*** For media inquiries, contact: 217,332 TOTAL PPP LOANS. We dont have the capacity to work everything that comes in, Grossman told POGO. If the borrower can prove they used the money to pay employees and eligible expenses, they can ask the SBA for loan forgiveness. Applicants fraudulently obtained at least $16 million, per the Justice Department. More than half of that amount$246 millionactually went to accused fraudsters. On applications for loans for two companies, Greenberg Media Group and DG3 Network, Greenberg allegedly lied about not being under indictment despite having been arrested by federal agents and charged just days earlierwith the indictment a matter of public record. NGUYEN and DAT HO will be presented in United States District Court for the Eastern District of New York in connection with these and other unrelated charges. The National Center for Disaster Fraud (NCDF) is in Baton Rouge and reports can be filed here. As of this month, weve seized over $580 million from over 23,000 fraudulent EIDL loans.. At the request of WAFB, the Louisiana Board of Barber Examiners also searched their apprentice, student, barber, and shop records for those eight names and addresses, and came up empty as well. In order to support the false representations in the loan applications about the number of employees at, and the wages paid by, the Victoria Companies, the defendants submitted fraudulent and doctored payroll and tax records. 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.. Ryan Summers is a research fellow for POGO. In less than six months, more than 50 people have been charged with allegedly committing fraud in connection with the program. Not all those loans were necessarily fraudulently obtained. Created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Paycheck Protection Program has lent out $755 billion to businesses as of April 11. ) or https:// means youve safely connected to the .gov website. But such gaps can create ambiguities that muddy the waters in overseeing spending., Still, much can be done with the data that does exist. We have a lot of qui tam cases that have been brought forward, Grossman told POGO, generally referring to False Claims Act complaints filed by private individuals. SOUTHERN CLASSIC OF FARMERVILLE LLC. He warned that increased loan volume, loan amounts, and expedited loan processing timeframes may make it more difficult for SBA to identity red flags in loan applications. The inspector general called for the agency to put in place sufficient controls, but the agency did not heed the watchdogs warnings at that time. NGUYEN, VICTORIA HO, and DAT HO are members of a family that owns a chain of over 15 nail salons called Victoria Nails & Spa and other companies (the Victoria Companies) in or around the New York metropolitan area, including the Bronx, Brooklyn, and Long Island. 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. We expect to go to trial because of the serious nature of this matter.. The Department of Justice, and in particular my office here in the Middle District of Louisiana, is committed to investigating and prosecuting those who abuse the system for personal gain and will use every resource at our disposal to protect those federal dollars and the businesses they are intended to help. Nick Schwellenbach is a Senior Investigator at POGO. These cases further highlight the ways individuals appear to have taken advantage of lax oversight in the program. The cases involve attempts to steal a total of more than $175 million from the program, with actual losses to the federal government totaling more than $70 million, the DOJ reports. Jean Rabbittand Kevin Aguilarwere charged with bank fraud and conspiracy to engage in monetary transaction charges. This Office was one of the districts affected by the SolarWinds intrusion. What happens when the watchdog tasked with overseeing the most powerful law enforcement agency in the country doesnt do its job? (WAFB) - Since the Paycheck Protection Program (PPP) launched to help businesses pay their employees to prevent great losses due to the COVID-19 pandemic, some people have. The Veterans Administration, Office of the Inspector General, is an active member of the PRAC Fraud Task Force. As far as the state of Louisiana is concerned, there is no requirement that a sole proprietor have a specific license at the state, said Ricks. During the programs first round, the Small Business Administration issued 5.2 million loans between April and August 2020. But because the Department of Justice has made PPP and EIDL a priority we are seeing results from DOJ rather quickly in a lot of our investigations., Others in government have also remarked on how fast many of these cases Based on the fraudulent PPP loan applications submitted by NGUYEN, VICTORIA HO, and DAT HO, a total of more than $13 million in PPP loans were approved for the Victoria Companies and approximately $7.8 million in loan proceeds were disbursed into bank accounts controlled by NGUYEN, DAT HO, and other family members. If you look at the last round [of PPP] and you look at it on a time series, it almost looks like the largest businesses and businesses in high-income neighborhoods received money first and smaller businesses and businesses in low-income neighborhoods received money last, the Small Business Administrations Michael Roth told Politico in March. Too often those who fraudulently divert tax dollars in amounts below what is typically accepted by prosecutors are not fully held accountable, impacting agency programs and leaving the taxpayer footing the bill, he wrote. As part of its own COVID-19 relief spending tracker Senator Kennedy admits the program may have had some holes in it, due to how quickly it was rolled out, and the loan program has been updated many times to expand eligibility. But it may be far greater than the fraud rate seen in the 2009 American Recovery and Reinvestment Act. In fraud cases where there is no apparent misuse of a loan, civil enforcement may be more likely than criminal prosecution. 