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SBA Disaster Loan Fraud Investigation Over $550 Billion in Loans!

While lawmakers look to issue another round of relief to businesses that are hurting because of the coronavirus pandemic, a new report indicates scammers may be taking advantage of aid programs.

The Small Business Administration Office of the Inspector General issued a report on Tuesday citing “serious” concerns about “rampant” fraud within the agency’s Economic Injury Disaster Loan Program and advance grant program.

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There have been more than 5,000 complaints from financial institutions receiving loan deposits about suspected fraud.

“Our preliminary review reveals strong indicators of widespread potential fraud in the program,” Inspector General Hannibal “Mike” Ware wrote in the report.

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Examples of alleged fraud include using stolen identities, account holders attempting to move funds into investment accounts or foreign accounts, deposits into personal accounts and scams on social media.

Additionally, $250 million appears to have been awarded to ineligible recipients, while at least 275 duplicate loans are believed to have been made.

The CARES Act allowed the SBA to advance eligible businesses $1,000 per employee, up to a maximum of $10,000 as the applicant waited on a decision regarding a disaster loan.

Some of the loans have been frozen by financial institutions, but the report suggests that the SBA take immediate action to implement internal controls to prevent additional fraud.

Thursday, the DOJ announced new charges in a complex case involving defendants in Florida and Ohio that involved applications for some $24 million in loans. Among those charged were Joshua Bellamy, a former wide receiver for the New York Jets football team.

The case involves 11 people, coordinated between Miami and Cleveland, “including a professional athlete and business manager,” the DOJ said.

Attorneys for Bellamy were not immediately reachable for comment.

Rabbitt said the DOJ will now concentrate on prosecuting “coordinated criminal rings that have engaged in systematic, organized conduct to loot the PPP.”

FBI Deputy Assistant Director John Jimenez said officials were generally looking at “individuals we believe that fraudulently requested or received hundreds of millions of dollars” in funds that were meant for business owners to weather the economic blow of the pandemic during the wave of shutdowns.

The alleged fraud uncovered so far represents only a tiny fraction of the $525 billion in PPP loans that were given out to 5.2 million applicants in the program.

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