S.Hrg.119-350

1[Senate Hearing 119-350]2[From the U.S. Government Publishing Office]34                                                      S. Hrg. 119-35056                  FROM FRAUD TO RECOVERY: RESTORING7                  INTEGRITY IN SMALL BUSINESS PROGRAMS8=======================================================================910                                HEARING1112                               BEFORE THE1314                      COMMITTEE ON SMALL BUSINESS15                          AND ENTREPRENEURSHIP1617                                 OF THE1819                          UNITED STATES SENATE2021                    ONE HUNDRED NINETEENTH CONGRESS2223                             SECOND SESSION2425                               __________2627                           FEBRUARY 25, 20262829                               __________3031      Printed for the use of the Committee on Small Business and32                            Entrepreneurship3334[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3536        Available via the World Wide Web: http://www.govinfo.gov3738                               __________3940                 U.S. GOVERNMENT PUBLISIHING OFFICE4163-360                   WASHINGTON : 202642=======================================================================4344            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP45                    ONE HUNDRED NINETEENTH CONGRESS4647                              ----------4849                        JONI ERNST, Iowa, Chair50            EDWARD J. MARKEY, Massachusetts, Ranking Member51JAMES E. RISCH, Idaho                MARIA CANTWELL, Washington52RAND PAUL, Kentucky                  JEANNE SHAHEEN, New Hampshire53TIM SCOTT, South Carolina            CORY A. BOOKER, New Jersey54TODD YOUNG, Indiana                  CHRISTOPHER A. COONS, Delaware55JOSH HAWLEY, Missouri                MAZIE K. HIRONO, Hawaii56TED BUDD, North Carolina             JACKY ROSEN, Nevada57JOHN R. CURTIS, Utah                 JOHN W. HICKENLOOPER, Colorado58JAMES C. JUSTICE, West Virginia      ADAM B. SCHIFF, California59JON HUSTED, Ohio60                Meredith West, Republican Staff Director61                 Sean Moore, Democratic Staff Director6263                           C O N T E N T S6465                              ----------6667                           FEBRUARY 25, 202668                           Opening Statements6970                                                                   Page71Joni Ernst, U.S. Senator from Iowa, Chair........................     172Edward J. Markey, U.S. Senator from Massachusetts, Ranking Member     37374                               Witnesses7576The Honorable William W. Kirk, Inspector General, U.S. Small77  Business Administration........................................     578    Prepared Statement...........................................     779Mr. Kenneth Dieffenbach, Executive Director, Pandemic Response80  Accountability Committee (PRAC)................................    1981    Prepared Statement...........................................    218283              Additional Letters/Statements for the Record8485U.S. Senate Committee on Small Business and Entrepreneurship86  Letter to the Administrator of the U.S. Small Business87  Administration Dated January 8, 2026...........................    488889                        Questions for the Record9091William W. Kirk Responses to Questions Submitted by Chair Ernst92  and Senator Scott..............................................    5293Kenneth Dieffenbach Responses to Questions Submitted by Chair94  Ernst and Senator Scott........................................    569596 FROM FRAUD TO RECOVERY: RESTORING INTEGRITY IN SMALL BUSINESS PROGRAMS9798                              ----------99100                      WEDNESDAY, FEBRUARY 25, 2026101102                      United States Senate,103                        Committee on Small Business104                                      and Entrepreneurship,105                                                    Washington, DC.106    The committee met, pursuant to notice, at 2:32 p.m., in107Room 428A, Russell Senate Office Building, Hon. Joni Ernst,108chairwoman of the committee, presiding.109    Present: Senators Ernst [presiding], Young, Hawley, Markey,110Shaheen, Hirono, and Rosen.111112               OPENING STATEMENT OF SENATOR ERNST113114    Chair. I call the Committee on Small Business and115Entrepreneurship to order.116    Nearly 6 years ago, the Small Business Administration's117pandemic relief programs provided a much-needed lifeline for118small businesses in Iowa and across America. Millions of small119business owners and their employees were saved from closure and120mass layoffs thanks to Paycheck Protection Program and Economic121Injury Disaster Loan funds awarded by the SBA.122    But as we've seen time and again, when government funds123seemed free for the taking, bad actors are ready to steal and124scam. Government programs should never be able to be exploited125at the American taxpayers' expense in the first place. However,126the lack of oversight mechanisms in SBA's COVID relief programs127coupled with the quick disbursement of funds to save shuttered128businesses allowed swindlers to rob taxpayers of $200 billion129in pandemic relief loans.130    The Pandemic Response Accountability Committee, or PRAC,131sounded the alarm years ago on how allowing applicants to self-132certify their eligibility increases fraud. Self-certification133allows the government to rely on an applicant's promise that134they meet program requirements. The SBA Office of Inspector135General repeatedly echoed their concerns about this system.136    Unfortunately, for taxpayers, the Biden administration137ignored repeated watchdog warnings, allowing blanket138forgiveness without additional verification on PPP loans under139$150,000, and potentially allowing a large swath of fraud to140escape meaningful scrutiny. Self-certification was known to be141a major problem as more pandemic relief programs were created.142    Consider the Restaurant Revitalization Fund, or RRF, and143Shuttered Venue Operators Grant, the SVOG programs. These144opened a menu of fraud for the taking. In 2024, music artist145Chris Brown exploited these awards to the tune of $10 million.146Half of these funds were paid directly to the singer himself.147Additional funds were spent on an $80,000 birthday party. The148SBA never should have been running a drive-through for149fraudsters.150    However, even though the RRF program had a 20-location151limit for franchisees restaurant chain, CoreLife eatery with 29152locations still got served $7.8 million from our taxpayers that153it never should have been allowed to receive. But talk about154fast fraud made to order, one Oregon dentist known for155illegally distributing pharmaceuticals, used his personal156address and fictitious restaurant names in Florida to generate157nearly $8 million in RRF payments.158    To date, the PRAC has diligently helped law enforcement159partners expose more than $2.4 million--or excuse me, billion,160with a B, $2.4 billion in estimated fraud loss. IG Kirk's161recent appointment as PRAC chair highlights how critical it162remains to claw back these funds, especially across SBA163programs. Last July, the SBA OIG flagged an astonishing $544164million of potential improper payments in the SVOG program.165Yet, the Biden administration continued ignoring the program.166Ultimately, officials from the previous administration did not167refer a single case to the Treasury.168    Fraudsters can't be left off the hook just because time has169passed. Congress must pass my SBA Fraud Enforcement Extension170Act to extend the statutes of limitations for SVOG and RRF171programs, and give investigators the time they need to continue172going after crooks. Without my legislation, as soon as April,173fraudsters who stole funds will escape justice.174    You heard me right folks, in just a little over a month,175many of the swindlers who took advantage of some SBA COVID176relief programs can no longer be prosecuted. The good news is177my statute of limitations bill has already passed the House and178this committee; it is now pending before the full Senate. I179call on Democrats to stop blocking this legislation so there180can be real accountability.181    I am grateful the current administration knows that the job182is not finished. The SBA is conducting manual reviews of more183than 10,000 RRF awards, totaling over $3 billion. Just over1841,000 of these awardees did not submit the required post-award185report documenting how the money was spent. SBA also sent186demand letters to an additional 8,000 awardees who were not a187part of the manual review and never submitted a post-award188report totaling over $1.2 billion in RRF disbursements.189Additionally, last year, the SBA issued hundreds of demand190letters to SVOG grant recipients. The total grant value of191recipients who have not responded totals over $150 million.192    The SBA has been dealt an incredibly difficult hand193reviewing the entirety of both programs before the statutes of194limitations and referring all fraud to investigators. This195critical work must continue. A few weeks ago, Administrator196Loeffler suspended more than 110,000 