An explosive new investigation of data from the Paycheck Protection Program (PPP) finds that, in Donald Trump’s final days in office, his administration rushed to eliminate oversight for loans which were flagged for potential fraud or further investigation — and wiped flags from nearly every one of the largest PPP loans.
As the Project on Government Oversight (POGO) revealed in a report published Wednesday, over the course of several weeks before President Joe Biden was inaugurated, the Trump administration went on a spree of eliminating flags on PPP loans, the majority of which went directly to personally enriching the richest Americans. Officials in the Small Business Administration (SBA) eliminated 2.7 million flags between December 2020 and January 2021, as the administration was in its lame duck period.
Special preference was given to the largest loans, which often also went to the largest corporations. On January 16, 2021, four days before President Joe Biden’s inauguration, Trump’s SBA wiped 99 percent of special review flags, which were given out to every loan above $2 million for separate investigatory purposes.
If the Trump administration did, indeed, go on a spree to mass-clear potential fraud flags before Trump left office, it is no surprise that it appeared to have favored the very largest loan recipients. Trump continually gave huge financial favors to large corporations during his time in office — and though most large corporations were exempt from receiving PPP loans, some large corporations managed to skirt the rules and receive loans anyway.
Out of the $800 billion given out in the program, flagged loans accounted for at least $189 billion. Because the vast majority of PPP loans — 95 percent — have been forgiven, it’s likely that many of these loans that had previously been flagged have been forgiven entirely.
Not all flagged loans were necessarily fraudulent; many of them had flags indicating clear reasons that the recipient may have submitted a fraudulent application or should at least have been investigated as such. The most common flag, applied to over 785,000 loans, showed that the businesses didn’t exist before February 2020 and were therefore ineligible.
It’s unclear how many loans went to businesses for their intended purpose of saving small businesses from pandemic impacts. But a report done earlier this year estimated that only between about a quarter and a third of PPP loans went to saving workers’ jobs. The rest — about 66 to 77 percent — went to business owners and people like shareholders.
Many loans went directly to the rich. Several billionaires or companies owned by billionaires received loans, like Republican fundraiser Joe Farrell or Kanye West’s apparel company, valued at $3 billion.
One loan, POGO found, went to a hotel owned by West Virginia Gov. Jim Justice, a Republican who is the richest man in the state and a former billionaire. The loan was worth $8.9 million and appeared to have been flagged eight times by the SBA. Another loan with nine flags, worth over $5 million, appears to belong to a Kentucky hospitality corporation whose annual revenue of $850 million would likely make it too large to receive a PPP loan.
Other loans, which are very often forgiven, went to politicians or their campaigns — including several far right politicians who have spent the last months spouting diatribes about how people buried in student debt aren’t “deserving” of debt relief. People like Representatives Majorie Taylor Greene (R-Georgia) Mike Kelly (R-Pennsylvania) and Matt Gaetz (R-Florida) had hundreds of thousands of PPP loans forgiven.
In a previous investigation in 2020, POGO found that there were at least 113 loan recipients, making up hundreds of millions of PPP loans, who political contributions worth about $11 million immediately after receiving the loan.