Massive Pandemic Fraud Exposed in California

Trump administration cracks down on $8.6 billion in suspected COVID-era loan fraud

Published on Feb. 6, 2026

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The Trump administration has uncovered massive fraud in California related to pandemic relief programs, freezing 111,620 borrowers connected to $8.6 billion in suspected COVID-era fraud tied to PPP and EIDL loans. Authorities found numerous examples of criminal activity, including a single San Diego address linked to 14 different 'small businesses' that collectively received over $2 million in fraudulent loans.

Why it matters

This case highlights the scale of fraud that emerged during the pandemic, as lax oversight and policies aimed at quickly distributing aid created opportunities for criminals to abuse the system. The crackdown signals a shift towards greater accountability, with the government moving to claw back stolen funds and pursue criminal charges.

The details

According to SBA Administrator Kelly Loeffler, investigators found numerous instances of fraud, including a single San Diego address tied to 14 different 'small businesses' created during the pandemic, all of which received over $2 million in COVID relief loans, many of which remain unpaid. The SBA has now suspended 111,620 California borrowers linked to $8.6 billion in suspected fraud, and is referring cases to the Department of Justice for criminal prosecution.

  • On February 6, 2026, the Trump administration announced the crackdown on pandemic fraud in California.

The players

Kelly Loeffler

The Administrator of the U.S. Small Business Administration, who revealed details of the fraud investigation.

Gavin Newsom

The Governor of California, whose administration is accused of failing to prevent the widespread fraud.

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What’s next

The SBA has announced it will be pursuing criminal referrals to the Department of Justice and working to claw back the stolen funds.

The takeaway

This case highlights the need for greater oversight and accountability in the distribution of pandemic relief funds, as lax policies and lack of scrutiny allowed for widespread fraud to occur. It serves as a warning that the government will no longer tolerate such abuse of taxpayer money.