California borrowers who197took home over $8.5 billion in potentially fraudulent COVID198relief funds. The recent fraud investigations in Minnesota have199uncovered at least $9 billion from State and Federal programs,200including $400 million in PPP loans, and Administrator Loeffler201acted quickly to remedy this issue.202    Republican members of this committee sent a letter to203Administrator Loeffler earlier this year, applauding her work204to shut down these schemes. I ask unanimous consent to enter205into the record our January 8th letter requesting information206from the SBA on its efforts to uncover fraud in the SBA207programs.208    Without objection so ordered.209    I look forward to hearing from our Federal watchdog210partners today on how they are tackling fraud and recovering211taxpayers' hard earned dollars. Thank you for your service, and212I look forward to hearing your testimony.213    I now recognize Ranking Member Markey for his opening214statement.215216                  STATEMENT OF SENATOR MARKEY217218    Senator Markey. Yeah. Thank you, Madam Chair.219    Last night, President Trump declared a war on fraud. While220fraud must be taken seriously, the Trump administration has221shown it is only interested in weaponizing fraud for political222gain, and last night was a clear example of that. Trump said223the Somali community in Minnesota is plundering America and has224pillaged $19 billion from the American taxpayer. You know,225Trump lied and cynically weaponized fraud to demonize226immigrants. Trump is falsely pointing the finger at immigrants227while facing no accountability for his own behavior that228enriches himself and his family.229    Trump said last night, if we're able to find enough of that230fraud, we'll actually have a balanced budget overnight. That231level of fraud does not exist, and it should trouble every232American because what it really means is that Trump will use233isolated incidents of fraud to punish his perceived enemies,234and the attacks have already begun. Last month, the Trump235administration used fraud as a pretext for freezing funding for236childcare and low-income assistance programs, threatened to237withhold Federal Medicaid funds, and ordered a review of238Federal funding for Democratic-controlled states.239    These are not actions of a President fighting fraud. This240is a President determined to make life miserable for anyone who241doesn't support him. All the while, DOGE has been accessing242American's sensitive data. We recently learned DOGE employees243illegally funneled voter data to an organization pushing244disproven conspiracy theories of widespread election fraud. We245still don't know if sensitive data at SBA was compromised by246DOGE because our committee has never been briefed on DOGE's247activities at the SBA, and that is unacceptable.248    If the President cared about fraud, would he be doling out249billion-dollar contracts to his cronies. Would he solicit250donations for his gold-plated ballroom from companies that do251billions of dollars of business with the Federal Government?252Would he grant pardons to criminals convicted of money253laundering, bank fraud, and wire fraud who have connections to254him and to his administration? And we are just 1 year removed255from the night President Trump illegally fired 17 independent256watchdogs, including Mike Ware at the SBA. Are these the257actions of a President serious about fraud? Or are those the258actions of an administration where corruption is self-dealing259are the norm?260    There's an old saying that hypocrisy is the tribute that261vice pays to virtue. And so, yeah, we now have Donald Trump262paying vice, paying tribute to the rooting out of fraud while263at the same time. That is a good way of describing the entirety264of his administration. And that's the hypocrisy I think that265really bothers people even as they see the President up there266trying to demonize a small number of people and promising that267eradicating that level of fraud will balance the budget when he268knows that is not true.269    Today's hearing is about fraud at the SBA, and we know that270bad actors took advantage of some of these COVID programs. We271don't deny that, and we must hold them accountable. Absolutely.272But let's be very clear about when that fraud occurred. Take273the Economic Injury Disaster program or the EIDL program, for274example. Of the approximately 4 million loans issued during the275pandemic, more than 3.7 million of those loans, or more than 90276percent of the loans, were approved in 2020 by the Trump277administration itself, 90 percent of the loans that we're going278to be looking at.279    So, when we hear about fraud today, let's keep in mind who280was on watch when it happened, and Democrats and Republicans281should stand up and acknowledge actual fraud wherever and282whenever it occurs, and not just when it is politically283convenient to do so.284    So, if we're serious about protecting taxpayer dollars,285policing fraud should not become a farce where those in power286give themselves a pass and use investigations to exact revenge287on their political counterparts. The Trump administration288abuses of Minnesota and other Democratic-led states like my289home state of Massachusetts, which he mentioned last night,290demonstrate exactly why we need real independent oversight at291all levels of government.292    So, I thank you Madam Chair. I thank you for holding this293hearing, and I look forward to hearing from our witnesses.294    Chair. Thank you, Ranking Member Markey. I do want to295extend a warm welcome to our witnesses, and I'm thankful that296you took time out of your busy schedules to share your297expertise and insight with this committee.298    And, first, Mr. William Kirk serves as the inspector299general for the Small Business Administration. Mr. Kirk was300sworn in as SBA inspector general in early January, and has301extensive experience in strengthening internal controls and302combating fraud, waste, and abuse in his three decades of303leadership across higher education, also private enterprise,304and the Federal Government. So, yeah, thank you for your305service. He earned his bachelor of business administration in306accountancy and juris doctorate degrees from the University of307Notre Dame.308    Mr. Kirk, I would also like to congratulate you on your309recent appointment as chair of the Pandemic Response310Accountability Committee, effective March 1. I am confident311that you will continue to shine a spotlight on the pandemic-era312relief programs, and work across the investigative community to313recover funds and bring fraudsters to justice.314    Next, Mr. Ken Dieffenbach. Mr. Dieffenbach serves as the315third executive director of the Pandemic Response316Accountability Committee, or PRAC, and brings over 28 years of317experience in the oversight community. As executive director,318Mr. Dieffenbach leads the PRAC's efforts to support and319coordinate oversight of the pandemic response, enhance320transparency, and use data to detect fraud, waste, and abuse.321Mr. Dieffenbach earned his bachelor's degree in business from322the Citadel and a graduate degree in criminal justice from the323University of Alabama at Birmingham. Thank you again.324    Briefly, I'd like to take a moment to explain our lighting325system to our witnesses. There are three lights in front of326you. Green means go, yellow means you need to wrap it up pretty327quick, and red means to conclude your remarks.328    I ask unanimous consent that the witness's full statements329be included in the record, and without objection, so ordered.330As your written testimony has been made part of the record, the331committee asks that you limit your oral remarks to 5 minutes.332    And with that, Mr. Kirk, you are recognized for 5 minutes333for your testimony.334335STATEMENT OF MR. WILLIAM ``BILL'' KIRK, INSPECTOR GENERAL, U.S.336         SMALL BUSINESS ADMINISTRATION WASHINGTON, D.C.337338    Mr. Kirk. Thank you, Chair Ernst, Ranking Member Markey,339and distinguished members of the committee. Thank you for the340opportunity to appear before you today. It is a great honor to341represent the Office of Inspector General at the U.S. Small342Business Administration and the dedicated auditors, sworn law343enforcement investigators, analysts, and support professionals344who work every day to protect taxpayer dollars and promote345integrity across SBAs programs.346    The SBA OIG operates independently under the Inspector347General Act of 1978. Our mandate is straightforward, but348consequential; we conduct objective oversight, grounded in349evidence to detect and deter fraud, waste, and abuse, and to350strengthen SBA program integrity through actionable351recommendations and transparent reporting.352    While the acute economic phase of the COVID-19 pandemic has353passed, oversight has not oversight, the scale and speed of354SBAs pandemic response was unprecedented. To avert an economic355crisis caused by lockdowns, business closures, and other356impediments, SBA dispersed approximately $1.2 trillion in357pandemic economic assistance.358    The response delivered critical relief to millions of359legitimate small businesses, but it also created opportunities360for fraudsters to exploit internal control