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.. 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. Suspicious activity reports for small business loan fraud continued at levels far higher than normal through the end of 2020, according to POGOs review of federal data. The Small Business Administration has said victims of identity theft will not have to repay the loans fraudulently obtained in their name, but some individuals have told media outlets the agency has not promptly resolved their cases. The Biden administration published a fact sheet on February 2 detailing new measures to prevent fraud in the program. Louisiana Department of Revenue Identity Theft Affidavit, Louisiana Workforce Commission Suspected Fraud Form. The defendants were arrested this morning. In 2020, applicants could not lawfully receive more than one Paycheck Protection Program loan. The Department of Justice confirms they are looking into reports of PPP fraud across the nation. Find out how you can get involved and stay up to date with our work. That new law permitted SBA to require additional information from applicants, such as tax returns, for loans and advances as part of its verification, according to Shear of the Government Accountability Office. For more information on the Departments response to the pandemic, please visit https://www.justice.gov/coronavirus. to give the federal government time to investigate and evaluate the complaint before it becomes public. 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. The disaster loan programs strongest internal control is the ability to receive directly from the IRS recent tax transcripts, wrote James Rivera, head of the SBAs Office of Disaster Assistance, last fall. Nearly a dozen of those people took out two loans. The line is staffed 24/7. Other government agencies also submit referrals of potential fraud to the office of inspector general, and suspicious activity reports come in through the financial industry by way of the Treasury Department. 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. & Making sure that victims of federal crimes are treated with compassion, fairness and respect. (212) 637-2600, Human Trafficking & Child Sexual Exploitation, Department of Justice Harassment Prevention Resource, Download Ngoc Manh Nguyen et al. Representative James Clyburn (D-SC), chair of the House Select Subcommittee on the Coronavirus Crisis, said in the March 25 hearing that the Trump administration ignored flags of potential fraud in the Economic Injury Disaster Loan program, and approved loans in batches with little to no vetting and abandoned a rule that required two SBA employees to approve each loan application., The Trump administration ignored flags of potential fraud, While a year has passed since the CARES Act became law and there are more checks now, government watchdogs say the Small Business Administrations oversight of the lending programs is still inadequate. The DOJ says this ill-gotten money was in many cases used to buy luxury personal items like cars, homes, vacation trips, and jewelry. OIG and its law enforcement partners will relentlessly pursue fraudsters and bring them to justice. (The latest round, which began in January, allowed some applicants to receive a second Paycheck Protection Program loan. Assistant United States Attorneys Michael C. McGinnis and Sagar K. Ravi are in charge of the prosecution. In connection with loan applications for COVID-19 relief available from the Paycheck Protection Program (PPP) of the SBA, the defendants falsely and grossly overstated the number of employees and payroll at their nail salons and other businesses through fraudulent and doctored payroll and tax records in order to obtain larger loans. The Small Business Administrations Office of Inspector General found a significant gap in the agencys data on underserved markets, such as ethnicity, veteran status, and women-owned businesses. Loans through that program were directly processed by the Small Business Administration, while in the Paycheck Protection Program, loans were primarily processed by banks and other lenders. Maurice Kamgaing, 41 sent PPP loan . But the government could have implemented these safeguards from the beginning, which may have prevented significant levels of apparent fraud in the program. Investigators say those accused made false statements about things like how many people they employ, their average monthly revenue, and payroll figures. But, in the Economic Injury Disaster Loan program, the Small Business Administration has not conducted robust data analysis to find instances of loans and grants that may have been fraudulently obtained, according to the Government Accountability Office. A .gov website belongs to an official government organization in the United States. Click here for information on the investigation into the Mount Vernon Police Department. Investigators say those accused made false statements about things like how many people they employ, their average monthly revenue, and payroll figures. Name Jobs Reported Current Loan Loan Forgiveness; Amount ($) Date Approved Amount ($) Date; CONQUEST COMPLETION SERVICES, LLC: 129: 6,940,800: July 30, 2020: 7,069,157 Lenders can be liable under the FCA for knowingly certifying ineligible borrowers for PPP loans, including by failing to employ sufficient anti-money laundering protocols, according to a memo from the Cleary Gottlieb law firm. Alabama Arkansas Arizona California Colorado Florida Georgia Idaho Illinois Indiana Iowa Kentucky Kansas Louisiana Maine Maryland Michigan Minnesota Missouri Mississippi Montana Nebraska Nevada New Hampshire New Jersey New