Using a telemarketing scheme called My Buddy Loans, the telemarketing scheme exploited those seeking assistance during the COVID pandemic, including many who were over the age of 55, according to a Small Business Administration inspector general agent quoted in a Justice Department press release. The case was brought in Honolulu, Hawaii. A Washington state tech executive was sentenced today in the Western District of Washington to two years in prison for perpetrating a scheme to fraudulently obtain COVID-19 disaster relief loans guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) under Previously, the SBA announced $15 billion in loans worth more than $150,000 had. The auditor found that the deficiencies were caused by an inadequate entity wide control environment.. At $367 billion, the amount of disaster funds provided through the EIDL COVID program is more than three times the amount of disaster loan funds approved for all disasters combined since the SBA was created in 1953, wrote Jovita Carranza, then-head of the Small Business Administration, in December 2020. If you have questions or concerns and would like to speak with an attorney in confidence, we urge you to call us promptly at 888-680-1745 or . But, he added, the CARES Act removed that control, calling it a pivotal change.. However, the Trump administrations Justice Department also sought to assuage companies concerns, especially in regard to qui tam False Claims Act lawsuits. An indictment includes text and email messages involving creating tax records for some of the companies. On March 30, the Justice Department unveiled new charges against Joel Greenberg, a former Florida tax collector. For instance, in one larger case, the Justice Department has charged 19 individuals to date. Not all the blame can be placed at the Small Business Administrations feet. SBA reveals full list of recipients of PPP loans It provided more than $2 trillion in economic relief to help Americans cope with the economic impact of the COVID-19 global pandemic. You can search the SBA's entire PPP loan data below. Allegedly, the family sought, ultimately unsuccessfully, to use the funds to purchase a $3.7 million mansion in Disney Worlds Golden Oak gated community. provided fully guaranteed SBA loans for certain eligible small businesses, individuals, and . The DOJ is prosecuting PPP loan recipients who are accused of both intentionally and unintentionally committing fraud under the PPP. An attorney for Aqeel, Tommy T. Mingledorff, told POGO by email that these allegations are denied. Many believe a high percentage of these grants were stolen, but some federal prosecutors with heavy caseloads may find it hard to justify The False Claims Act will play a central role in the Departments pursuit of COVID-19 related fraud, Michael Granston, a Justice Department deputy assistant attorney general, said in December. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. Funds can also be used to pay interest on mortgages, rent, and utilities. Updated List of PPP and EIDL Loan Fraud Criminal Cases In certified submissions to the federal government, the familys ministry claimed a substantial operation with 486 employees, a monthly payroll of over $2.76 million, and revenue exceeding $51 million in 2019. & Instead, the DOJ undertook to prosecute any and all cases of apparent PPP loan fraud. This March, the Government Accountability Office added the Small Business Administrations emergency loan programs for small businesses to its biennial high-risk list of executive branch programs vulnerable to fraud, waste, abuse, and mismanagement, or that need transformation.. Individuals and companies targeted in PPP loan fraud investigations should engage federal defense counsel promptly, and they should work with their counsel to build sound defense strategies. One case involved applications for hundreds of allegedly fraudulent Economic Injury Disaster loans and at least a $1.3 million loss to the federal government. U.S. Small Business Administration 409 3rd St, SW. Washington DC 20416 He also opened bank accounts and lines of credit at financial institutions and credit card companies in the names of his elderly victims, according to the Justice Department. A check of Floridas Division of Corporations database would have revealed the companies had just been reinstated. However, all of the DOJs PPP fraud investigations to date have shared a common thread: The agency has moved quickly in seeking to file charges, and it has shown little sympathy for those accused of unlawfully taking advantage of the PPP. The law firm K&L Gates, however, wrote in December that since Congress allowed lenders to rely on borrowers self-certified information, that should decrease the likelihood that otherwise law abiding financial service providers would face government scrutiny for the fraudulent acts of their borrowers., The role of employees who become whistleblowers may emerge as a significant factor in civil Paycheck Protection Program cases. In December 2020, an independent auditor informed the SBA that, out of 5.2 million Paycheck Protection Program loans in 2020, the agency made over 2 million approved PPP loan guarantees worth some $189 billion potentially not in compliance with the law. Clients from more than 45 U.S. states have hired Nick to seek effective protection against government You are responsible for reading, understanding