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Pa. Auditor General Calls For Tighter Control Of Next Round Of COVID-19 Relief Funding After Cases Of Fraud

PITTSBURGH (KDKA) -- Since the beginning of the pandemic, KDKA Investigates has uncovered several types of coronavirus relief fraud — from questionable Paycheck Protection Program loans to inmates getting Pandemic Unemployment Assistance.

Now that Pennsylvania is in line for more than $10 billion in new coronavirus relief, can that fraud be reined in?

Randy Frasinelli of Carnegie stands accused of bilking the Paycheck Protection Program to the tune of $3.8 million. Federal prosecutors say he claimed business expenses but lavished the money on Mercedes SUVs, a BMW, a Porsche, gold bars, jewelry and tuition for his family.

On a smaller scale, KDKA found dozens of questionable PPP loans going to some apparently non-existent businesses in Braddock — each receiving the maximum $20,000 for people claiming to be sole proprietors.

"There weren't enough safeguards in place prior to those loans being awarded. And as a result, the federal government has estimated that hundreds of thousands of dollars were lost due to fraud," said Pa. Auditor General Timothy DeFoor.

DeFoor cited the rampant fraud in the distribution of PPP, calling for tighter control of the next big round of coronavirus relief funding

"We need transparency, oversight and accountability," he said.

Ours and federal investigations found that was not the case with PPP.

In its report, the inspector general said trying to get money quickly from the Small Business Administration to businesses that needed it opened the door to fraud and estimates that 55,000 loans have gone to potentially ineligible businesses.

"SBA's efforts to hurry capital to businesses were at the expense of controls that could have reduced the likelihood of ineligible or fraudulent business obtaining a PPP loan. As a result, there is limited assurance that loans went to only eligible recipients," DeFoor said.

DeFoor said under the plan, the state and local governments should take the time to implement safeguards to ensure the money is not misspent or wasted. He's proposed a public-private partnership of accountants and investigators to oversee the allocations.

"You are never going to stop fraud. That's just a reality. However, by having the proper processes in place, you can definitely mitigate it," he said.

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