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Fed SBA disaster relief has gone to some entities with foreign IPs

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Inspector General recommends that SBA examine its controls

Pago Pago, AMERICAN SAMOA — More than $100,000 was disbursed to at least three applicants using an IP address for Samoa, from federal COVID funds allocated to the U.S Small Business Administration (SBA) through the COVID-19 Economic Injury Disaster Loan (EIDL) program.

This is according data in 38-page SBA Inspector General Evaluation Report, issued yesterday, following an audit and review of the EIDL for the period of Mar. 20, 2020 to Nov. 12, 2021.

The report states in part that SBA received millions of attempts to submit COVID-19 EIDL applications from foreign IP addresses and stopped most of them; however, the agency processed more than 233,000 of these applications — which SBA approved and disbursed 41,638 COVID-19 EIDLs, advances, and grants totaling $1.3 billion.

EIDL relief eligibility, in accordance with federal law, is limited to U.S. citizens, noncitizen nationals, and qualified aliens. Therefore, those applicants located at foreign IP addresses could be legitimate if they controlled at least a 20% share of an eligible entity, were adversely affected by the COVID-19, located in the United States or U.S. territories, and in business on or before January 31, 2020.

“Although individuals who reside overseas may qualify for the assistance if they meet the eligibility requirements, the fraud risk was high because of the history of fraud originating from transnational crime organizations that have stolen funds from U.S programs in the past,” the report says.

For the audited period, data in the report by foreign country shows that 12 applicants came from the IP address for Samoa. Additionally, one applicant was approved and $15,000 was distributed for grants and advances while 2 applicants were approved for EDILs for a total of $106,000.

The overall total — grants and advance as well as EDILs — stands at $121,000 as of the time period of the SBA audit, according to the report, which didn’t identify the entities by name.

In the South Pacific region, applications were also submitted — for example — from foreign IP addresses such as: New Zealand with 428 applications submitted with more than $6 million distributed for grants and advances as well as EDILs to just over 200 applicants; French Polynesia with 15 applications with three applicants approved awarding $13,000; Fiji with 7 applicants but two were approved for $11,000; and Tonga with 5 applicants and no approval made.

The report does not provide names of the entities or the applicants.

The SBA Inspector General also offered recommendations, for example, examining controls related to foreign IP addresses and ensuring these controls are more effective in future disaster processing systems.

SBA concurs with this recommendation and agrees to examine controls related to foreign IP addresses and ensure these controls are more effective in future disaster processing systems.