review in order to weed out false positives and that is where they got their 36 billion figure and they argued the estimate of 200 billion is so high because that focus only on initial automated screenings and therefore includes false positives. What do you say to that . I think that is absolutely false. I think it is important to be on record that the only investigation that sba can conduct are those conducted by the investigative arm of sba. We are the Law Enforcement authority. Fraud, this is our business, fighting fraud is what we do. We are fully equipped to opine on what the potential fraud in the program is. Sba does not have access to the data sets that we have access to, number one, number two, they do not sit in the middle of the fraud fighter across the nation. In every single state in the department of justice working with the task forces, working with all the different Law Enforcement entities. You do say that you periodically to eliminate false positives, correct . Which we did in this report. In your office reconcile the differences in order to provide the committee with a more consistent estimate of the likely fraud . I believe, honestly, with the reconciliation of those numbers, they will never be possible. They cannotto have access to mandated sets that we have access to further Law Enforcement purposes. Every loan number that i can provide to them under the ig act and under u. S. Attorneys rules Everything Else. That is what i can deal. However, more importantly, which isat why it was surprising thatt would be such an attack on a number, i think that we get a little sidetracked with the number we should be talking about the control environment that is necessary in any future Program Going forward and our ability to call back as much fund as we possibly can. If i found tay the number was 30 something billion but im sitting in the middle of the fight and that is not just a logical number. Up a big difference so that this be a administrator is saying that you are misleading the public and that they have a Due Diligence process to investigate the fraud. In other words you are incompetent is what shes saying and you are the Inspector General for the u. S. Small Business Administration so i just want you to tell me how do you respond when opening public and everyone is listening to your report is not that good. What do you say to that . I dont believe that. I meet with her often. And thats misleading the public. If someone tells me i misleading the public im not really going to like it because thats compromising my reputation. I get that but i still would give i her the benefit of the doubtt because i know her. If you know her and shes not sitting next to you and she is the administrator and we have 36 billion here in 200 billion over there and youre the guy that has the resources to find out what happened with the money. Can i say this . Tell me. I think the committee based econ my track record before this committee knows that i am an independent broker of the truth. Im not talking about that. Im talking about the relationship you have with the administration and the administrator is questioning your report publicly and on top of that shes not sitting next to you. What do you say to that . T ive spoken to be administered in the last week. And whether she said to you . Week have passionate disagreement on the subject. I am not misleading the public i can tell you that. But she said it that you are misleading the public. I am an independent broker of the truth. We know that but you said you had to work with her so for my constituents for his thing i dont quite get this the guy who is supposed to be the watchdog in doing his job and the lady who is supposed to be supervising and doesnt like his other something fishy here. What do you say to the public . Not only that she has you, as you said as the administratorr reached out to you to review the disparities. The question is how she asked you hey by the way how did she get to 201 we only got to 36 . We have had this discussion very often. What did she say to you that proves her case that you are wrong . Its evident they cant prove that case based on their response to the report. If the empirical evidence is not there then what else is there . Mine is based on fact and crosslink analysis and criminal investigation of work in based on technique. Its a rigor. So you forewarned her sir that so much money is going outy so fast andd it could bepened up for fraud and what did she say . She was not the administered or when i was there. And was pretty much the same argument. Fair. Im not sure the publicc knows that. 90 of the loans that were given by the sba 90 are valued at less than 100,000, right . Plus the 109 in the sba has decided not to put any effort into collecting the money that you believe was stolen the only word that we can say, 90 of those so explain to us we are going to recoup that money on some of the money less than 100,000 or any loan less than 100,000. I actually clarify this earlier. Sba asserts that any loan with a fraud coat on it are in not pursuing collections. If theres a fraud and the potential fraud assigned to the loan of 100,000 or less those do not go away. Thats what they have asserted. Okay