vulnerabilities.361Fraudsters stole identity information, created synthetic362identities, duplicated information to exploit programs, all363this to exploit to--they exploited programs meant to help those364in need.365    Today I'm going to focus on three areas central to the366committee's oversight responsibilities. First, the systemic367risks within the 8(a) Business Development Program and the368importance of eligibility oversight. Secondly, the369underperformance in post-award monitoring within the Restaurant370Revitalization Fund, also known as RRF, and the Shuttered Venue371Operators Grant, known as SVOG, or SVOG awards, and the372recovery of funds that were improperly or fraudulently373dispersed. Third, the necessity of extending the statute of374limitations to 10 years for RRF and SVOG fraud, which would375match the statute enacted for the Paycheck Protection Program,376PPP, and COVID-19 Economic Injury Disaster Loan, or idle fraud.377    These issues are interconnected. They all reflect the same378underlying principle; when program eligibility is not379rigorously verified, when red flags are not fully resolved, or380when enforcement timelines are misaligned with investigative381realities, the American taxpayer bears the risk.382    Our office has continued to identify indicators of383potential ineligibility, unresolved fraud flags, and delayed384recovery actions in certain pandemic programs. At the same385time, we have seen the benefits of strength and controls,386improved inter-agency data-sharing, and enhanced investigative387coordination through partnerships such as with the Pandemic388Response Accountability Committee, known as the PRAC. Oversight389is not about revisiting the urgency of 2020. Rather, it is390about ensuring that the structural lessons from that period391translate into stronger controls today and in the future.392    Under my leadership, SBA OIG will continue to exercise393independent judgment, pursue complex fraud investigations,394wherever the evidence leads us, we'll issue recommendations to395strengthen internal controls, and we pledge to keep this396committee fully informed of risks, corrective actions, and397measurable outcomes. The work before us requires persistence,398sufficient time to investigate potential fraud, and a sustained399commitment to integrity.400    I appreciate the committee's engagement on these matters,401and I look forward to discussing them in greater detail. Thank402you very much.403    [The prepared statement of Mr. Kirk follows.]404    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]405406    Chair. Thank you very much. Mr. Dieffenbach, you're407recognized for 5 minutes for your testimony.408409   STATEMENT OF MR. KENNETH DIEFFENBACH, EXECUTIVE DIRECTOR,410 PANDEMIC RESPONSE ACCOUNTABILITY COMMITTEE (PRAC) WASHINGTON,411                              D.C.412413    Mr. Dieffenbach. Thank you. Chair Ernst, Ranking Member414Markey, members of the committee, it is an honor to be here415today to discuss the Pandemic Response Accountability416Committee, or PRAC, and our work to investigate fraud and417improve fraud prevention across Federal programs, including418funds intended to help small businesses.419    PRAC's success would not be possible without strong420partnerships like the one we have with the Small Business421Administration, OIG. Thanks to Congress, the One Big Beautiful422Bill Act extended the PRAC and its data analytics capability423until 2034, provided $88 million in funding and expanded our424jurisdiction to programs funded in the law. Operating an annual425budget of approximately 18.5 and a half million dollars, to426date, the PRAC has helped recover well over $500 million for427the taxpayer.428    As executive director of the PRAC, an entity Congress429created to oversee over $5 trillion in relief funding, I work430with a phenomenal team that is leveraging artificial431intelligence to collect, organize, and analyze data to rapidly432provide insights into fraud risks. This proactive approach is433clearly needed so that fraud is prevented before funds are434dispersed. This past summer, the PRAC issued two fraud alerts435that identified over $79 billion in potential fraud that could436have been prevented with pre-award vetting and cross-agency437coordination.438    To address these issues, the PRAC is developing an439artificial intelligence enabled fraud prevention engine,440trained on 5 million pandemic applications and other data, the441tool can quickly identify anomalies, trends, patterns, and442hidden connections in applications before payment. Our access443to law enforcement sensitive and other unique data, over 119444million applications for pandemic aid and over 127,000 known or445suspected pandemic fraud cases can reveal powerful new insights446and serve as an early warning system of organized, often447transnational, criminal conspiracies and other emerging448threats.449    Had our fraud prevention engine been in existence in March450of 2020, pre-award vetting would've flagged at least tens of451billions of dollars in fraudulent claims for further scrutiny,452allowing agencies again to prevent fraud. One of the many453lessons of the pandemic is that fraudsters rarely target just454one government program, they exploit vulnerabilities wherever455they exist. This is why the PRAC uniquely focuses on cross456program and cross agency risks. For example, in one project we457found over 40,000 instances where the same person appears to458have reported a low income to obtain housing benefits and also459a high income to obtain small business administration benefits.460    These anomalies indicate potential fraud in more than $860461million in PPP loans, and they were likely caused by identity462theft or other types of fraud schemes in one or both of the463programs. Now, most importantly, it also means that legitimate464beneficiaries likely lost out on benefits that they needed and465deserved to have.466    The PRAC also works across--works with OIGs to develop467analytics tools that provide new insights and prove468effectiveness of oversight. For example, we recently developed469a risk dashboard for the Pension Benefit Guarantee Corporation470OIG, that to date has contributed to them recovering over $260471million. And we just launched a similar dashboard for the472Federal Communications Commission OIG, which aggregates data473related to $11 billion in disbursements to 14,000 entities that474will allow them to provide more effective oversight.475    The PRAC also provides investigative support to more than47650 law enforcement partners related to 1200 investigations with47724,000 subjects and well over the $2.4 billion, Chair, that you478referenced in your opening statement. In one of the tens of479thousands of pandemic fraud cases, we identified one PPP scheme480involving more than 450 applications from over 100 individuals481across 24 states. This is but one example where the proactive482use of data and technology could have prevented or aided in the483early detection of a scheme, mitigated the need for a resource484intensive investigation and prosecution, and helped ensure485taxpayer dollars went to the intended recipients and not the486fraudsters. Every dollar that goes to a fraudster does not go487to the recipients that Congress intended the programs to help488including small businesses, the unemployed, and veterans.489    With the support of Congress, we'll continue our work on490behalf of the taxpayers to investigate fraud and demonstrate491the value and effectiveness of fraud prevention. Thank you492again for the opportunity to be here today and for your493continued support of the PRAC, the IG community, and494independent oversight. This concludes my prepared remarks. I495look forward to answering your questions.496    [The prepared statement of Mr. Dieffenbach follows.]497    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]498499    Chair. Thank you very much to our witnesses. And now, we500will move into the question, answer session and I will501recognize myself for 5 minutes.502    So, Mr. Kirk, we'll start with you. Reports from your503office state SBA identified $544 million in potential improper504payments in the SVOG or SVOG program and $522 million in the505RRF program. Yet not one recipient had been referred to506Treasury for recovery. Not one. This is actually pretty507appalling. Your testimony also identifies more than $9.5508billion of RRF awards in need of review.509    Given the scope of potential fraud across the two programs,510will you be able to investigate all credible leads before the511statutes of limitations expire in April for the SVOG program512and May for the RRF program?513    Mr. Kirk. Thank you, Senator, for the question. There is no514possible way that our office would be able to investigate all515of the outstanding referrals and cases that we have received in516the SVOG and the RRF program. I will acknowledge that the work517of the SBA OIG to this point in the RRF and SVOIG518investigations has been underwhelming, quite honestly. There's519lots more work we can do.520    I can only say that that was probably as a result of521resource allocation on other programs. The investigators and522auditors have done tremendous work, but the scope of the work523is such that we would need much more time, which is why