The Small Business Administration (SBA) suspended 111,620 California borrowers suspected of committing fraudulent activity related to pandemic-era loan grants, the agency said in a Feb. 6 statement.

The fraud involves the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. PPP, established under the Coronavirus Aid, Relief, and Economic Security Act, provided funds to small businesses to cover up to eight weeks of employee payroll expenses, including benefits.

The COVID-19 EIDL loans provided funds to help small businesses recover from the pandemic’s negative impacts.

The fraudulent borrowers in California received 118,489 PPP and EIDL loans totaling more than $8.6 billion.

Kelly Loeffler, SBA administrator, said that this was the “most significant crackdown” on those who have defrauded pandemic programs.

“As we did in Minnesota, we are actively working with federal law enforcement to identify the criminals who defrauded American taxpayers, hold them to account, and recoup the stolen funds. As we continue our state-by-state work, our message is clear: pandemic-era fraudsters will not get a pass under this Administration,” Loeffler said.

The agency will pursue criminal referrals regarding the $8.6 billion fraud with the Department of Justice, she said.

The Epoch Times reached out to the office of California Gov. Gavin Newsom for comment, but did not receive a response by publication time.

Loeffer said, in a letter to state Gov. Tim Walz, that SBA had granted 13,600 pandemic relief loans worth $430 million that are “suspected as fraudulent.”

The defendants used more than 1,000 bogus unemployment claims to obtain over $5.6 million, it said. They used the names, Social Security numbers, and other personal information of unsuspecting individuals to carry out the fraud.

Jennifer Runyan, Special Agent in Charge of the FBI Detroit Field Office, said the lives of more than 900 victims were disrupted due to the scheme.

“Among those victims was a nurse working 12-plus hour shifts on the front lines during COVID-19, who then had to fight to clear her name after her identity was stolen,” Runyan said.

“These defendants did not just steal money; they stole peace of mind from hardworking Americans during a national crisis.”

Since June 2020, GAO has made several recommendations to the SBA to improve its pandemic relief programs, according to Courtney LaFountain, acting director of Financial Markets and Community Investments at GAO.

“GAO has estimated that the additional controls SBA put in place for its pandemic-relief programs collectively had saved the government more than $30 billion as of the end of fiscal year 2025,” LaFountain said.