so they are going after everyone. The last one thank you mr. Chairman. S. B. Has created an Ad Hoc Committee that sets their own investigation and they are saying they are interviewing 3000 people a day. Do they have the personnel to do that in a brief fashion . I now recognize mr. Thanedar michigan for five minutes. Thank you mr. Chair. Mr. Ware thanks for your work and your testimony here. Despite the fraud which is certainly concerning a spot on the Covid Relief Program are a collie has been nothing short of my remarkable. We were able to keep up businesses afloat. As a result the recovery has been faster than any other industry industrialized economy. However we must address concerns regarding fraud to prevent future abuse from transpiring. You know i represent the city of detroit in the 13th district and im enough to put her myself having started Small Businessesm and grown Small Businesses. That pandemic has been especially h hard on all businesses in my district. When i look at the fraud numbers where the 35 billion or 200 billion it worries me and bothers me that many of my Small Businesses in my district were denied any kind of assistance for one reason or another. While billions of dollars were defrauded some domestic and some overseas. Many of the genuine small hardworking entrepreneurs and Business Owners in my district suffered through because they could not qualify or get any assistance in some unfortunately lost their livelihood and businesses. So that is a concern of mine and it just doesnt seem fair for the hardworking Business People who could not get federal assistance like the bad actors that walked away with billions of dollars. My question to you is how can the Small Business administration restore confidence innf its operations d rebuild trust among the public following the massive fraud that happened during the pandemic particularly under the Trump Administration because it appears that the large majority ofd the fraud did happen under the Trump Administration. C so i tend to stay away from any discussion of administrationss. You are agreeing right that the majority of the fraud happened they make it happen the beginning when there were almost no controls and thats just what happened. Everything was calibrated to speed. Its a fact that it did happen during that period. It happen happened in that d period. Relative to the restoring of trust i think under administered or guzman working closely with our office i think that we have built an environment thats vastly superior to what it was a couple of years ago, right . I believe the administered or guzman and her team are moving toward that end however we have not fully tested the controls and more importantly because of my experience with sba whether or not the controls were actually followed and implemented, that would be the test. We have quite a bit of work on this. All right thank you you so much. I yield back. Now recognize senator alford. I yield 20 seconds to the gentlelady from florida ms. Salazar. She left,s sorry. Thank you mr. Chair and thank you Ranking Member for holding this important hearing today and thank you Inspector General ware for showing up and doing your job. The idle funds are stolen taxpayer dollars and that is money that was stolen from from the constituents of everyone here the people that we represent in my case a fourth Congressional District in the great state ofst missouri. Inspector Inspector General estimates the fraud is over 200 billion as youve said in the sba administrator says its somewhere in the neighborhood of 36 billion. This calls into question why the sba should increase their scope to oversee more lending especially with in november americans elected a House Majority because they were sick and tired of being confidence in blatant disregard shown by the biden harris ofin administratio. The core job of this committee to conduct oversight and we should all do our job. Its up to the administered to show up and do hers. To answer us and the answer to the American People. The title and that name card start with on or both. Theres nothing honorable about not showing up to do your job. So im going to ask her questions anyway. She needs to be here and hopefully wherever she is she will hear these questions. Administrator guzman their port you released estimates of proud toto be around 36 billion while they Inspector Generals report says its closer to 200 billion. What is the reason for the large discrepancy . Administrator guzman the Inspector Generals office has decades of experience and her subject Matter Expert when it comesst to fraud ways to misuse. Why is your team know better than the actual experts . These concerning numbers administrator guzman come during a time the sba wants to see more lending much contribute to the fraud but why should this committee be confident in sbas ability to act as a regulator for syntax . Thank you administrator guzman now moving on to you Inspector General ware and again thank you for showing up today. The President Trump caused this fraud, 200 billion worth of fraud . Not that i know of, no. Thank you very much because there seemed to be some in this room that wanted blamed trump for everything. He did not bring down