[Congressional Record Volume 169, Number 195 (Tuesday, November 28, 2023)]
[House]
[Pages H5917-H5919]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  PROHIBITING INDIVIDUALS CONVICTED OF DEFRAUDING THE GOVERNMENT FROM 
    RECEIVING ANY ASSISTANCE FROM THE SMALL BUSINESS ADMINISTRATION

  Mr. WILLIAMS of Texas. Mr. Speaker, I move to suspend the rules and 
pass the bill (H.R. 5427) to prohibit individuals convicted of 
defrauding the Government from receiving any assistance from the Small 
Business Administration, and for other purposes.


 =========================== NOTE =========================== 

  
  On November 28, 2023, on page H5917, in the first column, the 
following appeared: ance from the Small Business Administration, 
and for other purposes, as amended.
  
  The online version has been corrected to read: ance from the 
Small Business Administration, and for other purposes.


 ========================= END NOTE ========================= 


  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 5427

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. ASSISTANCE PROHIBITED AFTER FRAUD CONVICTION.

       (a) In General.--Section 16 of the Small Business Act (15 
     U.S.C. 645) is amended by adding at the end the following new 
     subsection:
       ``(h) Financial Assistance Prohibition.--
       ``(1) In general.--An associate of a small business concern 
     who is finally convicted of any crime involving or relating 
     to financial misconduct or a false statement with respect to 
     a covered loan or grant shall be ineligible to receive any 
     financial assistance from the Administrator, other than 
     financial assistance under section 7(b).
       ``(2) Business concerns.--A small business concern that has 
     as an associate an individual subject to paragraph (1) shall 
     be ineligible to receive any financial assistance from the 
     Administrator, other than financial assistance under section 
     7(b).
       ``(3) Definitions.--In this subsection:
       ``(A) Associate.--The term `associate' means, with respect 
     to a small business concern--
       ``(i) an officer, director, or owner of more than 20 
     percent of the equity of, or a key employee of, such small 
     business concern;
       ``(ii) any entity not less than 20 percent owned or 
     controlled by one or more individuals referred to in clause 
     (i); and
       ``(iii) any other individual or entity in control of or 
     controlled by such small business concern, except for a 
     licensed small business investment company (as defined in 
     section 103(3) of the Small Business Investment Act of 1958 
     (15 U.S.C. 662(3)).
       ``(B) Covered loan or grant.--The term `covered loan or 
     grant' means--
       ``(i) a loan made under--

       ``(I) paragraph (36) or (37) of subsection (a) of section 7 
     of the Small Business Act (15 U.S.C. 636); or
       ``(II) subsection (b) of such section in response to the 
     COVID-19 pandemic; or

       ``(ii) a grant made under--

       ``(I) section 5003 of the American Rescue Plan Act of 2021 
     (15 U.S.C. 9009c); or
       ``(II) section 324 of the Economic Aid to Hard-Hit Small 
     Businesses, Nonprofits, and Venues Act (15 U.S.C. 9009a).

       ``(C) Finally convicted.--The term `finally convicted' 
     means, with respect to an individual or entity, that such 
     individual or entity has been convicted of an offense and 
     such conviction--
       ``(i) has not been appealed and is no longer appealable 
     because the time for taking an appeal has expired; or
       ``(ii) has been appealed and the appeals process for such 
     conviction is completed.''.
       (b) Applicability.--Subsection (h) of section 16 of the 
     Small Business Act (15 U.S.C. 645), as added by subsection 
     (a) of this Act, shall not apply to any contract or other 
     agreement entered into by the Government prior to the date of 
     the enactment of this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Williams) and the gentlewoman from New York (Ms. Velazquez) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. WILLIAMS of Texas. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days in which to revise and extend their 
remarks and include extraneous material on the bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. WILLIAMS of Texas. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise today in support of my bill, H.R. 5427. This 
legislation prohibits any individuals convicted of defrauding the 
government's COVID-19 lending programs from ever receiving future 
financial assistance from the SBA.
  When the COVID-19 pandemic hit America, the SBA took on an outsized 
role in helping small businesses. They partnered with banks and credit 
unions to set up the Paycheck Protection Program that ultimately got 
over $800 billion to Main Street to keep businesses from laying off 
employees. Additionally, the SBA ran the Economic Injury Disaster Loan 
program, better known as the COVID EIDL program, that gave out close to 
$480 billion in low interest loans.
  While both of these programs were successful in keeping businesses 
afloat during the pandemic, we have seen some very troubling data come 
out in recent months.

