Let me get this straight, because the facts here are so stupid that I keep rereading them waiting for a plot twist. A man in Shelby Township, Michigan, submitted fake Paycheck Protection Program applications totaling $2.5 million. The applications got approved. The money went out the door. The Small Business Administration, the agency whose entire stated mission was to police this specific program, caught exactly none of it. The FBI caught it. The U.S. Attorney's Office caught it. A federal judge just sentenced him. And the SBA is, at this moment, issuing a press release about how committed it is to fighting fraud. The SBA is committed to fighting fraud the way your landlord is committed to fixing the heater. It is committed in the abstract. It is not committed in the sense that it will do anything.
Two and a Half Million Dollars. One Guy. One Keyboard.
The thing you have to keep reminding yourself, every time one of these cases lands, is that $2.5 million is not a sophisticated heist. There is no hacking. There is no money laundering mastermind. There is a man, in a house in suburban Detroit, filling out forms. The forms are on a website. The website is run, notionally, by the SBA. The SBA's job, in the most literal sense, is to look at the form and ask, "does any of this check out?" The SBA, in this case, did not ask that. In hundreds of thousands of cases across the life of the program, it also did not ask.
The fraud was caught later, in court, by a completely different arm of the government, because the SBA outsources its accountability to federal prosecutors the way a landlord outsources heat to whichever tenant remembers to buy a space heater.
The Other Cases This Week Are Identical
Let's line them up, because the pattern is the whole story.
- A woman in Roanoke sentenced for PPP fraud. Caught by the feds. Not the SBA.
- A woman in London, Kentucky, sentenced for $1 million in COVID loan fraud and money laundering. Caught by the feds. Not the SBA.
- A woman in Minnesota sentenced for COVID loan fraud plus hiding a marriage for benefits. Caught by the feds. Not the SBA.
- A Palm Beach County sheriff's deputy charged with PPP fraud. Caught by internal affairs and then the feds. Not the SBA.
- A Macomb County man sentenced for COVID-19 loan fraud. Caught by the feds. Not the SBA.
You'll notice a theme. The theme is that the SBA is functionally a checkout window. Its responsibility, apparently, ends at the moment the money is handed over. What happens after, whether the money was real, whether the business was real, whether the applicant was real, is, somehow, not its problem. That's a weird organizational design for an agency whose name has the word "Administration" in it. Administration of what, exactly, if not this.
The Minnesota Number, Updated
Remember when the SBA announced it had suspended roughly 6,900 Minnesota borrowers over suspected fraud, and the press release framed this as decisive action? That suspension came years after the money went out the door. The money is, for all practical purposes, gone. Some of it will be clawed back through forfeiture in criminal cases. Most of it will not. The suspension is a paperwork event. It closes the barn door while the horses are in another state filing a tax return under a fake LLC.
The Minnesota probe is now national. The SBA has hired Palantir, because of course it has, to build a fraud-detection platform that could have existed in 2020, would have saved tens of billions of dollars, and is being built in 2026, after the fraud has already happened. This is like hiring a locksmith to rekey your house four years after the burglary, while the burglar is at your kitchen table eating your cereal.
The $8.6 Billion California Number
The current administration has publicly stated it uncovered $8.6 billion in suspected California small business fraud. Eight point six billion. In one state. This is, to be clear, not a new discovery. This is the discovery of a backlog. The fraud happened years ago. The money was disbursed years ago. The flagging is happening now because a political incentive structure has finally aligned with doing the math. The SBA didn't run the math on its own. It had to be made to.
Stack Minnesota plus California plus every single one of the sentencing stories above plus the quiet national tally of PPP and EIDL cases still moving through federal court, and the honest accounting is that the SBA's Paycheck Protection Program was one of the largest unforced transfers of public money to unqualified recipients in the history of American administrative government, and the agency that ran the program is still, at this moment, sitting at its desk.
What's Going to Happen Next (Nothing, Basically)
The Shelby Township case will generate a sentencing press release from the U.S. Attorney's Office for the Eastern District of Michigan. It will name the defendant. It will note the dollar amount. It will include a pull quote from the assigned Assistant U.S. Attorney about accountability. It will not include a single sentence about what the SBA did or didn't do to prevent the fraud in the first place, because that's not what sentencing press releases are for. Sentencing press releases are for the part after the money is gone.
The agency that approved the fraudulent loan will, this week, issue its own statement, completely unrelated to this case, about how it is "committed to integrity." The statement will link to a webpage that was last updated in 2023. The webpage will link to a PDF. The PDF will have a broken internal link. Somewhere, a contractor is being paid $340,000 a year to oversee the PDF.
The Part That Should Actually Be Illegal
The part that should be illegal is not the individual fraud. Individual fraud is, frustratingly, a solved problem. You catch it, you prosecute it, you sentence it. We have a system for that. It is slow and imperfect but it works, in the way that bailing out a sinking ship with a bucket works.
What should be illegal is running an agency whose documented failure rate produced tens of billions of dollars in false payments and then answering to no one for it. There has been no SBA administrator termination tied to program performance. There has been no structural overhaul. There has been no clawback of the salaries of the officials who signed off on the rules that allowed a man in Shelby Township to self-certify $2.5 million into his bank account.
The man is going to prison. The agency is going to lunch.
Bookmark This and Check Back in Six Months
I'll be covering the next case. And the case after that. And the Minnesota Palantir rollout, which will be declared a success in a carefully staged press event roughly eleven months from now, at which point a new category of fraud will quietly be announced, at which point everyone will be surprised, at which point the agency will issue a statement about its continued commitment to integrity, at which point I will write this same post again with different names and a different dollar amount.
It is not a news cycle. It is a loop. LOLSBA exists to document the loop until someone in a position to break it decides to break it, which, based on every available indicator, is not going to be this year.