the hindenburg and did not sink the titanic and did not cause this fraud. We are here to get to the bottom of it and get the money back to the taxpayers. Do you feel the same way . I feel i want to get the money back to the taxpayers and get to the bottom of fraud coming guess. In the house and senate came together to getot the money out the door best in the goal was to move fast but there was expected there would be some fraud but that was over three years ago and biden has taken minimal effort to recoup these funds in the last two years from what youve seen investigated has the sba enhanced any of their internal controls and any other efforts to mitigate reassess to getac that money back to the taxpayer taxpayers . As they have. My report goes down the list of the many things that they have done especially in response to the recommendations that we will resolve at the agency. Do you feel confident that we are moving toward a of this happen again that well have the tools in the regulatory tools in place to limit and mitigate fraud . Aye confident that we are moving in that direction. I had to be a focus on eliminating certification in these types of government programs. Inspector general again i thank you for being here today. Its very disappointing that someone that we pay to the federal taxpayers dollars at the u. S. Treasury cannot be haired answer questions in the primary oversight capacity that we have a help us all do better and to help americans and Small Businesses. Its just a shame and im very disappointed. Im very disgusted. Thank you and i yield back. I now recognize representative from the great state of washington for five minutes. Thank you mr. Chair thank you for being here and Inspector General ware but its great to have you back and id like to start by asking about the fraud landscape. Through your investigation did you find any trends about the size up the size of clemency determined to be potentially fraudulent like are we basically talking about mom and pop for rb talking about larger operations that receive more funding . The media ran the gambit. There was quite a bit of larger people that went after larger numbers. I dont know if they even existed in many cases so it would be larger than a momandpop shop. Nd did you consider the size of fraudulent loans which ones you are going to go after or other other factors that you determine to which allegations would be highly privatized. We have a prioritization framework within our office. It takes into account our hotline data and takes into account the task force we are working on but we can look at much smaller amounts particularly involved in an intricate criminal ring like poor example one plug in the report was an instance where we find 500 tons went to one place and we would know that they gave 13,000 here and 50 here and ordinarily we wouldnt go after them unless they were public issues violent criminals. We put them together. That analysis helps us with the data and it came start with one person explode to 800. Wow, thank you. The last time you last time youre here you spoke about the indicators ofof pandemic relief being durable so you can leave footprints in the stand sand. In your testimony talked about Automated Technology to aid in your best to get a fork into use Machine Learning and Artificial Intelligence by outliers in the portfolio investigation. Can youyo expand on the kind of data you were using to investigate cases of potential fraud and how your office utilizer continues to improve upon the use of certain Current Technology to go after fraudsters . Thank you for that. Or reuse of the most most right now and the only place we use Machine Learning is within the hotline. We went from 800 hotline complaints a year to 250,000. We needed to be able to get to the bottom of that and the Pandemic Response accountability helped us a great deal with that giving us bodies in them access to their data before we let able to stand up on her own. Thats how we were able to find common identifiers based on the casework we were using the loan file and everything like that overlaying them with the hotline information to be able to determine what is actionable most likely actionable. So thats one way in which we are doing it but in terms of Data Analytics the link analysis which helps to validate the numbers in this report because it deals with common fraud clusters that start maybe in one place and then we put in the next i program. It doesnt just start and stop with ppp. To be quite frank go find it in unemployment insurance. You find it in the other programs as well. Could you, so well thank you very much for being here. Im deeply appreciative of the work you are doing in your office and thank you very much. As a taxpayer and as a smallbusiness owner i sincerely erappreciate the leadership you are showing here so thank you very much. Mr. Chair i yield back. The gentlelady yields back and now ive represent recognize [inaudible] changes to the sba program in washington d. C. Its only a town when his lost billions of dollars in asp or more to expand so when you ask for more money when you cant handle the money you party received. Sorry. Only in town which asked for more money when you cant handle