                              {time}  1700

  SBA's Office of Inspector General has estimated over $200 billion of 
these relief funds were given to fraudulent actors. This means that 
roughly 20 percent of all the money that was supposed to help 
businesses went to the wrong people, and, unfortunately, we have seen 
some estimates show that this 20 percent figure might be on the low 
end.
  The committee is working to find creative ways to get this money back 
to the taxpayers, but in the meantime, we also cannot let those who 
committed these crimes off easy. That is where my legislation comes in. 
This bill prevents anyone who was convicted of defrauding the SBA's 
lending programs from receiving any future financial assistance from 
the agency. If someone saw the pandemic as an opportunity to enrich 
themselves, then they should never be given the opportunity to utilize 
any of these financial programs again.
  These criminals took money away from businesses across the country 
that were in desperate need of assistance. This bill provides an 
additional layer of security for government programs so people who have 
taken advantage of past programs cannot commit a similar crime in the 
future.
  A lot will need to be done to correct all of the issues within the 
SBA that allowed these unacceptable levels of fraud to occur, but as 
those internal issues are corrected, this bill will help rebuild 
confidence in the agency.
  Mr. Speaker, I urge all of my colleagues to support this commonsense 
bill, and I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume. I rise in support of H.R. 5427, which puts into statute 
current rules

[[Page H5918]]

which prohibit anyone convicted of defrauding the government from 
receiving an SBA loan.
  Over the course of the pandemic, the SBA disbursed approximately $1.2 
trillion in economic aid. The vast majority of this aid was a lifeline 
to keep small businesses afloat during troubling and uncertain economic 
times. Unfortunately, bad actors took advantage of the program early in 
the pandemic when SBA removed or weakened internal controls. To that 
end, the Biden administration reinstituted longstanding antifraud 
controls and put new safeguards into place to curb the flow of pandemic 
dollars to fraudsters, and they remain in place today.
  Before issuing a loan, SBA screens applicants on the government's Do 
Not Pay list and then checks its internal database for any fraudulent 
flags or holds. While borrowers have an opportunity to clear their 
names, the SBA will not move forward until the holds are cleared.
  The bill we are considering today is closely aligned with the actions 
taken by the Biden administration, and it will send a strong message 
that SBA will not do business with anyone who defrauded the government. 
With that said, the single most important action Congress can take to 
recover fraudulent pandemic funds is to fully fund the SBA Inspector 
General and give the office the resources it needs to go after bad 
actors. In the last Congress, Representative Luetkemeyer and I 
sponsored two laws to extend the statute of limitations for fraud in 
the PPP and EIDL program to 10 years. Without additional resources, the 
OIG will not be able to capitalize on these new laws.
  In closing, Mr. Speaker, I appreciate the bipartisan work of Chairman 
Williams and Representatives Mfume and Bean, I urge my colleagues to 
support the legislation, and I reserve the balance of my time.
  Mr. WILLIAMS of Texas. Mr. Speaker, I yield such time as he may 
consume to the gentleman from the great State of Missouri (Mr. Alford).
  Mr. ALFORD. Mr. Speaker, I thank the chairman and the ranking member 
for their leadership.
  Mr. Speaker, I rise today because the Small Business Administration 
and the Biden administration have continuously failed to take action to 
prevent this type of fraud that happened during COVID-19, ripping off 
you, ripping off me, ripping off everyone in this room, and ripping off 
the American taxpayer.
  The SBA's Office of the Inspector General has estimated that at least 
$200 billion in COVID relief money given by the SBA ended up in the 
wrong hands of fraudulent actors. We believe it could be well up over 
$600 billion. Roughly 20 percent of that money intended to help small 
businesses went to the wrong people, and SBA Administrator Guzman 
refuses to testify before our very committee about these losses.
  These losses must never happen again, Mr. Speaker, and Chairman 
Williams' bill addresses this by doing what the SBA is not willing to 
do right now, and that is to hold these fraudsters accountable and make 
sure they are unable to steal from us again.
  I proudly support Chairman Williams' bill, H.R. 5427, which prevents 
anyone who is convicted of defrauding the SBA's lending programs from 
getting any future financial assistance from that agency.
  We cannot live in an America that allows criminals to defraud 
taxpayers and hardworking small business owners especially during a 
time of need.
  Mr. Speaker, I urge my colleagues to support H.R. 5427.
  Ms. VELAZQUEZ. Mr. Speaker, I yield such time as he may consume to 
the gentleman from Maryland (Mr. Mfume), who is the ranking member of 
the Oversight, Investigations, and Regulations Subcommittee.
  Mr. MFUME. Mr. Speaker, my thanks to Chairman Williams and to the 
ranking member, Ms. Velazquez of New York for their leadership. She and 
I were having a conversation reminding ourselves that 84 percent of all 
of the loosening of the guardrails that created the problems occurred 
while the previous administration was in office. It is important for 
the facts to be noted in that regard. It is not in an effort to cast 
aspersions, but it is in an effort to make sure we tell the truth.
  Mr. Speaker, I rise today like the gentleman from Texas and the 
gentlewoman from New York in support of H.R. 5427 which prohibits, as 
you have heard, individuals convicted of defrauding small business 
pandemic relief programs from receiving future non-disaster financial 
aid assistance from the administration.