I'm524strongly supportive of the idea of extending the statute of525limitations to allow for more time to investigate and resolve526and return money to the Federal Fed.527    Chair. No, I really appreciate that. And does that mean528that the ongoing investigations as well would time out?529    Mr. Kirk. I believe so. I believe that the handful of530investigations, quite honestly, it's an embarrassing number of531investigations that we currently have underway, those would532probably time out as well if we could not bring them to533prosecution.534    Chair. Yeah. So, even though you've invested time and535resources through the department they could not continue if the536statute of limitations runs out for the programs.537    Mr. Kirk. Indeed, it's my understanding that that work538would be for nought.539    Chair. Okay. Which is exactly why we do need to extend the540statute of limitations. So, thank you. Mr. Dieffenbach, the541PRAC has produced over $57 billion in monetary findings and542over 1200 indictments resulting in over 450 convictions. Is it543safe to say you are aware of the time and energy it takes to544investigate pandemic fraud?545    Mr. Dieffenbach. Yes. Very safe to say. I spent the bulk of546my 29-year career doing fraud and public corruption547investigations in the OIG world, and it takes time to identify548the bad actors, track them down, and to do the necessary work549to, to serve the purpose of justice. Yes.550    Chair. So, if Congress extends the statutes of limitations551by an additional 5 years, how much additional SVOG and RRF552fraud do you realistically believe could still be uncovered and553prosecuted?554    Mr. Dieffenbach. So, Chair, I can't provide you a numerical555estimate for that, again, because there's so many factors556involved, but I can assure you that with additional time, we'll557identify more bad actors and more losses and, and lead to more558convictions and more arrests. Yes.559    Chair. Okay. Thank you. And maybe for both of you in, in560the remaining time that I have, the Biden administration chose561automatic forgiveness for paycheck protection program loans562under $150,000, effectively waiving through potential fraud.563What front-end control should have been mandatory before564forgiveness was granted? And, and if we could start with you565General Kirk.566    Mr. Kirk. Sure. Thank you, Senator. First off, the, the567front-end control that would've certainly avoided many problems568would be the avoidance of the use of self-certification of569eligibility. That's a real problem. There are ways to570crosscheck that self-certification, but certainly self-571certification is problematic. I would defer to my colleague if572there are others that he's aware of.573    Chair. Great. Thank you. Yes.574    Mr. Dieffenbach. Sure. So, the PRAC has done a tremendous575body of work in lessons learned, and we've produced a program--576a blueprint for program integrity, it includes program577certification. The biggest point I'd make to you is that578agencies own this risk and they have to do risk assessments,579and they have to identify how are we verifying eligibility,580what are the terms and conditions of the award, what is the law581as laid out by Congress, and how are we ensuring that we're582mitigating a broad range of risk?583    And every program has different risk, overlapping risk, but584first and foremost, agencies have to pay attention and devote585resources to those activities.586    Chair. Okay. Thank you. Now I recognize Ranking Member587Markey.588    Senator Markey. Thank you, Madam Chair, very much. The589questions that I'm going to begin with refer to the Paycheck--590the Paycheck Protection Program, or PPP, and the Economic591Injury Disaster Loan Program or EIDL, which helped save592millions of businesses during the pandemic. The SBA and593Congress should be learning from our experiences to improve594programs, keep fraudsters out, and target help to deserving595small businesses.596    However, Republicans seem more intent on blaming the Biden597administration than anything else. 2023 SBA report found that59886 percent of the fraudulent loans came under Trump during the599first 9 months of the first pandemic relief programs. So, Mr.600Kirk, your office's own 2023 report on pandemic fraud states601that many of the SBA's improvements to stem fraud, ``Were made602after much of the damage had already been done,'' and that603fraudsters, egregiously exploited SBAs weakened controls during604the first year of the program, meaning during the Trump605administration. So, Mr. Kirk, when were most PPP and EIDL loans606made?607    Mr. Kirk. Thank you, ranking member, for the question. I608appreciate it. As you described, the vast majority of the loans609were made in the year 2020 and 2021. So, they were in that610timeframe, that's when the pandemic occurred. So, the relief611that the country needed was at that time in those--that's when612the loans----613    Senator Markey. So, 93 percent----614    Mr. Kirk. Yes.615    Senator Markey [continuing]. Of the EIDL grants were made616in 2020 when President Trump was in office. Mr. Kirk, do you617agree with your predecessor's finding that the vast majority of618fraudulent PPP and EIDL loans were made during the first Trump619administration? It seems that you do. Mr. Kirk and Mr.620Dieffenbach--excuse me?621    Mr. Kirk. No, I was going to say that that was the time622place--time when the pandemic occurred, it was in 2020, and the623economic relief that the country needed was at that time. So,624that's when the loans were disbursed.625    Senator Markey. And I think I heard you say, Mr.626Dieffenbach, that if pre-award vetting had been in place in6272020, we would've saved tens of billions of dollars. Is that628what you said? Correct.629    Mr. Dieffenbach. Correct, Ranking Member Markey. Had we had630the data systems, the authorities' jurisdiction in place, we631certainly could have identified significant amounts of632potential fraud for which the proper due diligence could have633been accomplished before the money went out the door.634    Senator Markey. Right. So, back in 2020, if we had put635those programs in place, we wouldn't be chasing fraud. We636would've prevented the fraud in the first place?637    Mr. Dieffenbach. Correct.638    Senator Markey. Right. Thank you. So, do you agree with639that, Mr. Kirk?640    Mr. Kirk. Thank you, Senator. Yeah, I agree that had641different measures been taken, I think you learn an awful lot642in hindsight. But because the pandemic was raging at that time643and there was a strong desire, a bipartisan desire to try to644save the economy, that's when those loans were made.645    Senator Markey. And what programs should the Trump646administration have put in place? Because as you're saying, you647live life forwards, but you understand it backwards. So, what648programs should have been in place in order to prevent against649faulty implementation of those laws?650    Mr. Kirk. I'm sorry. I'm not--what, the program, the651pandemic, the people----652    Senator Markey. You agree with Mr. Dieffenbach that we653should have had those checks in right from the get go. You do654agree with that?655    Mr. Dieffenbach. The protocols in place to prevent.656    Mr. Kirk. It would--again, hindsight is wonderful. I think657there were significant controls put in place, but the frauds658were very capable, and they were able to get by some of them.659As I said, I think there was bipartisan interest in rescuing660the economy from the ravages of the pandemic. And so, the loans661and grants that were made were intended to save the economy.662Obviously, in hindsight, we can----663    Senator Markey. I'm just trying to get the timeline down--664--665    Mr. Kirk. Sure.666    Senator Markey [continuing]. In terms of when that fraud,667you know, began.668    Mr. Kirk. The fraud has continued in the past 5 years as669well----670    Senator Markey. I appreciate that. But as we just heard671earlier, if the safeguards were in place initially, we would've672saved tens of billions of dollars. And that's just the673testimony that we received. And just a few weeks ago, the New674York Times reported about a huckster who had been convicted of675peddling bogus energy drinks in 2019, but was then pardoned676with the help of one of President Trump's former lawyers as he677concluded his first term in 2021. And just last year, that same678huckster was convicted again of another fraud scheme that cost679victims millions of dollars. So, what did the President do? He680granted another pardon to that same huckster.681    So, Mr. Dieffenbach, as someone who has devoted nearly682three decades of your life to fighting fraud, how does it feel683to see convicted fraudsters let off the hook not once, but684twice, because they happen to have a line into the President?685    Mr. Dieffenbach. So, Ranking Member Markey, I'm not686familiar with that matter at all. But I can look into it if the687law is followed throughout then it's followed throughout. I688don't--I don't know the facts.689    Senator Markey. Okay. Thank you. Thank you, Madam Chair.690    Chair. This might be an instance where both Ranking Member691Markey and I agree that if we had had the proper protocols in692place for that very bipartisan bill the Paycheck Protection693Program and EIDL, that