the money we are giving you now and do it with a straight face. That is crazy. One of the most disturbing stories to come out at the sba duringng covid is the tpp and scams that involve the barbie faced offy gamb. Everybody knows one of americae favorite dolls is barbie. We love barbie and beloved malibu barbie president ial barbie you can get dr. Barbie regarding than lawyer barbie but it seems men have hijacked barbie and i present to you swindler barbie. How about that . Thisis is actual faces and ladis and gentlemen actual faces, harvey was taken hostage and created swindall barbie or people are up to no good use barbie and other dolls to create Fake Identities to steal taxpayer money. Clearly someone that sba is living in swindler barbie world. We are not just living a town. We have we moved into barbie 200 billiondollar town dream house on looney tune land. I appreciate you coming forward your testimony and i love that you are a man of truth. We all know it will take a lot of work to clawback all of this money and according to your own reporter the more than 250,000 hotline complaints you you have perceived this as a start the pandemic more than 90,000 of them were actionable leads. This represents according to data 100 years of investigative casework. Let me say that again, its a 100 years ofrs investigated casework and only in crazy town does this happen. But you people to keep the Committee Update on how much money as far back as you begin the centuries long casework load . Absolutely. What is your plan . We talked the you said theres a plan. What is. The plan to begin climbed back this money . Its import to ban record with this for the number that i am given in terms of the results of our office are not the only result in government. There is more so the fbi has their own cases and the fdic and i can go on and on. The number is a lot larger and its magnified maybe even exponentially more impactful with the doj Strike Forces and pass forces. Relative to my office we have a prioritization of framework that allows us to go after the most actors fast and thats how we have been doing this. And some of these actors have hundreds of loans under their namefa or under a single fake number. Is that correct . Correct a single case and we have had a single case hotline complaints so it works like that. For those that have stolen money from the taxpayer should they be worried right now . I think they should bewa worried. We have a statute of limitations and im just one part of the enforcement activity that is taking place. We have been told, we have been told if he stole less than 100 grand we are not going to worry about you anymore. We are just going to let it go and pretend it didnt happen. What say you to somebody that stole and still stole. Below that threshold. Are we going to go after them to . I believe we have a very recent press release. It depends on where it falls right . That leeway at all. Are you familiar with swindall barbie now and have you heard that before . I did get up to on us today. Inspector thank you so much for coming forward and i yield back the remainder ofot my time. I now recognize senator fellows from the great state of minnesota. Thank you mr. Chairman and thank you mr. Ware in let me start with gratitude to you in the many thousands of employees that sba to do this important work and under the Trump Administration that are doing it right now to express gratitude who are doing what we want and that is to look after taxpayer dollars. I like this committee when theni spirit is to restore faith in government and casting stones is. I want to make sure we go after fraud and all of my colleagues on the other side i want to do the same but what troubles me as president bidens requested appropriaten to dollars for december and my colleague on the Financial Services committee and the general government appropriations so its a little incongruent i might say to say we need to go after this and not appropriate the resources do it. I would like to sell my colleagues we should appropriate the dollars necessary to go after the fraud. Is that 16 million shortfall impacting your ability to do so . Impacts my ability tremendously. Isis it one more time . It impacts my ability. The fundamental we had had runs under 2024. A lot of criminal investigation is in the lot of them had to go homel. Its a time in the fight is the hardest hardest. Mr. Chair a Great Respect for you and i would ask that we try to appropriate resources to what we all want to do which is to eliminate fraud and repatriate the dollars and claw them back. 30 billion is done so already. Its her ware i suspect that a number of companies overrepresentedem employees and sending ppp and loans. Your testimony provides an the bad actors but can you shed more light on that practice of companies exaggeratingan their needs and whether the sba has been effective in your recommendations to crackdown on the . To be fair thats what the law calls for to be fair. We couldnt review tax records ioand we couldnt review employe information as well. And. Since then those things have been t tightened up quite a bit. I am self certifying so nobody checked me so i could easily say 50 in the fraud trend is a wellknown