1/ 🧵EXCLUSIVE: Thru a #FOIA lawsuit, @POGOwatchdog got data on 2.3 million #PPP loans that the Small Business Administration flagged for scrutiny, incl potential fraud
But the SBA botched its review of billions of dollars of flagged loans
pogo.org/investigation/…
2/ There were some 4.3 million flags that SBA applied to these 2.3 million #PPP loans from August 2020 to Sept 2021 worth at least $189 billion. The flags were meant to help SBA assess whether a recipient should receive loan forgiveness
3/ But how did SBA use these flags? There were breakdowns in SBA's oversight of flagged #PPP loans, @POGOwatchdog found
4/ To speed things up, in the fall of 2020, SBA had a contractor create the capability to engage in bulk closures (called "batch dispositioning") of the flags applied to loans. An auditor found that the agency didn't ensure those flags were properly closed out
5/ Remember then-Treasury Secretary Mnuchin's pledge that every PPP loan $2 million and up would receive a "full review"?
SBA data shows that 99.1% of "special review" flags applied to these large loans were closed out on a day shortly before Biden was inaugurated
6/ On just 4 days in the last weeks of the Trump administration, SBA closed out 77% of the 4.3 million flags.
On one day - Jan 6, 2021 - SBA closed out 1.8 million or 41% of the flags.
7/ Those bulk closures came shortly before recipients could apply for a 2nd PPP loan.
Under the SBA's rules, PPP loan recipients couldn't get a 2nd PPP loan if they had outstanding flags.
8/ SBA didn't directly comment on what the Trump administration did, but a spokesperson told @POGOwatchdog that “From Day One, it has been a priority to address issues inherited from decision makers in the Trump Administration.”
9/ Under Biden, the SBA is examining forgiven loans. However, the SBA’s inspector general warned this year that earlier agency oversight failures may make it challenging “to recover funds for forgiven loans later determined to be ineligible.”
10/ A flag does not mean a loan recipient necessarily engaged in fraud. But some of the flags - if accurate - indicate clear-cut ineligibility. For example, if a business was created after February 15, 2020, it wasn't supposed to get a PPP loan.
11/ Adjusted for each county's business population, parts of the Midwest and Puerto Rico have a higher rate of flagged loans.
(Many of these counties are sparsely populated & under those circumstances, it doesn't take a lot of flags to rise to the top of the list)
12/ @POGOwatchdog also mapped out where SBA flagged loans where it found PPP loan recipients had large numbers of employees at residential addresses, a possible indicator of fraud, although there can be innocuous explanations as well
13/ SBA withheld the names of loan recipients. It also made it difficult to identify recipients by only giving their loan amounts in ranges & by withholding other info. But @POGOwatchdog was able to identify a few potential matches.
14/ There have been many stories on PPP fraud prosecutions & the eyepopping amount of potential fraud (up to $100 billion). But this story sheds light on previously untold government breakdowns that enabled fraud. This is investigative accountability journalism
15/ This investigative story took a #FOIA lawsuit, intensive data analysis, reading lengthy audits of agency financial statements, talking to experts including federal sources, & reviewing numerous govt oversight reports.
Data here: kaggle.com/code/schwellen…
16/ @POGOwatchdog had a great team working on this project: me, @NEGordon, @SarcasmSean & Leslie Garvey had bylines, but Julienne McClure, Amaya Shoshannah Phillips, Henry Glifort, @bbrockmyer, and others played key roles
17/ There's more in the story & in the data I didn't include in this thread
As @POGOwatchdog's investigation concludes, "the great pandemic swindle was aided and abetted by the SBA’s lax oversight."
I hope you read it & consider sharing:
pogo.org/investigation/…
18/ We still have unanswered questions, esp regarding what happened inside SBA.
There are also many possible stories we didn't tell that could be told w/ the data
We hope this story & the data we've made public will be used by other journalists & researchers
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