The Small Business Administration (SBA) announced that it has suspended thousands of Minnesota borrowers after uncovering widespread fraud.
SBA Administrator Kelly Loeffler wrote on X that the agency “reviewed thousands of potentially fraudulent pandemic-era PPP and EIDL loans approved in Minnesota.” The agency then “took action to suspend 6,900 Minnesota borrowers amid suspected fraudulent activity.” The borrowers were approved for 7,900 PPP and EIDL loans worth an estimated $400M.
“These individuals will be banned from all SBA loan programs, including disaster loans, going forward. We will also refer every case, where appropriate, to federal law enforcement for prosecution and repayment,” Loeffler added. “After years, the American people will finally begin to see the criminals who stole from law-abiding taxpayers held accountable – and this is just the first state.”
The SBA administrator sent a letter to Minnesota Governor Tim Walz (D) in December, stating that the agency was “halting the disbursement of federal funds to SBA resource partners operating in the state of Minnesota, totaling over $5.5 million in annual support.”
Loeffler explained in the letter that the state “became the epicenter of the largest fraud scandal of the pandemic, and recent indictments and convictions indicate that fraud is endemic to the state-administered welfare programs in your state.” She added that the “volume and concentration of potential fraud is staggering, matched in its egregiousness only by your response to those who attempted to stop it.”
The Department of Health and Human Services has also frozen federal child care payments to Minnesota amid a widespread fraud scandal hitting the state. HHS Deputy Secretary Jim O’Neill announced the move on social media, writing, “We have frozen all child care payments to the state of Minnesota. You have probably read the serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade.”
