Rand Paul, Ernst investigate 'disturbing' $5.4B in pandemic fraud as Biden moves to end COVID emergency

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EXCLUSIVE: Sens. Rand Paul and Joni Ernst are launching an investigation into over $5.4 billion in small business loan fraud as the Biden administration prepares to wind down the COVID-19 pandemic emergency.

Paul, R-Ky., and Ernst, R-Iowa, sent a letter to Inspector General of the Small Business Administration Monday, demanding an assessment into the "extent" of fraud in the Paycheck Protection Program (PPP).

The senators say their inquiry comes after the Pandemic Response Accountability Committee sounded the alarm in a review released Monday that said $5.4 billion in taxpayer funds were dispensed to "fraudsters."

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Sen. Rand Paul (R-KY)  (Greg Nash-Pool/Getty Images)

"On January 30, 2023, the Pandemic Response Accountability Committee (PRAC) released a fraud alert detailing widespread fraud of the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL)," Rand and Ernst wrote in the letter first obtained by Fox News Digital.

 "Specifically, PRAC reviewed over 33 million applications and discovered 221,427 applications used fraudulent social security numbers. Of those, 69,323 applications were issued EIDL and PPP loans, totaling over $5.4 billion in funds dispensed to fraudsters," they wrote.

Ernst and Paul are specifically asking for a review into the "nearly 70,000 PPP loans" that were issued, a review of actions taken by the Small Business Administration, including its "automated and manual checks."

The White House and the Small Business Administration are blamed the former Trump administration for the fraud, saying the PRAC report reveals why it was a "mistake" to not implement "additional anti-fraud measures" during Trump's time in office.

Gene Sperling, White House American Rescue Plan coordinator, told Fox News Digital: "This report by the Pandemic Responsibility Accountability Committee (PRAC) demonstrates and documents both the significant fraud and identity theft that occurred under the prior Administration due to the lack of basic anti-fraud controls, as well as how consequential were the Biden Administration quick actions to reinstate strong anti-abuse measures in these emergency small business programs."

The investigation comes after President Biden told Congress on Monday that his administration will end two emergencies related to the COVID-19 pandemic on May 11, 2023, more than three years after they were enacted.

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The COVID-19 national emergency is set to expire on March 1, while the public health emergency will expire on April 11. The Office of Management and Budget wrote in a Statement of Administration Policy that Biden will extend both emergencies to May 11, at which point they will expire.

Sen. Joni Ernst joined Sen. Rand Paul on the letter to the inspector general. (Photo by Anna Moneymaker/Getty Images)

In addition, the investigation by the senators comes the week after the Government Accountability Office announced that as much as $45 billion was spent on fraudulent claims for unemployment insurance during the COVID pandemic.

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According to the report, the government spent $878 billion on unemployment insurance measures between April 2020 and September 2022 to cope with staggering job losses during the pandemic. The estimates of how much money went toward fraudulent claims is based on an analysis of the unemployment insurance system roughly in the first two years of the pandemic.

The report said $4.3 billion has been confirmed by state workforce agencies as fraudulent unemployment insurance payments, but said that does not reflect ongoing investigations into all fraudulent payments that total $45 billion.

Fox News' Paul Best and Pete Kasperowicz contributed to this report.