The Small Business Administration on Thursday suspended 6,900 borrowers over a suspected $400 million fraud scheme involving Paycheck Protection Program (PPP) and disaster loans during the COVID-19 pandemic.
"Today, our agency took action to suspend 6,900 Minnesota borrowers amid suspected fraudulent activity. In total, these borrowers were approved for 7,900 PPP and EIDL [Economic Injury Disaster Loan] loans worth approximately $400M," SBA Administrator Kelly Loeffler wrote on X.
"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," she 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."
She said the SBA would also pause annual funding to Minnesota "while we investigate $430 million in suspected PPP fraud across the state."
The report follows new allegations of fraud by child care centers in Minnesota run by Somali residents.
President Donald Trump has previously linked his administration's immigration crackdown against Minnesota's large Somali community to a series of fraud cases involving government programs in which most of the defendants have roots in the East African country.
Minnesota has been in the spotlight for years for Medicaid fraud, including a massive $300 million pandemic fraud case involving the nonprofit Feeding Our Future. Prosecutors said it was the country's largest COVID-19-related fraud scam and that defendants exploited a state-run, federally funded program intended to provide food for children.
In 2022, during President Joe Biden's administration, 47 people were charged. The number of defendants has grown to 78 throughout the ongoing investigation.
So far, 57 people have been convicted, either because they pleaded guilty or lost at trial.
Most of the defendants are of Somali descent.
Numerous other fraud cases are being investigated, including new allegations focused on child care centers.
In news interviews and press releases over the summer, prosecutor Joe Thompson estimated the total loss from all fraud cases could exceed $1 billion. Earlier this month, a federal prosecutor alleged that half or more of the roughly $18 billion in federal funds that supported 14 programs in Minnesota since 2018 may have been stolen.
The Associated Press contributed to this report.
Solange Reyner ✉
Solange Reyner is a writer and editor for Newsmax. She has more than 15 years in the journalism industry reporting and covering news, sports and politics.
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