Vice President JD Vance announced Monday that nearly 870,000 borrowers suspected of fraud involving pandemic-era small business programs are being barred from receiving future loans and other benefits from the U.S. Small Business Administration.
The move is part of a broader federal crackdown on fraud tied to programs created to keep businesses afloat during the COVID-19 pandemic. The borrowers being suspended are connected to an estimated $39 billion in suspected fraud, according to the SBA.
"If you screwed the American taxpayer, the federal government is now going to say you're cut off, no more," Vance told reporters Monday. "You shouldn't be applying anymore, and if you do apply, you're no longer able to get those benefits."
Vance made the announcement in Kansas City alongside Attorney General Todd Blanche, FBI Director Kash Patel and federal and state law enforcement officials as the Justice Department detailed the results of a summer enforcement operation targeting COVID-era loan fraud.
More Than 160 Defendants Targeted
The Justice Department's "Heartland fraud surge" ran from June 12 through Sept. 1 and resulted in enforcement actions involving more than 160 defendants and approximately $245 million in intended taxpayer losses.
Federal prosecutors brought felony charges against nearly 80 defendants in cases involving roughly $100 million in intended losses tied to SBA pandemic programs. About 43 other defendants pleaded guilty in cases involving approximately $44 million, while roughly 40 defendants were sentenced in cases involving nearly $100 million.
The alleged schemes range from invented businesses and phony payroll figures to fabricated revenue records and identity theft.
The crackdown comes more than five years after Congress created the Paycheck Protection Program in March 2020 as businesses faced shutdowns and other economic disruptions from the pandemic. Banks and other lenders ultimately issued roughly 11.8 million PPP loans totaling about $800 billion.
The loans could be forgiven if borrowers met requirements governing how the money was spent, including using funds for payroll and other eligible business expenses.
Billions in Suspected Fraud
Federal watchdogs have spent years examining how fraud spread through pandemic-relief programs that were designed to distribute enormous amounts of money quickly.
The SBA inspector general previously estimated that more than $200 billion distributed through PPP and the COVID Economic Injury Disaster Loan program showed signs of potential fraud.
SBA Administrator Kelly Loeffler said Monday's suspensions involve suspected fraud across 45 states and territories. Combined with earlier actions, the agency says borrowers associated with approximately $49 billion in alleged fraud across all 50 states have now been suspended.
Suspended borrowers are barred from future SBA small-business and disaster loans as well as programs including the agency's 8(a) federal contracting program.
The SBA has also turned to debt collection as another way to recover pandemic money. Earlier this year, the agency referred more than 562,000 suspected fraudulent loans totaling about $22 billion to the Treasury Department for collection.
"Exposing these criminals is only the first step," Loeffler said. "This summer, we referred $22 billion to the United States Treasury for collections."
Treasury collection efforts are separate from criminal prosecution and are intended to recover delinquent federal debt.
Why Cases Are Still Coming Five Years Later
One of the lingering questions surrounding pandemic fraud is why investigators are still working through such a large backlog years after the loans were issued.
Blanche said the Justice Department is devoting more prosecutors and resources to those cases.
"We have 500 prosecutors now in D.C. and around the country focused on this," Blanche told CBS News. "We have prosecutors in all 93 U.S. attorneys' offices now directly focused on this."
Last month, the Justice Department also established a National Fraud Detection Center intended to analyze information held by different federal agencies. The SBA inspector general lists the center's Aug. 25 launch among recent federal fraud-enforcement actions.
The renewed effort follows years of criticism over weaknesses in the government's original pandemic-loan safeguards. A March 2025 Government Accountability Office report found that roughly 2 million of nearly 3 million pandemic-loan fraud referrals contained incomplete, incorrect or duplicate information, hampering investigators.
More sophisticated automated screening and reviews were not fully introduced until January 2021, after more than $525 billion in PPP loans had already been approved.
Cases Range From Fake Businesses to Identity Theft
Among the cases highlighted in the Heartland operation is the prosecution of Jamie Gray in the Western District of Missouri. Gray is charged with wire fraud and money laundering 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 that supposedly existed before the pandemic, although nearly all allegedly weren't operating before the programs' eligibility deadline.
In another case, a federal grand jury in Iowa indicted Adrian Rafael Pupo Perez and Helen Yaima Leyva Santiesteban on 47 counts involving wire fraud, money laundering and conspiracy.
Prosecutors allege the pair and more than 100 others participated in a scheme involving approximately 470 fraudulent PPP applications filed in the names of people around the country. The applications sought more than $4.5 million, with roughly $2.4 million ultimately disbursed. The Justice Department says Pupo Perez and Leyva Santiesteban remain fugitives.
Recent prosecutions show that pandemic-relief investigations remain active. In one separate case announced Friday, federal prosecutors in Indiana said a former medical student had agreed to plead guilty in a scheme involving fraudulent PPP and EIDL applications that obtained more than $326,000.
Pandemic Fraud Investigations Could Continue for Years
The latest enforcement push is unlikely to close the book on pandemic-relief fraud.
Congress extended the statute of limitations for PPP and COVID EIDL fraud investigations to 10 years, meaning prosecutors can continue bringing some cases through 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 cases are also part of a wider federal effort to target fraud involving taxpayer-funded programs. The Justice Department created a National Fraud Enforcement Division earlier this year, while the White House established a government-wide Task Force to Eliminate Fraud chaired by Vance.
For investigators, the challenge now is sorting through years of suspicious pandemic-loan activity to determine which cases involve individual borrowers who exploited weak safeguards and which point to larger operations involving brokers, application preparers or organized groups.