concept. There was pressure, financial pressure for everybody to know where we were at the nation and the lack of control and any rationalize it in terms of well why not . Everybodys doing it. He you spoke about datasharing between agencies that support your work and i assume that would include the irs . Yes i would. The structures and technologies in a way thats necessary to give you the information . When we work through certain agreements i would argue not just oversight in these agencies could communicate when issuing government funds. I would argue that might not be wise to reduce funding the irs will need to go after fraudsters and tax cheats. You could distill this entire hearing downn to simple question we all agree its fraud we all agreed that we should go after and we should agree to the resources to the frustration we should not be cutting it by 15 million. Without mr. Ware i want to thank you and i know hundreds of ppp and idle recipients of my own district and they thank you and thousands of businesses and millions of employees around the country say thank you. When we did this we were under duress and things were complicated. I was here when we did this and im so glad they did. When we look at our economy the highest gdp ever, the lowest inflation in the entire g7 universe the lowest unemploymeny in my lifetime and the highest wages in a long time. I think we did a darned good job and thank you and i hope you can expand that gratitude to those you work with. Thankk you. I now recognize. Ms. From the great state of texas for five minutes. Attorney general ware i appreciate you taking the time to be with us today and you understand the importance of todays hearing and i wish were joined by administrator guzman. For lot of conversation today about pointing fingers. I want to figure out when that money was and how much sba had it with the resources were paid in 2019 do you know what the sbas budget was . I dont know off the top of my head. Do you know what it was in 2020 . I dont think. So. I think that was a time we were all struggling trades in 2020 is when we had the pmic said that sba received additional bunts . The pandemic i think supplemental funding was given. The answer is yes. Its 100 times as much as they had been given so the fact is when we look at when the money was given it out doesnt make since it was given out during the beginning of the pandemic rex thats when the money 14 days. If we had taken two years to do it and im going to ask you with your head, the other way, the other way. It if we had taken two years to do it the whole point was to try to get that money out. We note that treous amount of the roles and responsibilities went to the sba who had two xl at that point and they are expected to give out hundreds of millions, billions of dollars. Without having adequate but we want wanted to make sure it got out and in a time when everyonenc was in a pandemic. Two years later we know how much money are we talking about not . Fraudulently stolen from taxpayer dollars . Potentially over 20 billion. Does it make sense that we try to avoid this in the future . Absolutely and thats why im here. This makes sense sense to go reafter the bad actors who have stolen over 200 billion in taxpayer dollars . Absolutely. Does it make sense we a lot of time this hearing that happened then and that happens in practice i make a lot of sense toto. You . I cant say that this is what ive been avoiding from the very beginning. I appreciate your direct answerss instead of playing the blame game here i would hope that everybody on this committee everyone in congress will be focused on trying to prevent 200 billion in fraud from ever happening again. And try to get that money back. With the espys disturbing approximately 1. 2 trillion in covid idling ppp loans it estimates over 200,000 20 billion but to save face the sba who is admitted they have no rules in investigating fraudwe reportedlyly roughly 36 billion in spending the 164 billiondollar64 differenceo this troubling but what concerns me the most is the sbae who sad they are not an investigator at investigatory entity has additional dollars to put out a completely false cover their previous mistakes. The American People deserve more and taxpayers definitely deserve more and Small Businesses deserve more pay mr. Chairman id like to enter into the record administrator guzmans first bought twoth or later as relating to the fraud and pandemicra Relief Program. Will the sba told us quote when it comes to investigating fraud recovering recovering text or does the board to note that espys is not enforcement agency. The we collaborate with Law Enforcement authorities on their investigations and quote. Mr. Chairman . Mr. Ware looking at the Fraud Investigation and effort how does how long does the standard investigation take . About ng two months ago you testified in front of subcommittee on oversight where you shared your concerns the sba has not been collecting ppa under 100,000. Did you make that decision . Has the sba communicated to you whether they tend at temps to pursue these loans . And loans . And that is their intention to pursue those that have or fraudulent loan. Excellent i yield back. Williams andchair