and agreeing to the National Law Review's (NLRs) and the National Law Forum LLC's Terms of Use and Privacy Policy before using the National Law Review website. California. A picture from that stay shows Pape and Jung celebrating over sparkling wine. Jungs attorney declined to comment, and Papes attorney did not respond to a request for comment. You can search the SBA's entire PPP loan data below. These investigations have varied widely in both their scope and the specific allegations targeted. are moving. Greenberg is a friend of Florida Republican Matt Gaetz, and both were identified in a recent New York Times report as having allegedly paid women for sex, as well as potentially a 17-year-old girl. Each record represents a loan made from a commercial lending bank to a small business and backed by the federal government. Theres a lot of red flags that they look at in the data to help us determine if its something we need to look at deeper.. Irvine, CA: Irvine, CA. More than half of that amount$246 millionactually went to accused fraudsters. Filed under investigation Do you agree with the new rules in the Major League Baseball this season which will make the games shorter. Nick Schwellenbach Does something look fishy to you? 107 of the cases, accused individuals allegedly falsified payroll documentation to justify either getting a loan or getting a bigger loan than they were eligible for; 93 of the cases, accused individuals allegedly created fake tax documents used for verifying details in loan applications; 41 of the cases, accused individuals allegedly created bogus companies to get loans; 28 of the cases, accused individuals allegedly used defunct companies to get loans; 20 of the cases, accused individuals used stolen identities or aliases while applying for loans; 12 of the cases, accused individuals allegedly falsified ownership of existing legitimate businesses; 28 of the cases, accused individuals also obtained Economic Injury Disaster loans (some of these individuals have been accused of fraudulently obtaining these loans. The remaining data was the focus of a . NIOSH Announces Publication of Article on the Results of 2019 Survey How to Donate Cryptocurrency and Other Digital Assets to Charity. Ryan Summers is a research fellow for POGO. 46. The Justice Department has brought criminal charges against at least 209 individuals in 119 cases related to Paycheck Protection Program (PPP) fraud since banks and other lenders began processing loan applications on behalf of the Small Business Administration on April 3, 2020. The CARES Act precluded the agency from exercising one important check on fraud in the Economic Injury Disaster Loan program. This March, the Government Accountability Office revealed that 4 months after SBA started using a system to approve Economic Injury Disaster loans in batches, agency officials realized this system contained alerts that should have been reviewed by loan officers, but had not been. Normally, the office of inspector general receives between 700 and 800 hotline complaints or tips a year. In 2020, applicants could not lawfully receive more than one Paycheck Protection Program loan. Plastics industry insiders reveal the truth about recycling. (The latest round, which began in January, allowed some applicants to receive a second Paycheck Protection Program loan. Dirty Steel-Toe Boots, Episode 16: Investigations and the OSH Acts DOE Issues FOA for Carbon Capture Large-Scale Pilots and Carbon A Forward Look at IRAs Sweeping Impact on the EV Sector [PODCAST]. General Litigation. Even if the debt is cleared, the loans can end up wreaking havoc on individuals and businesses credit scores. Its make or break time for many of them, he said. (In late March, the Justice Department told Congress that it had charged $446.8 million in losses related to PPP. Some of these cases may still be under seal and charges are routinely being unsealed.) When Cops Are Fired: How one attorney forces police chiefs to rehire dismissed officers. Notably, while the DOJ is pursuing criminal charges in the substantial majority of its PPP loan fraud cases (including those discussed above), civil charges are a possibility as well. Investigative Reporting Workshop He added though that hes not optimistic that grants directed to help restaurants will be included in the next round of federal stimulus so getting more PPP loans would be the best alternative. These comma-delimited files can be opened in Microsoft Excel or any other data management software. The 117th Congress enhanced the PRAC, IG community, and law enforcement partners' efforts to fight fraud in small business loan programs with its passage of H.R. HARRISBURG Data released by the Small Business Administration Tuesday reveal which Pennsylvania businesses and groups shared $5 billion in loans of under $150,000, provided through the federal Paycheck Protection Program. The loans have to be repaid with low interest. John Finnerty is based in Harrisburg and covers state government and politics. Partner & Co-Chair See the data: SBA names recipients, loan values of EIDL program The DOJ has pursued charges against large companies that received multi-million-dollar PPP loans, and it has pursued charges against individuals accused of obtaining six-figure PPP loans to finance lavish personal expenses. The Federal Trade Commission wrote in February that, Last year, we received 99,650 reports of fraud involving business or personal loans, compared with 43,920 reports in 2019, before the pandemic began. . Download state-by-state PPP loan data - Investigative Reporting Workshop Indeed, on the day lenders began processing applications for Paycheck Protection Program loans last year, Small Business Administration Inspector General Hannibal Mike Ware issued a white paper outlining lessons learned from previous stimulus loan programs. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. The Justice Department brought civil claims against the company under both the False Claims Act and Financial Institutions Reform, Recovery and Enforcement Act. But, in contrast to the False Claims Act where the reward is a minimum 10% of the recovery, FIRREAs whistleblower reward is capped at $1.6 million. Mostly clear. 1) Promptly identify PPP loans that have not been fully disbursed and follow-up with the lenders to stop $280 million in potential improper loan disbursements. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. a different set of 19 loan recipients traced back to an office park about 30 minutes . Government and federal taxpayers writ large arent the only victims of fraud in the pandemic lending programs. The program provided loans of up to $10 million for small businesses to help them recover from the government-ordered shutdowns and revenue losses caused by the virus. The scandal is whats legal, not whats illegal.. National Law Review, Volume XI, Number 91, Public Services, Infrastructure, Transportation, The Benefits of Donating Cryptocurrency and Digital Assets. Statement of Michael E. Horowitz Chair, Pandemic Response Tracking PPP: Search Every Company Approved for Federal Loans - ProPublica The release states that, In exchange for a fee, My Buddy Loans took personal identifying information from victims and promised to file an application for an agricultural grant, which they said was available to those who owned a few acres of land. Instead, the defendants Clifton Pape, 45, and Sally Jung, 58, both of Cleveland, Texas, actually filed fraudulent EIDL applications with the SBA that contained the victims personal identification information.. Since last October, when POGO published a report examining trends in Paycheck Protection Program loan fraud at the programs six-month mark, several eye-popping cases of alleged fraud have emerged. Search EIDL Loan Data and EIDL Loan Recipients - Skip The charges followed the guilty pleas of five other individuals involved in the alleged scam. As EPA continues to move toward identifying PFAS as Hazardous Is an OSHA Workplace Violence Standard for the Healthcare Industry on Yellen Calls on World Bank to Take Decisive Action on Climate Change, To Volunteer or Not: The Role of Community Association Board Members. In other words, lenders and the Small Business Administration did not prevent the alleged fraud in these instances before taxpayer dollars went out the door. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act is a federal law passed in March 2020 that provided $2.2 trillion dollars in emergency financial assistance to the millions of Americans who are suffering the economic effects caused by COVID-19. Grossman said his office has shared data with the Department of Health and Human Services Office of Inspector General, which identified some repeat offenders. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. Identity theft is probably the most common underlying cause of the fraud that were finding, particularly in the EIDL program, SBA Inspector General Hannibal Mike Ware said in testimony before Congress in late March. The Government alleged that Christopher and Erin Mazzei submitted fraudulent loan applications and obtained over $1.3 million in COVID-19 relief funds. Another large identity theft case led to charges against Jeremie Saintvil of Delray Beach, Florida in March. POGOs analysis of the first full years worth of Paycheck Protection Program fraud cases found that in at least: Some of these cases involve multiple defendants. Later in the summer, following legal pressure, the SBA opted to identify only the largest loan recipients. SBA and Treasury Release Names of PPP Loan Recipients These cases further highlight the ways individuals appear to have taken advantage of lax oversight in the program. The Justice Department has brought charges in at least 56 cases for alleged Paycheck Protection Program fraud, according to a POGO review detailing trends in these first cases. He allegedly sought to obtain a total of more than $1.5 million in Paycheck Protection Program loans, at least $937,000 of which he successfully obtained. (He also applied for a separate loan just days before being indicted.) The Trial Attorneys in the MIMF Unit prosecute cases involving, government procurement fraud, bank fraud, mortgage fraud, and . Winds light and variable. In January, the U.S. Attorneys Office for the Eastern District of California obtained the first settlement in a Paycheck Protection Program civil enforcement case, against an online retailer called SlideBelts Inc. Meant to help small businesses keep workers on the payroll, the Paycheck Protection Program offers loans of up to $10 million that can be forgiven in full if recipients meet certain employee retention requirements. Thats because, at least in part, its optional for loan applicants to supply that information.