The Trump administration is suspending roughly 870,000 borrowers suspected of pandemic-era fraud from future federal small-business programs as the Justice Department announced enforcement actions involving more than 160 defendants and approximately $245 million in intended losses.
By yourNEWS Media Newsroom.
Vice President JD Vance announced Monday that roughly 870,000 borrowers suspected of defrauding pandemic-era small-business programs will be barred from future Small Business Administration loans and other agency benefits, as federal prosecutors disclosed the results of a nationwide fraud crackdown involving more than 160 defendants and approximately $245 million in intended losses.
Speaking alongside federal and state law enforcement officials during a Fraud Task Force press conference in Kansas City, Missouri, Vance said individuals suspected of taking taxpayer-backed pandemic assistance fraudulently should not be allowed to return to federal lending programs.
“If you screwed the American taxpayer, the federal government is now going to say you’re cut off, no more,” Vance told reporters. “You shouldn’t be applying anymore, and if you do apply, you’re no longer able to get those benefits.”
SBA Administrator Kelly Loeffler said the newly suspended borrowers are associated with an estimated $39 billion in suspected fraud across 45 states and territories. When combined with previous actions covering the remainder of the country, the SBA has suspended borrowers connected to approximately $49 billion in suspected fraud across all 50 states.
Suspended borrowers are barred from future SBA small-business and disaster loans as well as other agency programs, including the 8(a) federal contracting program.
“Exposing these criminals is only the first step,” Loeffler said. “This summer, we referred $22 billion to the United States Treasury for collections.”
The agency had previously referred more than 560,000 suspected fraudulent borrowers to the Treasury Department for collection involving roughly $22.2 billion in delinquent Paycheck Protection Program and COVID Economic Injury Disaster Loan debt.
Treasury collection actions are separate from criminal prosecutions and are intended to recover money owed to the federal government.
Monday’s announcement coincided with the conclusion of a Justice Department enforcement initiative conducted from June 12 through Sept. 1. The effort, called the “Heartland fraud surge,” drew prosecutors from 44 U.S. Attorney’s Offices and more than 20 federal and state investigative partners.
Federal prosecutors brought felony charges against nearly 80 defendants in SBA pandemic-relief fraud cases involving approximately $100 million in intended losses. About 43 additional defendants pleaded guilty in cases involving roughly $44 million in intended losses, while approximately 40 were sentenced in cases involving nearly $100 million.
Taken together, the summer enforcement actions involved more than 160 criminal defendants and approximately $245 million in intended taxpayer losses, according to the Justice Department. The alleged schemes included fictitious businesses, fabricated payroll and revenue figures, identity theft and other misrepresentations used to obtain government-backed money.
Attorney General Todd Blanche said the government has significantly expanded the resources devoted to pursuing fraud cases that may previously have gone uninvestigated.
“We have 500 prosecutors now in D.C. and around the country focused on this. We have prosecutors in all 93 U.S. attorneys’ offices now directly focused on this,” Blanche told CBS News.
The enforcement campaign is targeting money distributed through programs created during the economic emergency of 2020.
Congress established the Paycheck Protection Program in March 2020 to prevent businesses from collapsing as shutdowns and other pandemic restrictions disrupted economic activity. Banks and other lenders ultimately issued approximately 11.8 million SBA-backed loans totaling about $800 billion before the program stopped issuing new loans in 2021.
PPP loans could be forgiven when borrowers met specified requirements, including using the proceeds for payroll and other eligible business expenses.
Federal watchdogs later found that safeguards did not keep pace with the enormous number of applications arriving during the program’s initial stages. Major screening tools were introduced only after hundreds of billions of dollars had already been approved.
Expanded automated screening and reviews were not fully implemented until January 2021, by which point more than $525 billion in PPP loans had been approved, according to the Government Accountability Office.
The SBA inspector general estimated in 2023 that more than $200 billion distributed through PPP and the separate COVID Economic Injury Disaster Loan program showed indicators of possible fraud.
Years later, prosecutors are still processing an enormous volume of suspicious cases.
A March 2025 Government Accountability Office report found that approximately two million of nearly three million pandemic-loan fraud referrals contained incomplete, inaccurate or duplicative information, making it more difficult for investigators to determine which cases warranted further action.
Blanche said the administration is now instructing prosecutors to devote resources to cases they might previously have passed over because of staffing or workload limitations.
“What we’re saying now is, yes, you do. You do have the time. You do have the resources. You need to take that case and investigate it,” Blanche told CBS News.
The Justice Department also established a National Fraud Detection Center last month to analyze information held separately by different federal agencies and identify patterns that could reveal additional schemes.
Investigators are examining both individual borrowers who may have exploited weak pandemic safeguards and larger alleged networks involving brokers, application preparers and others accused of helping numerous borrowers obtain government money.
Among the cases highlighted Monday was the prosecution of Jamie Gray in the Western District of Missouri.
Gray faces wire fraud and money laundering charges in an alleged scheme involving nearly $56 million in intended losses.
Prosecutors allege Gray submitted PPP and EIDL applications claiming ownership of dozens of businesses purportedly operating before the pandemic. According to the government, nearly all of those businesses did not exist as operating enterprises before the programs’ eligibility deadline.
One application allegedly claimed ownership of “Fur Lives Matter,” an existing Texas business that prosecutors say had no connection to Gray. Investigators allege information involving ownership, employees, revenue and business operations was fabricated.
A separate federal case in the Northern District of Iowa involves Adrian Rafael Pupo Perez and Helen Yaima Leyva Santiesteban, who were indicted on 47 counts of wire fraud, money laundering and conspiracy.
Prosecutors allege the defendants joined more than 100 other participants in a network responsible for approximately 470 fraudulent PPP applications submitted using the identities of people across the country.
The alleged scheme sought more than $4.5 million, of which approximately $2.4 million was distributed. Pupo Perez and Leyva Santiesteban remain at large, according to the Justice Department.
The Western District of Missouri has been one of the leading jurisdictions pursuing pandemic-relief fraud cases this year, including prosecutions involving allegedly falsified payroll information, fraudulent tax documents and PPP money diverted to personal expenses.
Deputy Attorney General Colin McDonald told federal and state officials before Monday’s announcement that the United States has carried out more than 1,200 major fraud actions during the past 160 days.
Congress has also given investigators additional time to pursue pandemic cases by extending the statute of limitations for PPP and COVID-related fraud to 10 years. That means additional prosecutions involving loans issued during the pandemic could continue into 2030 and 2031.
“Every one of these arrests, every one of these takedowns … we are saving money for the American people — real money, millions and millions and millions of dollars,” Blanche told CBS News.
The pandemic-loan crackdown is part of a wider federal fraud campaign. Earlier this year, the Justice Department established a National Fraud Enforcement Division, while the White House created a government-wide fraud task force chaired by Vance to investigate suspected abuse across taxpayer-funded programs.
McDonald said the effort has expanded to approximately 500 personnel and will continue growing.
“And we are growing even bigger. Why? Because the American people demand it,” McDonald told federal law enforcement officials. “They demand our best. They demand our resources. They demand that we take it personally when someone decides to steal from the United States of America, and we will not shrug our shoulders at such conduct.”
Monday’s announcement therefore combines two approaches to unresolved pandemic fraud: administrative sanctions preventing hundreds of thousands of suspected borrowers from returning to SBA programs and criminal enforcement targeting defendants accused of knowingly stealing federal relief money.
With investigators still working through millions of referrals and a 10-year statute of limitations extending years into the future, the cases announced Monday are unlikely to represent the end of federal efforts to recover pandemic funds and prosecute alleged fraud.
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