US cracks down on COVID loan fraud: 80 charged, 870,000 suspended from federal loans
The DOJ charged nearly 80 defendants in a nationwide crackdown on COVID-era PPP fraud totalling $245M in intended losses. VP Vance announced suspensions for 870,000 suspected fraudsters.
DOJ and Vance announce sweeping COVID loan fraud enforcement, 870,000 suspended
Vice President JD Vance on Monday announced that the Trump administration will suspend roughly 870,000 people suspected of defrauding pandemic-era small business programmes from receiving future federal loans, cbsnews.com reports.
Speaking alongside Attorney General Todd Blanche and FBI Director Kash Patel in Kansas City, Missouri, Vance said borrowers who misappropriated taxpayer money should be permanently barred from government-backed lending.
"If you screwed the American taxpayer, the federal government is now going to say you're cut off, no more," Vance told reporters. "You shouldn't be applying anymore, and if you do apply, you're no longer able to get those benefits."
'Heartland Fraud Surge' targets $245 million in losses
The announcement came as the Justice Department unveiled the results of a nationwide enforcement campaign dubbed the "Heartland fraud surge," which ran from 12 June through 1 September. Federal prosecutors and investigators filed felony charges against nearly 80 defendants in cases connected to approximately $100 million in intended losses tied to Small Business Administration COVID-era programmes, including the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) programme.
In total, the operation targeted more than 160 criminal defendants and roughly $245 million in intended losses, according to the Justice Department. A further 43 defendants pleaded guilty in SBA-related COVID fraud cases involving around $44 million in intended losses, while approximately 40 defendants were sentenced in cases connected to nearly $100 million in intended losses.
The operation involved prosecutors from 44 US Attorney's Offices and more than 20 federal and state investigative partners. Alleged schemes range from fabricated businesses and false payroll records to identity theft.
$49 billion in suspected fraud across all 50 states
SBA Administrator Kelly Loeffler said the new suspensions are linked to an estimated $39 billion in suspected fraud spanning 45 states and territories. Combined with earlier enforcement actions, the SBA has now suspended borrowers connected to roughly $49 billion in alleged fraud across all 50 states.
"Exposing these criminals is only the first step," Loeffler said. "This summer, we referred $22 billion to the United States Treasury for collections."
The SBA previously referred more than 560,000 suspected fraudulent borrowers — tied to approximately $22.2 billion in delinquent PPP and COVID EIDL loans — to the Treasury Department for collection. While these are not criminal prosecutions, treasury collections aim to recover outstanding debt owed to the federal government. All suspended borrowers are barred from future small-business and disaster loans, as well as the SBA's 8(a) federal contracting programme.
Prosecutors given resources to pursue previously shelved cases
Attorney General Blanche told CBS News in an interview that 500 prosecutors across the country are now focused on pandemic fraud. "We have prosecutors in all 93 US attorneys' offices now directly focused on this," he said.
Blanche acknowledged that some of the cases now being pursued were previously deprioritised due to limited resources. "What we're saying now is, yes, you do. You do have the time. You do have the resources. You need to take that case and investigate it."
Last month, the Justice Department established a National Fraud Detection Center designed to cross-reference data held by agencies that had previously maintained separate records.
Programme background: $800 billion in loans, safeguards lagging
Congress established the PPP in March 2020 to prevent businesses from collapsing under sweeping pandemic shutdowns. Backed by the SBA, banks and other lenders ultimately made roughly 11.8 million loans totalling about $800 billion. Loans could be forgiven, but borrowers were required to meet strict conditions, including using the funds for payroll and eligible expenses.
Government screening tools were not fully in place until after hundreds of billions of dollars had already been approved. The SBA's inspector general previously estimated that more than $200 billion distributed through PPP and the separate pandemic disaster-loan programme showed signs of fraud. The programme stopped issuing new loans in 2021.
A March 2025 Government Accountability Office report found that roughly two million of nearly three million pandemic-loan fraud referrals contained incomplete, incorrect, or duplicative information, limiting investigators' ability to act on them.
Key prosecution: $56 million wire fraud case in Missouri
Among the cases announced is the prosecution of Jamie Gray in the Western District of Missouri, charged with wire fraud and money laundering in an alleged scheme amounting to nearly $56 million in intended losses.
Investigators say a central question remains whether the remaining caseload consists largely of individuals who exploited loose safeguards or whether larger networks — involving brokers, application preparers, and others who allegedly helped multiple borrowers obtain funds — are still being uncovered.
Source: Google News MT — Crime (en)