thank you to inspector ware for being here. Inspector khatami here you testify you become more and more impressive. Thank you for being here. In march 10 more people supposedlynd nonprofit that used 250 million in covid relief funds. This brings the total to the largest covid 19 fraud. Her agencies must make recouping taxpayer dollars the prior daykham. On july 27 2020. The Small Businessy specter general issued his report on how four noble the programs are fraudsters and not her cited as the Administrative Office released a report in three hours later unfortunately the sba has failed to provide a detailed account of how this misappropriation of taxpayer funds occurred and how they plan to recover the stowed them funds. Given the roughly 160 billiondollar discovery between the oig report in the sba report with the pertinent to hear from both parties as to why the discrepancy. Unfortunately as indicated by the empty chair next to the Inspector General right there she had declined to come before this committee. The Small Business administrator can we talk about Small Business is the engine of our economy. She was notified in time to be here under the rules and she has failed to request by the chair of this committee to answer questions on the half of the American People. Where is the discrepancy and why the discrepancy . On multiple occasionsns the offe of Inspector General has described sba Data Tracking environment is informal and ad hoc and designated investigatory body for the sba to oig holds the authority to shed light on this matter and therefore i would appreciate some insights insight on the following. Inspector general stauber aside from the Inspector Generals office to consider the sba to bo the subject Matter Expert in Fraud Investigation . No. How much weight should we give to the sbas assessments of your Fraud Investigation . Well i would say sba is not positioned to define fraud for the office of Inspector General. If administrator guzman were present it would be beneficial for her to give us her perspective on why she believes her report is more accurate despite funding substantially less fraud. I want us to be able to have the dialogue and question both of you. Why the discrepancy . Only in washington d. C. Would an administrator not show up when theres 160 billion discrepancy how does that happen . The American People want to know why the discrepancy and why the fraud . The administrator doesnt show up so we can ask questions and get answers for the constituents and the taxpayers of this country. What is thest likelihood of the sba recovering most of that money . Most of that money is hard to say what the likelihood is thatt i could tell you we have 10 year statute of limitations and we will not stop and i believe thats the case why Law Enforcement partners across the nation. The American Public deserves answers and we deserved answers from the administered guzman today. Enter failing to testify alongside you should not go unnoticed. It is a slap in the face to the taxpayers who are out 200 billion. Chair williams thank you for holding this hearing. Thank you for making the notifications on time within the rules into the Small Businesses across this country who are on the backside of this covid. Starting to ramp up is beyond me why this Small Business administrator would not come here and testify to the 200 billion in fraud and i yield back. The gentleman yields back and the chair recognizes mr. Lotus from new york, the great state of new york. And thank you for your leadership on this important issue and its important to get downin to the issue of hundredsf millions of dollars being fraudulently. Thank you forr your leadership and your council to this committee and to the american and despite the sba administrator being timelyly and properly invited numerous times ahead of the very agency with so much fraudrs in it sadly is not here today to answer are important questions. As a result of administrators absence my constituents had to come toat no other reasonable conclusion that the sba losing 200 billion is not important enough for the administrator to be counseled to this committee and to the American People. The effects of the fraud are not limited to just 200 billion in taxpayer money being lost their countless stories of innocent people being victimized by sbas carelessness. One such example occurred in my district a constituent of my district fraudulently had loans taken out in her name in excess of 90,000 in my constituent did not find out about this fraud until way after was initiated and too late to reverse. Aen bank center in the male indicating her of the fraud it to criminals who stole 90,000 in her name using a fake license and Social Security card to open that account the lender told her they cannot run a credit check because the sba is required to them back even though the borrower is not producer low sold my constituent had to freeze around credit for several years. This severely limits your freedom to get things like buy a car, buy a home and acquire insurance or even cell phone service. My constituent is far from the only victim of fraud and sba must make it a priority to continue to investigate this who have committed fraud and recover