Mexico North Carolina Oklahoma . On January 11, in the final days of the Trump administration, the Small Business Administration began processing a new round of Paycheck Protection Program loans. The inspector general offices workload has increased significantly, Grossman said. Under the False Claims Act (FCA) as well as the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), either the government or whistleblowers with non-public information can initiate civil enforcement actions. Businesses applying for a PPP loan must provide documentation to confirm that they have previously paid employees the compensation represented in the loan application. Thats more than 10 times the fraud recoveries five years after the 2009 stimulus became law. Thats because, at least in part, its optional for loan applicants to supply that information. The PPP loan forgiveness is not subject to Louisiana state income tax. 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. The Department of Justice (DOJ) says as of Aug. 8, more than 5.2 million forgivable loans have been approved, at a total of more than $525 billion. But according to the Justice Department, neither company paid anywhere near the purported amounts and had few if any employees. Kindambu pleaded guilty in January. Government and federal taxpayers writ large arent the only victims of fraud in the pandemic lending programs. Linda Miller, the deputy executive director of the Pandemic Response Accountability Committee, told Federal News Radio in September, My guess is when were all said and done, [the fraud rate is] going to be significantly higher than 5% in the case of the CARES Act. If it is just 5% of the combined $957 billion in Paycheck Protection Program loans and Economic Injury Disaster loans and advance grants, that would still be about $48 billion in fraud. Giving back to the community through a variety of venues & initiatives. The Department of Justice says in Feb. 2021, Gray created a scheme to defraud a lender and the United States, through the Small Business Administration, by filing false applications for PPP. They. Mr. Santemore's pleaded guilty on April 27, 2022, and was sentenced on July 25, 2022 but the terms of his sentence are under seal. Your Address, Corporation Income/Franchise Extension Request. PPP Loan Recipient List By State Louisiana 217,332 TOTAL PPP LOANS $12.2B TOTAL LOAN AMOUNT $56,095 AVERAGE PPP LOAN 6 AVG COMPANY SIZE Louisiana has a total of 217,332 businesses that received Paycheck Protection Program (PPP) loans from the Small Business Administration. Federal investigators cannot comment on active investigations or give an estimate on how much fraud may have occurred through federal pandemic relief programs, but a spokesperson for the U.S. Attorneys Office of the Middle District of Louisiana confirms there were fraudulent applications submitted in Louisiana through several relief programs including the PPP. Published 8:46 am Sunday, September 11, 2022 . 650 Poydras Street, Suite 1600 But in March 2021, the Small Business Administration Office of Inspector General issued a report that found that lenders last year issued more than one Paycheck Protection Program loan to 4,260 borrowers with the same tax identification number and borrowers with the same business name and address. Those loans were worth a total of $692 million. 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. But, he added, the CARES Act removed that control, calling it a pivotal change.. Report it to the Small Business Administrations with just a few clicks. In 111 instances, the zip code in the Small Business Administrations data did not match the state provided. Does something look fishy to you? Sen. John Kennedy says in the rush to get help to people in need as quickly as possible, Congress didnt have time to build many safeguards against fraud into the program. Inaccuracies in the data or missing data can undermine oversight. 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. In another case, a Virginia resident obtained over $2.5 million from the Paycheck Protection Program and used the funds to buy not only a luxury car but a private plane. For media inquiries, contact: (WAFB) - Since the Paycheck Protection Program (PPP) launched to help businesses pay their employees to prevent great losses due to the COVID-19 pandemic, some people have of course tried to exploit the program and defraud the federal government of money. The payments are refundable tax credits and are not considered taxable income for federal or state tax purposes. Under the Coronavirus Response and Relief Supplemental Appropriations Act, passed as part of the Consolidated Appropriations Act of 2021, (CARES II), individuals began receiving automatically a second round of Economic Impact Payments of up to $600 for individuals or $1,200 for married couples and up to $600 for each qualifying child beginning in December. Act 12 of the 2020 First Extraordinary Session of the Louisiana Legislature provided for a one-time $250 rebate for eligible workers earning $50,000 per year or less, who spent at least 200 hours responding to or mitigating the COVID-19 crisis from March 22, 2020, through May 14, 2020. 3 Defendants Arrested For Over $13 Million Fraud Scheme To Obtain Loans Intended To Help Small Businesses During COVID-19 Pandemic Three Family Members Arrested for Misrepresenting Employee Payroll Figures to Receive COVID-19 Loan Funds for Chain of Family-Owned Nail Salons in New York Metropolitan Area and Other Businesses And these cases are just the beginning. BATON ROUGE, La. According to court records, Amir Aqeel and several others in the Houston area allegedly created fake tax and payroll documentation in exchange for large kickbacks for referring others into the scheme that involved 12 corporate entities. 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