Ernst Cracks Down on Fraud-Filled Small Business Programs

WASHINGTON - During today's Senate Committee on Small Business and Entrepreneurship hearing, Chair Joni Ernst (R-Iowa) detailed how taxpayer-funded programs designed to help small businesses have become magnets for fraud by highlighting concerning examples of fraud in COVID relief programs and the Small Business Administration's 8(a) program that provides funding for "socially and economically disadvantaged businesses."

She then detailed a slew of bills she is leading that hold fraudsters accountable, conduct a thorough review of government programs susceptible to fraud, and put commonsense guardrails in place to safeguard tax dollars.

Download pictures from the hearing here.

Watch Ernst's remarks here.

Ernst's full remarks:

"We've all heard Washington, D.C. referred to as the swamp, but these days, it is looking more and more like a pigsty.

"While Iowa small businesses keep their books neat and tidy and pinch pennies to balance their own budgets, they are the ones who are hurt when the government is sloppy and reckless with hard-earned taxpayer dollars.

"That's why I made a promise to Iowans to make Washington squeal.

"For over a decade, I have been exposing egregious Washington waste with my monthly Squeal Awards.

"Some examples are too outrageous to believe.

"I am talking about bureaucrats approving PPP loans for applicants who used pictures of dolls for IDs.

"Imagine giving Barbie or Ken a taxpayer-funded loan.

"Not only that, but they also believed folks claiming to be over 115 years old were alive and well enough to be approved for 3,095 PPP and EIDL loans worth $333 million, including $36,000 to a 157 year old. That's pure hogwash!

"But this is only the tip of the iceberg.

"Instead of boosting Main Street, millions of your tax dollars were wasted through USAID to fund Iraqi Sesame Street.

"And this one is unacceptable: Improper payments, or the government tossing cash into the wrong trough, have become commonplace.

"In fiscal year 2024, federal agencies shoveled out $162 billion in improper payments.

"The most frustrating part is how simple it is to stop this waste.

"A report by the Pandemic Response Accountability Committee found that $79 billion in potential COVID fraud could have been prevented if four basic questions were asked:

"One, is the applicant's Social Security Number valid?

"Two, if valid, does the name connected to that number match the name on the application?

"Three, does the birthday match?

"And lastly, is the individual alive?

"Seriously, folks, that could've saved $79 billion right there.

"The good news is that we can prevent nearly all improper payments in the future with my DOGE in Spending Act that enacts commonsense guardrails - like those four simple questions.

"And these quick fixes could not come soon enough.

"Six years after COVID, scammers are still pigging out on SBA relief funds.

"I'm proud this Committee advanced my SBA Fraud Enforcement Act, and I am eager to see it become law.

"Fraudsters snout-deep in pandemic-era shuttered venue and restaurant funds must be held accountable.

"Unfortunately, unless my bill is passed by the Senate and signed into law, many of these criminals will soon get away with it.

"During the prior administration, USAID repeatedly rebuffed my requests for information, using intimidation and shell games to hide where money is going, how it's being spent, and why.

"This is the same agency that handed cash to violent terrorists and funded dance classes in Wuhan. Yes, the same Wuhan you are thinking of.

"As a result of my oversight, I discovered firsthand USAID was a rogue bureaucracy, operating with little accountability and, at times, at odds with our nation's best interests.

"My findings were confirmed when, this summer, federal prosecutors convicted a USAID contracting officer who raked in over $1 million in bribes to steer more than $550 million in contracts to 8(a) program participants.

"Unfortunately, the SBA's 8(a) program has been a magnet for fraudsters since its inception.

"Decades of government watchdog investigations, bipartisan oversight hearings, a patchwork of reforms, and what is there to show for it? Not a shred of evidence that the program is worth taxpayers' investment.

"It is refreshing to see an administration take fraud as seriously as I do, and I applaud Administrator Loeffler's efforts to end 8(a) program scams for good.

"In the meantime, I have launched my own 8(a) investigation and introduced the Stop 8(a) Contracting Fraud Act to pause 8(a) no-bid contracts government-wide until the SBA completes its audit.

"I am also urging federal agencies government-wide to adopt this commonsense moratorium.

"Make no mistake, this waste hurts all our small businesses the most.

"When COVID fraudsters cashed in, thousands of deserving small busin

esses in Iowa were left out in the cold because funds had run dry.

"When the Biden USAID sent money to every corner of the world, small businesses here at home footed the bill as their taxes skyrocketed.

"When 8(a) programs divert government contracts to businesses committing fraud, legitimate small businesses pay the price, losing jobs, revenue, and growth opportunities.

"Government contracting should be based on eligibility and merit, not skin color.

"I promised to make Washington squeal, and it is clear that this pigpen of a swamp needs a thorough mucking out.

"I want to thank our witnesses for bravely pulling on their rubber boots and grabbing their buckets.

"Thank you all very much. Let's clean this up for American taxpayers and put our hardworking small businesses first.

"I do look forward to hearing your testimony."

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