as much as possible of the money. Mr. Ware the office of the Inspector General recovered 30 billion up the potentially 200 billion of fraud and thats only about 50 . What is the sba doing to recover the other 170 billion how can they be more successful in getting more taxpayer money back and how much do you expect to be able to recover the extent thank you. Its important to note is the responsibility responsibilitysf the office of Inspector General to carry out Law Enforcement activity to make a rest and to attempt to recover along with the sba because there could be other recent be other reasons as b. A. S recovering money. They could be people trying to give back the money real quick so its not just fraud that the money would havegi been recover. It seems like that 30 billion of the 200 billion we dont necessarily know yet. But we have the privatization documents and we are working with Law Enforcement entities across this nation to bring fraudsters to justice and to clawback as much money as they can. The agreement with the United States and they will help us with secret service. And we talk about the timeline in your citations when a month from now six months from now 12 months from now and can you ascertain the full scope of the issue . The revenue these programs are finished. Like what was said earlier the evidence our footprints and concrete so once we get to the evidence and once we investigate each of these potentially fraudulent instances thats when you would see the results. That is continuing and basically its rare that we open the case and its not what it is. We will you keep us posted as to your progress and absolutelyr and with my remaining time the sba claims that 30 billion be returned font was not retrieved and pandemic fraud money despite oig reporting that it was and can you explain the discrepancy . With the discrepancy is for two reasons. An important one is my office isnt independent arbiter of the facts here so we bring forward what we find based on our criminal investigative work and let the data exercise for us. Our audit work came to bear in this. We have access to data that they simply cant have access to and its a good way to say whether the discrepancy is valid or even logical in their response to the agencys response to the report and their rebuttal. Thank you. I appreciate your time and appreciate youte being here. The chair recognizes chair molinaro. Sadly one of the states with the greatest cases of fraud with that said mr. Chairman grateful to you freely ship and mr. Ware thank you for being here but i want to echo the comments of my colleagues that the sba administrator would simply not be here. Its and its embarrassing and it is. It is i not to this committee we to congress. Its to the american taxpayer families farmers and Small Businesses who for 2. 5 year struggle through pandemic that was well beyond their capacity to manage and to the people who pay every day their taxes to support an institution in the government to provide for the best interest and its but a straighter sba doesnt think the issue of monumental fraud for an agency of the size is worthy of presenting before congress but i say this not simply as a member who just got here but i say this because for the last 12 years i was account executive in the state of new york and it was my job to stand in front of countless residents and businesses and explain to them either government were shutting them down. And what resources and support would be available to them. Back my county was among the first in the state to secure sba loans so we could move effectively to support businesses and we worked with the chamber of commerce and others make sure they have access to the resources they need. Me this important to cut countless families of across america, my father lost his life to covid in life to covid in april of 2020 and it responds to that so many families like mine tried to muster upup what we cod to help the people who lived on with great struggles but its embarrassing and and itsrd that the sba would be represent here toto today and they would be a part of an effort to secure what has been lost. I work hard to ensure with my colleagues both in congress and in State Government to ensure rapid delivery of that assistance be made available to Small Businesses. Never did we think so little of betting in security procedures in place especially since we knew early on but there were red flags and we were able to identify them and the sba failed to implement a seikh safeguards even as warnings and reports of fraud were published and mr. Ware i suggest you are unintentionally misleading the public as to the magnitude of fraud. Did you unintentionally mislead the american taxpayer . Absolutely not. Are you intentionally misleading the taxpayer . Apsley now. Are you aware that i believe its potentially over 200 billion in fraud. In my own state of new york there was a case in 2021 were dearly 20 public state and municipal conspired and defrauded the sba ofof over 1. 