  It sounds like it is common sense to me. If you put your hand in the 
cookie jar and you steal the cookies, why should you be rewarded later 
for that?
  To this day, our Nation has to reckon with the fact that the 
consequences of that decision in 2020 to fast-track the allocation of 
the pandemic relief funds by weakening and removing the internal 
controls really caused the problems. It was a recipe for disaster.
  Are we even astonished that something like this would happen?
  This is why so many of us argued against this in 2020.
  While many of these antifraud controls are being reinstituted by the 
Small Business Administration, fraud in these programs has run rampant. 
We let the horse out of the barn and are wasting time looking at it 
instead of trying to find a way to get it back in. So that is what this 
measure does in many respects.
  As the ranking member of the Small Business Subcommittee on 
Oversight, Investigations, and Regulations, I have been, like many of 
my colleagues on the committee, incredibly concerned by the misuse and 
the abuse of pandemic relief funds.
  Why?
  It is a very simple answer: These funds could have been used to 
protect jobs. They could have been used to lift small businesses out of 
financial distress as they should have, and they could have created a 
circular flow of income in so many communities, urban and rural, 
throughout this country.
  Instead, they lined the pockets of thieves and fraudsters. So that is 
why I am pleased to be the Democratic co-lead on this along with Mr. 
Williams.
  This bill amends section 16 of the SBA Act to prohibit, as we said 
before, anyone convicted of crimes related to financial misconduct or 
making false statements with respect to small business pandemic relief 
moneys from not being able to receive nondisaster financial assistance 
in the future. It is kind of common sense. It really is.
  So this bill ensures that those who knowingly and willfully stole 
Federal funds are not given a similar opportunity in the future.
  Mr. Speaker, I, again, thank the ranking member, Ms. Velazquez of New 
York; the chair, Mr. Williams of Texas; Mr. Bean of Florida; and others 
on both sides of the aisle for working to make sure that this bill has 
the support it needs.
  Mr. Speaker, I urge all of my colleagues later today to be able to 
stand up and to vote for it.
  Ms. VELAZQUEZ. Mr. Speaker, I reserve the balance of my time.
  Mr. WILLIAMS of Texas. Mr. Speaker, I have no further speakers, and I 
am prepared to close.
  Ms. VELAZQUEZ. Mr. Speaker, this bill prohibits anyone convicted of 
defrauding the government with respect to the SBA's pandemic programs 
from receiving loan disaster financial assistance from the SBA.
  While there may be disagreement on the actual estimates of fraud in 
the pandemic programs, it is clear we need to work together to protect 
their integrity.
  Administrator Guzman has taken steps to put strong controls into 
place that would prohibit anyone convicted of fraud from receiving 
financial assistance, and this bill will ensure those controls remain 
in place with future administrations.
  I thank Chairman Williams, Mr. Mfume, and Mr. Bean for their efforts, 
and I urge my colleagues to support the legislation.
  Mr. Speaker, I urge my colleagues to vote ``yes'' on H.R. 5427, and I 
yield back the balance of my time.
  Mr. WILLIAMS of Texas. Mr. Speaker, H.R. 5427 is simple. It needs to 
be passed.
  I also want to thank my colleague from Maryland (Mr. Mfume) for all 
his support working on this bill. I thank him for his support.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Texas (Mr. Williams) that the House suspend the rules 
and pass the bill, H.R. 5427.
  The question was taken; and (two-thirds being in the affirmative) the

[[Page H5919]]

rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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