The U.S. Attorney’s Office for the Western District of Tennessee participated in a nationwide operation targeting fraud committed in Small Business Administration (SBA) programs created during the COVID-19 pandemic, and revealed on Monday that federal prosecutors had identified around $245 million in fraud. It was described as the single largest action against alleged perpetrators of SBA fraud in its history.
According to the U.S. Department of Justice, Operation No Doze included officials from 20 different state and federal agencies, as well as 44 different U.S. Attorneys Offices, and took place in a “summer surge” between June 12 and September 1.
As of the Monday press release, the DOJ reported that about 40 defendants from Operation No Doze have already been sentenced for nearly $100 million in intended COVID-related SBA fraud. The DOJ reported that “approximately 43 defendants” have already pleaded guilty to defrauding the SBA of $44 million, while an additional 80 are charged for the remaining $100 million in intended loss.
“Pandemic loan relief was meant to keep American small businesses alive during government lockdowns—not line the pockets of fraudsters,” Attorney General Todd Blanche stated for the press release.
Operation No Doze came as a result of the National Fraud Enforcement Division of the DOJ, which President Donald Trump instructed the agency to establish in January, according to the press release.
“Today’s announcement represents the largest-ever action against perpetrators of SBA fraud, with 870,000 suspended borrowers tied to $39 billion in suspected fraudulent PPP and COVID EIDL activity,” said SBA Administrator Kelly Loeffler. “In partnership with Vice President Vance and the White House Task Force to Eliminate Fraud, we’re putting fraudsters on notice: the federal government will no longer turn a blind eye to those who stole from taxpayers and exploited programs designed to sustain small businesses during the pandemic.”
SBA Inspector General William Kirk indicated some amount of money defrauded from taxpayers was recovered as a result of the investigation.
“By concentrating our investigative resources and working closely with SBA and our law enforcement partners, we are strengthening our ability to identify fraud, recover taxpayer funds, and hold accountable those who exploited programs created to help small businesses in a time of extraordinary need,” said Kirk. “This initiative makes clear that the passage of time does not diminish our commitment to accountability.”
On Monday, the SBA also said it sent demand letters seeking money back from about 8,000 borrowers in Missouri and Kansas.
Separately, the U.S. Immigration and Customs Enforcement (ICE) raid that resulted in 120 arrests at a Memphis nightclub notably occurred during the period authorities were conducting Operation No Doze. The nightclub, El Corralón, appears to have received two Paycheck Protection Program (PPP) loans in contradiction of SBA policy.
Vice President JD Vance said on Monday that 870,000 people suspected of defrauding pandemic-era SBA programs have been permanently banned from receiving future federal loans.
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Tom Pappert is a 2025 recipient of the Dao Prize and the lead reporter for The Tennessee Star. He also reports for the Star News Network. Follow Tom on X. Email tips to [email protected].