5 million schemes like this route to comment and resulted in a least 200 billion an outstanding fraudulent payments. I know that the congress could make better use of 200 billion more importantly the wreck and taxpayer could make better use of 200 billion. At this point we are challenged with how to recover thesear dollars. Its your agency and its you and your investigatory capacity and criminal prosecution and your partners that you work with obviously to secure recovery. Can you speak to however the deficiencies in any collaborative effort going on with the sba and what strategies are used that may or may not recover the fraudulent payments . As i can which is surprising again because wepa work really closely with the sba to set up the controls and to go after seizures and forfeitures but bur really well with. I do believe administrator guzman is serious about it. She has implemented numerous recommendations to ensure that control the environment is stronger so that discrepancy is puzzling to me in light of all the work we have done together. A collaborative effort has been in place yet theres a failure to acknowledge the program will lead to the inability to solve the problem. A quite honestly the internal control environment doesnt shift whatever the billion, 200 billion. Its the same. My time is up mr. Chairman and i will follow up certainly after but i thank you administrator ware and on for half of those who the covid pandemic we are grateful for your work. I now recognize the tremendous sub select committee mr. Wenstrup from the great state of ohio. Thank you and thank you mr. Ware for your work. Im grateful for the work of this committee and we arere tryg to help the u. S. Be prepared for the next time if theres a next time to do better in this case helps Small Businesses if theres another pandemic in the future but as chairman of that committee we are charged with investigating and finding solutions for any, fraud or abuse for the pandemic Relief Program and essentially the broad task of the subcommittee is an afteraction review of Lessons Learned so we can create a better situation and look at those things have been working beyond with ourselves about that because k we are committee lookt what we hear from our victims before we hear from the committee the agency and hopefully the administrator. Thankom you very much for that. And the pandemic hit no one knew what to do. Its called novel for a reason and the science and Everything Else in the economy and what we were going to do next. Theres no doubt about where to move quickly and that was a bipartisan agreement. That included getting money out the door quickly unfortunately as often theres an opportunity for people have who have various in mind. The sba relaxed its internal b. Controls to get money up there quickly and that allowed for a to occur. Raud i dont know that anyone disagrees to money had to get out the door quickly. Ch secretary mnuchin being pretty much in a panic. In your estimation which of the sbas rolax control contributed most directly to these high fraud rates . Self certification. The Ways Means Committee was a problem and we continue with that going forward. Moving forward which of these internal controls are easy and effective enough to implement that would get money out the door could be so preventing fraud . That is the challenge. Its about personal getting rid of sub certification and having quick verification measures and learning from the flags that we established and having a procedure in place to clear them. And to answer the follow question my biggest thing in the beginning was asked the followup questions. You are getting people who normally dont commit fraud and you ask one question they are coming back pain answer a question when they figure you are onto them so i thought that would be very important. I appreciate that and put. Are thereap additional controls the sba should implement and i guess maybe you have answered that. Im pretty sure i can get back to you with a list. I would appreciate that. And for the record if he would do that. And homeless controls do with riskmanagement either any ways that we can detects and prosece fraud . You might sniff somebody out but as to the prosecution of fraud any suggestions there . Doing away with Self Certification because once people certified with their documents its much easier in terms of prosecution in that regard and its much more difficult if they dont say anything. Got it. Tr real quick there are some things and first did ppp lenders have that others do not . A familiar customer was a big deal. The banks as i said earlier we got over 5000 referrals from the banks giftwrapped like they beat the fraud and we need know these people dont have the business. That came quickly. What do i call that . Ride control agenda. Its difficult for me to answer that question because i provide oversight and type dont want to build a program that i cant oversee. I appreciated that in thank you very much for f your time. [inaudible] to account for questions we have had for her maybe we can try again. Thank you mr. Ware for being here. Without objection members have five legislative days to submit additional materials or any questions for the witness to the chair. Asked the witness to respond promptly and if theres no further business without objection that committee isom adjourned. Thank you very much. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]