we probably would've saved a lot of--a694lot of taxpayer money, and we wouldn't be in this situation695today. But I would remind everybody, probably everybody on this696committee voted in favor of those programs because we did want697to save our small businesses back home.698    But, you know, if we had instituted DOGE, Department of699Government Efficiency at that time, we probably would've had700the proper protocols in place. So, next, we have Senator701Hawley. You are recognized for 5 minutes.702    Senator Hawley. Thank you, Madam Chair. Thanks to the703witnesses for being here.704    Mr. Kirk, if I could just start with you, help me705understand the scope of what you're looking at with the706Restaurant Revitalization Fund and the Shuttered Venue707Operators Act. These are the programs you've identified that708are currently under shorter statutory limitations that you709think that we need to adjust. And partly that's because as you710outline in your written testimony, there is a good deal of711potential fraud here that it sounds like to me your office and712others are currently running down. Is that fair to say?713    Mr. Kirk. That is correct, Senator. Thank you for the714question. Yes, we're running it down. I will acknowledge that715I've only been in place 7 weeks or so. I have learned that716really there's been an inadequate attention paid to717investigating RRF and SVOG fraud. We can do much better. I718commit to you we will do much better. We have only a handful of719investigations underway. To me it's an absolute priority, but720it will be critically important for us to have an extension of721the statute of limitations to be able to continue those722investigations.723    Senator Hawley. And you say only a handful of724investigations have been performed or are currently underway,725but it sounds like on the basis of your written remarks, that726the potential fraud in the Restaurant Revitalization Program's727quite large. Is that fair to say?728    Mr. Kirk. Yes, Senator. There's potential fraud in the729billions of dollars.730    Senator Hawley. Billions with a B?731    Mr. Kirk. Yeah.732    Senator Hawley. That's incredible. I'm reading from your733written testimony, you say, OIG in one review identified 33,168734restaurant revitalization recipients, who had also received PPP735loans that have been marked as potentially fraudulent or736ineligible. These recipients received nearly not quite $11737billion in RRF funds. And you go on to outline that a bare738minimum of these, a tiny percentage have had any kind of739substantive review. It sounds like there's a lot to be done740here.741    Mr. Kirk. We have our work cut out for us, and we will make742good use of the additional time in the statute of limitations.743Indeed, there is a tremendous amount of fraud that has been744uncovered, identified potential fraud. Not all of it has been745proven. Obviously, we have work to do to ensure that fraudsters746are brought to justice, but it is billions of dollars, Senator.747    Senator Hawley. You say that your recommendation called for748review of more than 61,000 RRF awards totaling almost $10749billion.750    Mr. Kirk. That's correct.751    Senator Hawley. That's quite substantial. Why is it that752there's been so little investigation done before now? Do you753have a sense of that?754    Mr. Kirk. Thank you, Senator. The magnitude of work755available to us to do is significant. I have come to know that756the investigators and auditors that are in the SBA OIG right757now are really dedicated professionals. I believe that they758were performing their duties in other areas. The pandemic and759EIDL fraud is significant. We have so much work to do. Having760said that, we can't ignore one area of fraud just because we've761got fraud in others. We are going to attack this fraud. We're762going to do it diligently. I'm really honored to be named to763the Pandemic Recovery Accountability Committee because I764selfishly will look forward to using the PRAC to be able to765identify more of the fraud.766    For example, it would be impossible for our staff to review767manually 61,000 loans. But with the data analytical capability768of the PRAC, we'll be able to do a much better job of that and769return far more money to the--to the taxpayer. We need that770time, though. We need the extension of the statute of771limitations to undertake that work.772    Senator Hawley. And remind us when it runs out one more773time, Mr. Kirk. When does the statute----774    Mr. Kirk. Current, some of them as early as March or April.775    Senator Hawley. Very, very soon.776    Mr. Kirk. It's very soon.777    Senator Hawley. We need to act immediately.778    Mr. Kirk. Yes, sir.779    Senator Hawley. I'm glad that you're making this a top780priority. Obviously, we've seen in recent weeks, I think just781the scope of the pandemic era of fraud that has continued into782the present. I had testimony at another committee, one expert783suggested that we could be looking at as much as a trillion784dollars in fraud every year. Not all of that pandemic fraud, of785course, but that's an astounding, astounding number. I think786the American people are astounded and also sickened by the fact787that their tax dollars are being used to fund fraudsters buy788private planes, luxury yachts.789    In one case there were 12,000 pounds of $100 bills smuggled790out of suitcases in the city of Minneapolis. I mean, this is791outrageous stuff. Any dollar of fraud is outrageous. But the792scale that you're talking about here is truly alarming. What's793the first order business for you? We get this statute extended,794which is what we've got to do, what's the next order of795business for you in terms of tackling this?796    Mr. Kirk. Oh, thank you, Senator. As I mentioned to our797staff, our focus is fraud, fraud, fraud. I mean, there's three798things we're concentrating on. We need to dedicate our799investigative capabilities to identify the fraud, to return the800dollars to the--to the taxpayer. The first priority really is801to leverage data analytics, because when you're talking about802billions, even trillions of dollars and hundreds of thousands803of loans, it's simply not possible to do manual reviews in804these cases. We have to use data analytics. We have--the805fraudsters are taking advantage of the technology. We need to806be able to do so as well.807    Senator Hawley. Very good. Well, I hope that we can get the808statute of limitations extended so you'll be able to do your809work. Thank you for the terrific work you're doing, both of810you.811    Mr. Kirk. Thank you.812    Senator Hawley. Thank you, Madam Chair.813    Chair. Thank you, Senator Hawley. Next, Senator Shaheen. 5814minutes.815    Senator Shaheen. Thank you, Madam Chair, and thank you both816for being here and for the work that you're doing. I appreciate817what the chairwoman said about the importance of the programs818and what you said Mr. Kirk, about the fact that when those819programs were designed, and as somebody on this committee who820helped design the PPP program, there was real urgency about821getting that done, about trying to save the small businesses822that were going under and the economy, and a recognition that823fraud needed to be addressed. But it was secondary to ensuring824that businesses were able to continue to operate.825    So, Mr. Dieffenbach, can you talk about how long it is826taking to develop those pre fraud measures that you mentioned?827    Mr. Dieffenbach. I'm sorry, the pre fraud measures?828    Senator Shaheen. Yeah. What you're talking about.829    Mr. Dieffenbach. The pre award vetting?830    Senator Shaheen. Yeah.831    Mr. Dieffenbach. Yes, ma'am. So, thank you for the--for the832question, Senator. We have developed, again, a artificial833intelligence enabled system that can very rapidly identify----834    Senator Shaheen. And how long?835    Mr. Dieffenbach [continuing]. Patterns, trends, anomalies.836We can--we can review once the system is set up----837    Senator Shaheen. How long did it take you to develop?838    Mr. Dieffenbach. To develop it? We've developed it over the839last 6 to 7 months.840    Senator Shaheen. Okay. So, having that kind of a system in841place before the program was done was probably unlikely given842the urgency about getting----843    Mr. Dieffenbach. From March of 2020, correct.844    Senator Shaheen. Correct. Okay. I just wanted to be clear845as we're looking at timeframe here. And one of the things that846you said was that we can't ignore--maybe it was you, Mr. Kirk--847we can't ignore one area of fraud because of fraud in other848areas. And Senator Ernst mentioned the DOGE work.849    Last year we saw reports that DOGE had accessed SBA systems850that had sensitive information about people and businesses. We851requested a review of what they accessed and whether there was852any misuse of personal information. Mr. Kirk, have you looked853into what DOGE accessed and whether there was any tampering854with the information at SBA?855    Mr. Kirk. Thank you, Senator for the question. I've just856been in place about 7 weeks. And in that time, I have not857conducted any review of DOGE. If I may say though, I was--at858the time I was a career employee in the Federal government over859at the Department of Education. And when I worked