New Fraud Uncovered in California: $8.6 billion COVID-era Relief
SBA suspends more than 111,000 borrowers in the state
By Katy Grimes, February 6, 2026 7:35 am
https://californiaglobe.com/fl/new-fraud-uncovered-in-california-8-6-billion-covid-era-relief/
Earlier this week, the White House announced plans for a new anti-fraud task force targeting welfare abuse in California and other states, and assigned Vice President J.D. Vance, Andrew Ferguson of the Federal Trade Commission (FTC), and Attorney General Pam Bondi.
California Attorney General Rob Bonta fell all over himself Thursday claiming that the California Department of Justice was working to tackle fraud in the state. He even “pushed back” against the Trump Administration’s characterization that California programs are overrun by fraud and that state government is somehow facilitating this fraud.
Friday morning, the Small Business Administration upstaged AG Bonta and announced it has uncovered $8.6 billion in suspected fraud tied to COVID-era relief lending in California and has suspended more than 111,000 borrowers in the state.
Did Bonta really think he could get ahead of the SBA’s fraud announcement?
“This is categorically false,” Bonta said. “While the issue of fraud seems conveniently novel to the Trump Administration, California has been aggressively tackling fraud head-on and has recovered nearly $2.7 billion for California taxpayers, including by partnering with the federal government. Fraud is not unique to California; bad actors will look for opportunities to pocket cash — including in states like Florida, Texas, and Ohio.”
SBA Administrator Kelly Loeffler said the borrowers are suspected of improper activity involving federal pandemic programs, including Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) funds.
“They are accused of collecting money under the paycheck protection and economic injury disaster loans from the federal government that were supposed to ease the economic burden from covid,” the NY Post reported.
“Once again, the Trump SBA is taking decisive action to deliver accountability in a state whose unaccountable welfare policies have created a culture of fraud and abuse at the expense of law-abiding taxpayers and small business owners,” Loeffler told The Post.
“This staggering number represents the most significant crack-down on those who defrauded pandemic programs, and it illuminates the scale of corruption that the Biden Administration tolerated for years.”
“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.”
Administrator Loeffler and EPA Administrator Lee Zeldin were in California Wednesday in meetings in the Pacific Palisadeswith Los Angeles Mayor Karen Bass and Los Angeles County Supervisor Kathryn Barger focused on speeding up the rebuilding process to help wildfire victims demanding long-overdue assistance.
“Our conversations with Mayor Bass and Supervisor Barger about accelerating the rebuilding process in Los Angeles were productive,” said Administrator Zeldin. “We discussed a variety of ways to clear a path to rebuilding, which includes advancing efficient and expeditious permitting for thousands of residents as one of many top priorities. Administrator Loeffler and I, on behalf of President Trump, asked these local elected officials to join us in this urgent effort, and I am hopeful great progress will be made in the days and weeks ahead. Many LA residents lost everything in these fires. It’s well past time to clear any remaining hurdles that have been adding to an already painful experience. I look forward to working with Mayor Bass and Supervisor Barger to delivering the much-needed relief the citizens of Los Angeles have been calling for.”
“Since Day One, President Trump has surged billions in resources to support the Los Angeles wildfire recovery effort, including $3.2 billion across 12,000 SBA loans to help residents rebuild,” said Administrator Kelly Loeffler. “One year later, thousands of families and small business owners are now suffering from a second disaster, which is the local permitting process that has prevented them from accessing these funds to rebuild their homes and livelihoods. While SBA borrowers can now bypass the massive permitting delays thanks to President Trump’s executive action, we have extended further federal support to help Mayor Bass clear months-long backlogs – and urged her to join this Administration’s effort to expedite rebuilding.”
One year ago this week, the Globe was in Palisades at a meeting with President Trump’s Special Envoy Ric Grenell, and Trump’s White House representative on the ground in California. Grenell got the word out to residents that Environmental Protection Agency (EPA) Administrator Lee Zeldin, U.S. Army Corps of Engineers Major General Jason Kelly, Federal Emergency Management Agency (FEMA) regional administrator Bob Fenton, Los Angeles Mayor Karen Bass, and many colleagues and staffers would be there to speak directly with them about how to get the Right of Entry process started, as well as understanding which agency is responsible for what, and the process and coordinating cleanup.
It was amazingly effective, and the cleanup actually took place. Yet that’s about all that happened.
Also one year ago, Governor Gavin Newsom announced that his administration launched a “new dashboard to track LA recovery.”
How’s that working out? Very little has been rebuilt. But the Governor’s dashboard takes credit for EPA and FEMA cleanup.
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