On September 14, the U.S. Small Business Administration announced it suspended 870,000 borrowers across 45 states, six territories, and the District of Columbia purportedly connected to an estimated $39 billion in suspected fraudulent pandemic-era PPP Loan and COVID Economic Injury Disaster Loan (EIDL) activity. The action, described as the agency’s largest suspension announcement to date, was announced alongside DOJ, and marked the culmination of a state-by-state “crackdown” conducted as part of the White House Task Force to Eliminate Fraud. The SBA had previously announced suspensions of more than 150,000 borrowers tied to approximately $10 billion in suspected fraud across five states. Suspended borrowers are prohibited from receiving future SBA small-business and disaster loans and are ineligible for other SBA programs, including federal contracting. DOJ simultaneously announced a slate of criminal enforcement actions targeting alleged perpetrators of PPP Loan and COVID EIDL fraud.

Separately, the SBA and OIG launched “Operation No Doze,” under which the agency will send final 30-day demand letters to suspected fraudulent borrowers, starting with approximately 8,000 in Kansas and Missouri. The letters demand repayment of debt associated with flagged loans and warn recipients that failure to pay within 30 days may result in enforcement under the Administrative False Claims Act — which may subject borrowers to liability of up to double the government’s damages plus administrative penalties — as well as referral to DOJ, transfer of delinquent debts to Treasury for collection with interest and fees of up to 28 percent, and offset against federal payments including tax refunds and Social Security benefits. As previously covered by InfoBytes, the SBA in April referred more than 560,000 suspected fraudulent pandemic-era borrowers tied to $22 billion in loans to Treasury for collection.