with DOGE860employees, we understood them to be government employees.861Certainly, they were from the Department of Government862Efficiency, I guess the name was, but they were government863employees that were vetted and reviewed by the HR processes and864procedures.865    Senator Shaheen. But in fact, they weren't.866    Mr. Kirk. I can't speak to that. I don't know. But the867folks that I worked with were as I understood them to be,868members of the Federal service.869    Senator Shaheen. Is this something you're concerned about870looking at SBA?871    Mr. Kirk. Not currently. No, ma'am.872    Senator Shaheen. I would hope that you would do that. And873in fact, when this was happening, we requested on the committee874a briefing that I think both Senators Ernst and Markey said875they would try and make sure we received. And yet, we haven't876gotten a briefing yet, so.877    Mr. Kirk. Thank you, Senator. I would be happy to work with878your staff to see if there is additional work that we can879assist you in trying to understand that.880    Senator Shaheen. That'd be great. I appreciate that. One of881my next question is also about SBA and how it operates, because882one of SBAs programs is the State Trade Expansion Program. It883helps small businesses that are exporting, it helps them to884grow their business. I think that's something that this885administration is also very interested in. And Congress886provided $20 million for STEP in fiscal year 2025 funding last887March.888    But despite SBA putting out a notice of funding889opportunities last May, they have yet to announce any awards890from STEP. So, I would hope Mr. Kirk is your looking into the891integrity of SBA and how it operates, that you would also look892into why SBA is not getting out the funding that Congress has893provided to ensure that those programs that are so critical to894our small businesses are actually being funded. Will you commit895to looking into what's going on and why the STEP program is not896funded?897    Mr. Kirk. Thank you, Senator. It appears to me that you898might be making a referral to an impoundment issue. And if so,899that's a matter that falls under the Impoundment Control Act.900That's a matter for the GAO to do that.901    Senator Shaheen. Well, I don't know that.902    Mr. Kirk. Perhaps not, but I'd be happy to try to research903that more and understand if that's what you're referring to.904    Senator Shaheen. Because there are also several other905programs, the Women's Business Centers and SCORE, where906Congress has funded them, but the money hasn't actually gone907out from SBA. So, I assume in your position, you can check on908that and see if SBA is actually funding the programs that909Congress determined it should fund.910    Mr. Kirk. I'll certainly be happy to work with my staff to911try to get answers to those questions for you.912    Senator Shaheen. Thank you. Madam Chair, I hope that we can913follow up and make sure that we have those answers.914    Chair. Yes, absolutely. Happy to work with you on that.915    Senator Shaheen. Thank you.916    Chair. Yes. And Senator Hirono, you're recognized for 5917minutes.918    Senator Hirono. Thank you, Madam Chair. Mr. Kirk, in your919testimony, you discussed the need to investigate fraud in the9208(a) Program, and I agree in fact, we should go after fraud by921anyone and in all programs. So, there you go. We agree on that.922And we should investigate fraud again in all programs,923including the 8(a), but to allege widespread fraud in this924program, which involves--how many people are--how many925companies, entities are in the 8(a) Program?926    Mr. Kirk. Gosh, I apologize, Senator. I don't have that.927    Senator Hirono. Thousands, thousands.928    Mr. Kirk. It is thousands. Indeed, I can assure you.929    Senator Hirono. And these are small businesses, and we have930decided in this committee that we should be supportive of small931businesses----932    Mr. Kirk. Absolutely.933    Senator Hirono [continuing]. And to work with them. But to934come into the questions relating to this 8(a) Program as with935the idea that there's massive fraud that is--that is936inappropriate. So, I just want to get your commitment that in937your review of the 8(a) Program that you maintain your938independence from those within the administration, including939the SBA leadership that considers the 8(a) Program to be a940fraud magnet. But you would be independent in your assessment941of whether or not there is fraud in the 8(a) Program.942    Mr. Kirk. Thank you, Senator, for the question. I can943absolutely assure you. I swore an oath to uphold the law, to944act impartially, to act without regard to political945partisanship independently and objectively. That's an oath I946take very seriously.947    Senator Hirono. I'm glad that you're reiterating once948again, that the IG is really critical that you be independent.949And I have the questions that I asked you during your950confirmation hearing.951    Mr. Kirk. Yes, ma'am.952    Senator Hirono. Now, one question I did ask you was whether953the rule of law applied to the President of the United States,954and you didn't answer that directly. I'm going to give you955another chance to answer that question.956    Mr. Kirk. Sure, Senator. I'm happy to acknowledge that the957rule of law applies to all citizens, all people in the United958States, including the President of the United States.959    Senator Hirono. Do you know that the President said that960the rule of law doesn't--he doesn't think the rule of law961applies to him?962    Mr. Kirk. I'm not aware of that statement.963    Senator Hirono. What if I were to tell you that that is his964view of the rule of law as applying to him? He doesn't think965the rule of law applies to him. He thinks that the Supreme966Court has given him pretty much immunity from--although that967that decision was based on any criminal doings, I think he968certainly applies it to the civil situation.969    So, I have some concerns about your independence. I'm glad970that you continue to affirm that you're going to be971independent. Now, on the question of Planned Parenthood receipt972of PPP funds, once again I believe that you're bringing up973whether or not, or the SBA is bringing up whether or not the974Planned Parenthood should have gotten this money. And your975predecessor IG has said that it was done appropriately.976    Do you have any reason to suspect or disagree with your977predecessor's assessment of whether Planned Parenthood had978committed fraud?979    Mr. Kirk. Thank you, Senator. My understanding is that the980SBA is conducting a review of the eligibility of many981institutions and entities, including that one.982    Senator Hirono. No, but your predecessor had already said983that Planned Parenthood had complied with the requirements.984    Mr. Kirk. Thank you, Senator. I'm actually quite pleased985that the agency is continuing to conduct reviews in all areas986because the job of tackling fraud is shared between the agency987and the IG.988    Senator Hirono. Well, the thing is----989    Mr. Kirk. This administration has made--the agency has made990really very significant efforts, since the beginning of last991year to----992    Senator Hirono. Hold on. I'm reclaiming my time. So, that's993great that, you know, the agency is being very objective and994all of that. But this regime is not objective when it comes to995the funding of Planned Parenthood. And in fact, it continues to996beat the drum that somehow Planned Parenthood committed fraud,997or that it was inappropriate. Now, your predecessor IG has998already reviewed--I mean, you must have enough other things to999look at regarding fraud, but you're going to once again, pursue1000fraud with regard to PPP.1001    So, my question to you is, do you not accept your1002predecessor IGs report, the assessment----1003    Mr. Kirk. Thank you, Senator.1004    Senator Hirono [continuing]. That Planned Parenthood had1005not committed fraud?1006    Mr. Kirk. I understand the question.1007    Senator Hirono. Yes or no?1008    Mr. Kirk. The SBA is conducting a new review, reviewing the1009eligibility of the affiliates, as I understand it. I am not1010involved in that review. Our office is not involved in that1011review. If they make referrals to the Inspector General's1012office, it is our responsibility under the law, and we abide by1013the law in all cases to investigate those matters.1014    Senator Hirono. Well, I have to tell you that this is very1015politically motivated, as you can imagine. And you must be1016aware that this regime--I call it a regime because of its1017authoritarianism--that this is a regime that has been calling1018to question funding for Planned Parenthood in many different1019ways, and certainly in this instance, you must be aware of1020that. So, I'm just saying this is yet another instance of1021politically motivated investigations. Thank you, Madam Chair.1022    Chair. Thank you, Senator Hirono. And I, for one, have1023called for additional information regarding those programs and1024the allocations that went out to Planned Parenthood, because I1025did not believe that they fit with the original congressional1026intent of the package that we passed out of this Small Business1027Committee. So, I would applaud the Inspector General's