Roughly 870,000 people suspected of looting pandemic-era small business programs will be permanently barred from future federal loans — a belated reckoning for an estimated $39 billion in fraud that ordinary Americans will be paying for years to come.
Vice President JD Vance announced the suspensions Monday in Kansas City, calling the scale of the theft an "open secret" in Washington. "If you screwed the American taxpayer, the federal government is now going to say you're cut off, no more," Vance said. The Small Business Administration's action covers 45 states, six territories, and the District of Columbia — the agency's largest suspension ever.
Combined with earlier enforcement actions, SBA Administrator Kelly Loeffler said the agency has now suspended borrowers tied to roughly $49 billion in alleged fraud across all 50 states. This summer alone, the SBA referred $22 billion to the Treasury for collections. The SBA Inspector General previously identified a staggering $200 billion in fraud losses across the Paycheck Protection Program and Economic Injury Disaster Loan Program.
That number — $200 billion — is the real scandal. Both parties rammed through emergency lending with virtually no guardrails. Trump signed PPP into law; Biden's team kept the spigot flowing. Vance accused the Biden administration of knowingly looking the other way: "Did the Biden Administration know this stuff was going on? Of course they did. It was an open secret. We knew that the PPP program was rife with fraud. I'm not talking about a few dozen cases." He added: "We need to be looking into the officials who were turning a blind eye to this stuff."
He's right to demand it — but Republicans controlled the White House when PPP launched in 2020 with minimal verification. The bipartisan rush to "do something" during COVID created the largest fraud opportunity in American history, and neither party raised the alarm when it mattered.
The Justice Department's "Heartland fraud surge," running June 12 through Sept. 1, produced charges against more than 160 defendants tied to $245 million in intended losses. Attorney General Todd Blanche told CBS News the department now has "500 prosecutors now in D.C. and around the country focused on this." One Missouri defendant, Jamie Gray, allegedly sought $56 million in loans for dozens of non-existent businesses — including one called "Fur Lives Matter."
The SBA is also launching Operation No Doze, sending 30-day demand letters requiring suspected fraudsters to repay their debts. Suspended borrowers are barred from future small-business and disaster loans, including the 8(a) federal contracting program, though they may request a review if they believe they were wrongfully flagged.
More than five years after the government shoved emergency loans out the door, the system is finally asking who took the money. The question that still hasn't been answered: which officials in both administrations let it walk out the door in the first place?
