Month: June 2023

According to a report published Tuesday by the inspector general of the Small Business Administration (SBA), the federal government squandered more than $200 billion in potential fraud to prop up small businesses as the COVID-19 pandemic threatened the U.S. economy.

The report from the inspector general of the SBA gives an estimate of how much of the $1.2 trillion disbursed by the SBA was stolen by fraudulent claims. At least 17% of all COVID-19 Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) funds were given away to potentially fraudulent actors, according to Inspector General Hannibal “Mike” Ware.  The SBA said: “In the rush to swiftly disburse COVID-19 EIDL and PPP funds, SBA calibrated its internal controls. The agency weakened or removed the controls necessary to prevent fraudsters from easily gaining access to these programs and provide assurance that only eligible entities received funds. However, the allure of ‘easy money’ in this pay and chase environment attracted an overwhelming number of fraudsters to the programs.”

The report focuses on two programs created during the pandemic to support small businesses: the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL). According to the report, there was a higher potential fraud in the EIDL program, which was a low-interest disaster loan that would later require repayment. For PPP, which gave money to businesses that would later be forgiven — similar to a grant — the estimate of potential fraud was lower: around $64 billion, representing 8% of the total funds sent out.

Officials said the government watchdog report represents the first comprehensive estimate of fraud to date; nearly $30 billion of those fraudulent funds — about 15% of the fraud that’s been calculated as of May — has been reclaimed through collaboration between the inspector general’s office, the SBA, the U.S. Secret Service and other federal agencies, the report said.

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On Tuesday, the Supreme Court ruled in favor of a Colorado man convicted of making “true threats” who repeatedly sent abusive messages to a local musician. The high court said that Billy Counterman’s conviction — for sending Facebook messages to singer-songwriter Coles Whalen — was based on the wrong legal standard.

The justices ruled on a 7-2 vote that the jury should have been required to make a finding about whether he intended his comments to be genuine threats. If such messages are not true threats, they are deemed protected speech under the Constitution’s First Amendment. The case now returns to lower courts for further proceedings on whether the conviction should be thrown out.

Justice Elena Kagan wrote for the majority: “The state had to show only that a reasonable person would understand his statements as threats. It did not have to show any awareness on his part that the statements should be understood that way. For the reasons stated, that is a violation of the First Amendment.” Conservative Justice Clarence Thomas and Justice Amy Coney Barrett dissented.

Prosecutors focused on messages Counterman sent to Whalen on Facebook for two years, beginning in 2014. Examples included “I’ve had tapped phone lines before, what do you fear?” and “You’re not being good for human relationships. Die. Don’t need you.”  Whalen did not respond to any of them and ultimately reported them to the police in 2016, according to court documents. Counterman was convicted of one count of stalking and sentenced to 4½ years in prison. The conviction was upheld on appeal, prompting him to ask the Supreme Court to intervene.

The case is similar to a 2015 ruling in which the court threw out the conviction of a Pennsylvania man who made threatening remarks on Facebook aimed at his ex-wife. That case was decided on relatively narrow grounds and did not reach the broader constitutional question raised by Counterman’s attorneys.

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