efforts1028on reviewing that matter. Senator Young.1029    Senator Young. Well, thank you, Madam Chair. And I want to1030thank our witnesses for being here today. Mr. Dieffenbach, I'd1031like to start by discussing the AI enabled fraud prevention1032engine that was developed by the Pandemic Response1033Accountability Committee that you highlighted in your written1034testimony. You noted that the tool can review approximately103520,000 applications per second before the funds are dispersed,1036and this would dramatically increase the government's ability1037to detect anomalies and potential fraud in real time.1038    Given those capabilities, what specific action should1039Congress consider to ensure agencies are fully leveraging AI1040driven fraud prevention tools at the front-end, rather than1041relying on a costly pay-and-chase model after funds go out the1042door?1043    Mr. Dieffenbach. Thank you, Senator Young. Indeed, we have1044built a very powerful tool. To what Congress can do to help1045enhance fraud prevention, I think first and foremost, it's1046ensuring the right incentives are in place, and that agency1047officials are taking their primary responsibility of preventing1048detecting fraud as they should. Inspector General Kirk and the1049rest of the inspectors general are here as kind of a secondary1050backup and an oversight mechanism. But the first and primary1051role of agency officials is to properly design programs, assess1052risk, and allocate proper resources to it.1053    So, in my estimation, the more Congress pays attention to1054their ownership of that risk, the more they will pay attention1055to it, and the more they will seek assistance from the PRAC and1056from inspectors general and follow recommendations so they can1057have impactful prevention activities.1058    Senator Young. Okay. Well, Congress will be--at least this1059member of Congress will be attentive to those issues. I know1060fraud throughout government programs is especially concerning1061to my constituents. Are there any statutory data sharing or1062other barriers that to your mind today prevent wider adoption1063of the AI tools you referenced across Federal programs?1064    Mr. Dieffenbach. Sure. The biggest one that comes to mind1065is our jurisdiction of the PRAC is currently limited to1066pandemic programs and to programs funded in the One Big1067Beautiful Bill Act, which is an expansion we received last1068summer we're grateful for. But the greater jurisdiction that we1069have at the PRAC, the greater we can identify trends,1070anomalies, patterns, and hidden connections across all1071government programs.1072    As I said in my opening statement, most fraudsters don't1073just defraud one government program. They go to the ones that1074are the weakest. We have an ongoing case now that involves1075frauds in 24 different states. The Department of Labor IG has1076identified one social security number that was used in 401077different states to obtain unemployment insurance benefits. So,1078expanding our jurisdiction, giving us the ability to1079responsibly look at a wider set of data, will give better1080visibility into these emerging trends and these organized1081groups to be more----1082    Senator Young. So, you would need statutory direction, is1083that accurate? Or would some other sort of direction suffice in1084order to broaden the scope of your current authorities or1085responsibilities to encompass non pandemic response programs1086that may be rife with or certainly you know, characterized by1087fraud?1088    Mr. Dieffenbach. So, as I outlined in my written statement,1089our jurisdiction is currently limited, so we would need1090statutory authorization to look at a broader array of programs,1091which would allow us to collect more data to be more effective.1092    Senator Young. Short of that, would it be allowable for1093members of your staff, perhaps you individually, to visit with1094me, any members of the Small Business Committee that would like1095to join and talk more generally about how lessons you've1096learned might be applied to other areas or tools you've1097developed?1098    Mr. Dieffenbach. Yes, Senator. I would welcome that1099opportunity. I spent almost my entire 28-year Federal career as1100a Federal law enforcement investigating corruption and fraud. I1101can talk fraud risks with you all day long, which is the first1102step in the process. But happy to talk anytime.1103    Senator Young. Here, today, I resolve to work with you and1104members of your team and have my office do so, and we will ask1105if other colleagues on the committee would like to also be1106supportive of cracking down on indefensible fraud.1107    Mr. Dieffenbach. Anytime, sir.1108    Senator Young. All right. And I see for the record, Senator1109Rosen, her face lit up. So, perhaps we can work together on1110this. Mr. Kirk.1111    Mr. Kirk. Yes, sir.1112    Senator Young. You've highlighted in your written testimony1113the recent steps the Small Business Administration has taken to1114strengthen program integrity. I regret that we're sort of1115running towards the end of our time, but I'll just ask you one1116threshold sort of question here. How's the SBA integrating AI1117machine learning or advanced data analytics into its fraud1118detection and application review processes today?1119    Mr. Kirk. Thank you, Senator. I know it is a priority of1120theirs. I have had several meetings already with the chief1121technology officer there, and I look forward to continuing1122those. It's really imperative. What we have to do is, as we1123integrate AI and data analytics, we have to make sure it's done1124safely, in a way that protects data, in a way that doesn't1125create new problems, as such as we're created with pandemic1126program, when steps were put into place that had a tail to1127them. So, I am, I know they are committed.1128    I am very committed to using technology because as Senator1129Ernst referred to, as Senator Markey referred to, we're talking1130about hundreds of thousands of loans, and there's no way to1131manually review these, that we have to use the data analytic1132tools that are available.1133    Senator Young. Well, thank you for your focus on this1134important matter. Chair.1135    Chair. Great. Thank you, Senator Young. Next, we'll go to1136Senator Rosen. Thank you.1137    Senator Rosen. Thank you, Madam Chair, Ranking Member1138Markey, appreciate this. Data and analytics, you're talking my1139language here. So, I want to thank Senator Young bringing this1140up. I was going to ask this very same question. I agree that1141early fraud protection through better technology, AI,1142dashboards, and the like, it is really preferable to--we don't1143want to pay them ahead of time and chase them down later. We1144want to prevent them.1145    And so, I do agree with your quote that the proactive use1146of data and technology could have prevented or aided in early1147detection schemes. So, I want to work with you to continue to1148use technology in smart ways to prevent fraud and join us on1149that. What we need to do to learn with you on ways that we can1150enhance your work. So, thank you for that.1151    And I want to say since I entered Congress, I've worked1152really hard to fight wasteful spending, look after Nevadans'1153hard-earned tax dollars, ensuring that waste is responsibly1154minimized. Responsibly minimized, right? As fraud is prevented,1155should always be a top priority. Tax dollars are precious. And1156so, I do believe this effort, and again, I agree with my1157colleagues that we must take the preventative approach. It's1158always better prevention--what do they say? An ounce of1159prevention versus a pound of cure, right?1160    And so, our goal should be to improve access to the support1161and SBA programs that are intended to provide. There's a lot of1162programs out there, not to create more barriers but to really1163enable people to navigate the complex environment that exists1164for I will say the people who aren't perpetrating fraud. The1165rest--the majority of folks really want to do the right thing,1166and they look forward and really dream about owning a small1167business. And so, we should be focused on implementing1168evidence-based reforms, identifying opportunities to improve1169compliance, and ensuring that critical resources do remain1170available for, look--99.2 percent of business owner of1171businesses in Nevada are small business. These are people's1172dreams, large and small. And we want them to use these1173resources.1174    So, one opportunity to improve compliance exists in better1175leveraging small business resource partners. You have an1176extensive network of resource partners, like Small Business1177Development Centers, Veterans Business Outreach Center--I was1178glad to bring the first VBOCs, two of them to Nevada--Women's1179Business Centers, they're all utilized extensively I know in1180Nevada by our small businesses. And I believe that the reach of1181these resources can be expanded to better help people who1182really want to do the right thing and own their own business1183and stay compliant with program requirements.1184    So, Mr. Kirk, how can the small business resource partners,1185like the ones I've named and others aid in the goal of1186educating business on compliance