KANSAS CITY, September 18 — The Small Business Administration will begin sending demand letters Tuesday to borrowers in Kansas and Missouri suspected of defrauding its pandemic-era loan programs, the first wave of a national anti-fraud push announced Monday in Kansas City. The bottom line: the agency says it delivered $1.2 trillion in Paycheck Protection Program and Economic Injury Disaster loans during the COVID-19 pandemic, and that $200 billion of it was stolen. The new program, called Operation No Doze, is led by the SBA inspector general’s office.
It issues 30-day demand letters instructing borrowers suspected of fraud to return the funds or face legal action. The letters will soon roll out across the country.
Missouri Republican Gov. Mike Kehoe was joined at the announcement by Vice President JD Vance, Attorney General Todd Blanche, FBI Director Kash Patel and SBA Administrator Kelly Loeffler. “To anyone looking to defraud the state of Missouri, we’re putting you on notice,” Kehoe said. “We will find you, we will prosecute you, and you will pay.”
By the numbers
Loeffler said the SBA has suspended 870,000 borrowers tied to an estimated $39 billion in taxpayer money under a separate initiative called Operation Heartland Surge. Those suspensions bar borrowers from accessing small business loans and federal contracting programs. She also said the agency has referred $22 billion in fraudulent loans to the U.S. Treasury for collections.
“Small businesses are the nation’s largest job creators and among our nation’s biggest taxpayers,” Loeffler said. “Like every taxpayer, they deserve to know that programs that they fund are not siphoned away by criminals who would rather steal from hardworking Americans than become hardworking Americans.” She added: “The message is simple: If you stole from the Paycheck Protection Program, if you created fake companies and lied about your employees, we know who you are.
We will claw back the money and, where warranted, we will refer you to law enforcement so that you can face the jail time you deserve.”
Charges and the task force
Blanche said the Department of Justice had charged more than 80 individuals tied to COVID-era loan fraud worth about $245 million. Many of the defendants, he said, had fabricated businesses, stolen identities and submitted false payroll information. “Pandemic loan relief was meant to keep American small businesses alive during government lockdowns, not line the pockets of fraudsters,” Blanche said.
Monday’s announcement is the latest campaign in the war on fraud President Donald Trump announced earlier this year, appointing Vance to lead an anti-fraud task force. Last month, the White House estimated the task force has discovered almost $230 billion in fraud and stopped about $56 billion in fraudulent payments from federal programs, including Medicaid and supplemental nutrition assistance.
“All you really need is an administration empowered to go after the fraud,” Vance said. “You can save the American taxpayers a lot of money. You can save these programs from being defrauded and stolen from, and you can put the fraudsters behind bars.
This is not that complicated.
The government should have been doing this for years.” Cutting off people who have defrauded the government in the past, Vance added, is “perhaps the most proactive thing that we can do because we make sure that if you come back to the federal government, if you come back to the trough but you’ve been a fraudster, your application is automatically going to be dinged as negative.” Investors will note the scale of the clawback effort: the $22 billion referred to Treasury and the $39 billion tied to suspended borrowers represent a fraction of the $200 billion the SBA says was stolen.
The figure that matters next is how many of the 870,000 suspended borrowers return funds voluntarily within the 30-day window before enforcement actions begin.