requirements? And what efforts1187are you taking to have the reach of our resource partners1188really get out there to the multitudes? Like I said, almost1189300,000 small businesses in Nevada, so they know they're there.1190They want to do the right thing, and they just need to be able1191to get the resources to do it.1192    Mr. Kirk. Thank you, Senator for the question. I really1193appreciate it because it allows me to talk about the other arm1194of what we do in the Inspector General's office. We are1195statutorily required to investigate and prevent and detect1196waste, fraud, and abuse. But our other critically important1197function is audit. And when we audit these programs, we can1198identify ways where their reach can be expanded. These are1199program responsibilities you're talking about, right? So, that1200those questions are--some of them are best directed to the1201administrator, but we are critically involved in auditing the1202programs to ensure that their reach is what Congress intended.1203    There are so many programs available. I'm only now becoming1204familiar with many of them. But our audit work is geared in1205many cases to identify how those programs might be improved,1206how the reach of the programs can be expanded.1207    Senator Rosen. Improved, for sure, because you can see the1208roadblocks for people who are trying to get things done and1209what are their obstacles to being compliant.1210    Mr. Kirk. Indeed.1211    Senator Rosen. Sometimes they're just not educated on what1212they need.1213    Mr. Kirk. Indeed. And, you know, the problem, you know, the1214pandemic relief was pushed out so quickly.1215    Senator Rosen. Yes.1216    Mr. Kirk. It would be nice if we could push out SBA1217assistance program assistance as quickly, but we would do so at1218the risk of greater fraud. So, I really am grateful for your1219question because it allows me to talk to our audit folks about1220really having them bear down on the issue of how can we ensure1221that the program funding, the program availability, the1222knowledge of how to use the programs is made available to the122336 million small businesses.1224    Senator Rosen. Right. Because some people are trying to1225perpetrate fraud and others may just not understand----1226    Mr. Kirk. Absolutely.1227    Senator Rosen [continuing]. How to be stay in compliance if1228they don't have--it's not a very large business.1229    Mr. Kirk. Indeed.1230    Senator Rosen. It could be just a mom and pop, a smaller1231business that just doesn't have the resources. So, thank you1232for that. And Madam Chair, I yield back.1233    Chair. Yes, thank you, Senator Rosen. And an excellent1234point, because we do have a lot of small businesses that just1235lack the ability to sort through some of the legalities.1236    Senator Rosen. They are trying to do the right thing but1237they just don't have the resources. Maybe they're not sure how1238to fill out paperwork.1239    Chair. Right. Exactly, exactly. Thank you for that line of1240questioning. And now I'll recognize Ranking Member Markey.1241    Senator Markey. Thank you, Madam Chair. Mr. Dieffenbach,1242you have been fighting government fraud for 28 years. You know1243that fraud is not a problem that is unique to only red and only1244blue states. Yet we've seen the SBA administrator take1245selective actions against borrowers in Minnesota and1246California. In fact, Administrator Loeffler went so far as to1247pause annual grant funding to the state of Minnesota after1248launching a probe into COVID-19 programs. I think the1249administrator is actually using isolated incidents of fraud1250from 6 years ago to deny law abiding small businesses in1251Minnesota access to SBA programs today.1252    So, Mr. Dieffenbach, as head of the Pandemic Recovery1253Accountability Committee, you have a comprehensive1254understanding of the fraud landscape. Has the data given you1255any indication that there was a correlation between whether1256someone lives in a state that voted against Donald Trump or for1257Donald Trump in terms of the likelihood that they committed1258fraud?1259    Mr. Dieffenbach. Ranking Member Markey, fraud exists in any1260program that gives away money. I have no data, no information1261about the geographic disbursement or the voting piece that you1262just discussed.1263    Senator Markey. Yeah. So, it's not red states and blue1264states, it's all states?1265    Mr. Dieffenbach. I don't know. It is--it is distributed1266across all states. Yes.1267    Senator Markey. Thank you. So, do you think that targeting1268specific states for political reasons as the SBA has done is an1269effective way to pursue recovery for the American taxpayers or1270does the PRAC rely on more nuanced analytics yourself to1271identify concentrations of fraud?1272    Mr. Dieffenbach. I don't have a comment on that except to1273say that I have 3 billion data points, and every day I've got a1274team that is looking for the patterns, trends, and anomalies of1275the fraud where it may occur so we can pursue it and refer it1276to the right inspectors general.1277    Senator Markey. Yeah. And I like that about you. You know,1278you're like, Sergeant Joe Friday in Dragnet, it's nothing but1279the facts, you know, and just follow the facts. It's not let's1280just target the blue states, because obviously, you'll be1281letting off most likely half of the culprits at that point,1282because that's just the way fraud works.1283    So, Madam Chair, as you know, this committee passed the SBA1284Fraud Enforcement Extension Vote Act by a voice vote this past1285July, and I am committed to passing this legislation as part of1286a comprehensive set of reforms and look forward to working with1287the chair to advance it along with other bipartisan priorities.1288And that said, our efforts to fight against fraud should not be1289limited to going after small restaurants and theaters,1290especially when President Trump is letting off fraudsters left1291and right.1292    If we're going to combat fraud, let's look and see what1293DOGE is doing with the social security numbers they illegally1294harvested and take steps to make sure they're not doing the1295same thing with small business data. So, I just want to be1296consistent. Let's call out the fraud across the board,1297including when it's committed by the President's allies, as1298well as the President's opponents. So, let's not allow the1299search for fraud to be used as a weapon to hurt people in blue1300states. So, I'm committed to fighting fraud but we just have to1301be consistent so that we call it out like you Mr. Dieffenbach1302regardless of where we find it in the country.1303    So, with that, Madam Chair, I yield back.1304    Chair. Thank you. Thank you, Ranking Member Markey, and I1305love that Sergeant Joe Friday, just the facts. And yes, I do1306believe that if there is fraud out there, we need to call it1307out. I don't care whether it is a blue state or a red state.1308Unfortunately, we have seen a lot of fraud in Minnesota. So,1309that's the state that does garner the most attention. So, I'll1310just ask a brief question.1311    So, the SBA had announced that there was nearly 7,0001312Minnesota borrowers linked to an estimated $400 million in1313COVID relief loans. They are being suspended after massive1314fraud rings were exposed throughout Minnesota. So, right now,1315what we do know is that Governor Walz is now proposing new1316forgivable loans, claiming businesses are being harmed by law1317enforcement.1318    So, Mr. Kirk, maybe what warning, as we're wrapping this1319up--what warning would you give to officials advocating for1320broad new grant forgivable loan programs?1321    Mr. Kirk. Gosh, thank you, Senator, for the question. I1322would suggest they consult with my colleague here and with me1323and with others, inspectors general to try to put in place1324methods in advance that would prevent fraud from occurring.1325There's many steps that can be taken. They don't require all1326that much effort. As I said, hindsight's 20/20. I hope that1327folks that would do that would look to experts who can provide1328information in that regard.1329    For example, self-certification, a real problem in these1330matters. There's opportunities that exist to check the self-1331certification that's being made. There's data tools out there1332that are available, and the data tools are better now than they1333were 6 years ago when the pandemic began, so.1334    Chair. Well, thank you. This has been a very good hearing,1335and I appreciate it. And, ranking member, I absolutely agree,1336let's go after the fraudsters. It doesn't matter, R, D, blue,1337red, does not matter. Fraud is fraud.1338    So, again, I want to thank our witnesses for being here1339with us today. I ask unanimous consent that the record of1340today's hearing remain open for 2 weeks for members to submit1341questions, revise and extend their remarks, and submit1342additional information into the record.1343    And without objection, so ordered.1344    And with that, the Committee on Small Business and1345Entrepreneurship stands adjourned. Thank you, Gentlemen.1346    [Whereupon, at 3:41 p.m., the hearing was adjourned.]1347    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]13481349                       [all]