U.S. Small Business Administration, Office of Inspector General

Recently, the U.S. Small Business Administration, Office of Inspector General – Eastern Region Special Agent in Charge Amaleka McCall-Brathwaite joined United States Attorney Damian Williams of the Southern District of New York to announce a $4.6 million False Claims Act settlement with restaurants, fur apparel companies, and their owners and managers for submitting false information to obtain Paycheck Protection Program (PPP) loans. The settlement resolves claims that the defendants—four restaurants located in New York, two companies based in New Jersey that distribute, sell, and service fur apparel, and five individuals who owned/managed these businesses—inflated payroll figures in their PPP loan and forgiveness applications by, among other things, misrepresenting that family members and an acquaintance of the owners/managers were employed by the businesses when they were not, and listing the same individuals as “full-time employees” of multiple businesses. The six defendant companies applied for and received six first-draw PPP loans and six second-draw PPP loans for more than $11.9 million, nearly all of which were fully forgiven. The five individual defendants were involved in preparing the PPP loan and forgiveness applications and personally signed the applications on behalf of their companies. As OIG’s Eastern Region Special Agent in Charge Amaleka McCall-Brathwaite said: “This settlement reinforces our unwavering commitment to protecting the integrity of SBA’s programs. Wrongful practices, such as inflating payroll and employee numbers, divert essential funds from deserving businesses.” Read more: https://ow.ly/1y9F50St1Ib

Recently, the U.S. Small Business Administration, Office of Inspector General – Eastern Region Special Agent in Charge Amaleka McCall-Brathwaite joined United States Attorney Breon Peace of the Eastern District of New York to announce that the former vice president and New York branch manager of Popular Bank were convicted of conspiracy to commit bank and wire fraud, wire fraud, bank fraud, and money laundering conspiracy. The charges arose out of a scheme the defendant led to fraudulently obtain millions of dollars from the Paycheck Protection Program and the Economic Injury Disaster Loan program during the height of the COVID-19 pandemic. The defendant boasted about her earnings from the scheme. In handwritten notes found at her desk at work and before the defendant’s conviction at trial, seven other co-conspirators pled guilty to wire and bank fraud conspiracy in connection with the defendant’s pandemic aid fraud conspiracy at the bank. Read more: https://ow.ly/uwWc50St1fp

#DidYouKnow: The U.S. Small Business Administration, Office of Inspector General has an Insights and Tips page with advice on how small businesses can protect against scams and fraud. Check it out here: https://ow.ly/BmsW50Ss5yB

Be sure to follow @SBAOIG's oversight of SBA’s programs and operations intended to mitigate the economic impact of the COVID-19 pandemic: https://ow.ly/Y5wk50PLfCG

Today commemorates the anniversary of the release of our historic, first-of-its-kind Fraud Landscape Report. The U.S. Small Business Administration, Office of Inspector General conducted this review to provide a comprehensive estimate of the potential fraud in the U.S. Small Business Administration’s (SBA) pandemic assistance loan programs. Over the course of the Coronavirus Disease 2019 (COVID-19) pandemic, SBA disbursed approximately $1.2 trillion of COVID-19 Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) funds. In this report, our office estimated that SBA disbursed over $200 billion in potentially fraudulent COVID-19 EIDLs, EIDL Targeted Advances, Supplemental Targeted Advances, and PPP loans. This means at least 17 percent of all COVID-19 EIDL and PPP funds were disbursed to potentially fraudulent actors. Click the link to read this report: https://ow.ly/JUHK50SrkVX

If you have a question about an SBA loan or SBA program that’s not fraud, waste or abuse, here's what to do: Get in touch with your local SBA District Office or the SBA Answer Desk by telephone (1-800-U-ASK-SBA).

Recently, the U.S. Small Business Administration, Office of Inspector General joined United States Attorney Timothy T. Duax of the Northern District of Iowa and representatives from the COVID-19 Fraud Enforcement Task Force to announce the guilty plea and conviction of a Pennsylvania man who organized a scheme to defraud the government out of COVID-19 pandemic loan funds. In a plea agreement, the defendant admitted that he and others recruited and assisted various individuals in the Northern District of Iowa and elsewhere to apply for Paycheck Protection Program (“PPP”) loans for which they did not qualify, in exchange for a fee. False, fraudulent, and fictitious documents and statements were submitted to various lending institutions in support of the PPP loans for the PPP applicants. After the PPP applicants received the fraudulent PPP loans, it was part of the scheme to demand a portion of the PPP money from the PPP applicants and, if necessary, the defendant traveled to demand payment in person. The defendant traveled to Iowa and demanded payment in person from a PPP applicant. The defendant admitted in his plea agreement that he is responsible for no less than $250,000 in loss based on no less than 21 fraudulent PPP loans as a result of the scheme to defraud. This conviction further showcase the power of strategic partnerships across government to ensure that wrongdoers are brought to justice. Read more: https://ow.ly/BvV550SpUxP

Our Investigation Division is hiring a Student Trainee (Pathways Internship - GS 4) in our Federal Way, WA Office. https://ow.ly/qZhJ50SpUrs

Recently, the U.S. Small Business Administration, Office of Inspector General joined United States Attorney Jessica D. Aber of the Eastern District of Virginia to announce that a Fredericksburg man pled guilty today to one count of conspiracy to commit wire fraud for his role in defrauding a federal COVID-19 relief program. According to the court documents, the defendant and co-conspirator prepared and submitted a PPP loan application. In the loan application, the defendant represented that he was the President/CEO of the company Green Information Solutions LLC (GIS), and falsely claimed that the company employed seven employees with an average monthly payroll of $78,215.41. Based on these false representations, Atlantic Union Bank awarded GIS a first-draw PPP loan for $195,500, which was deposited into an Atlantic Union Bank account in the name of GIS on May 11, 2020. The defendant then purchased a series of cashier’s checks drawn on the money from the fraudulently obtained PPP loan and deposited them into GIS’s Navy Federal Credit Union business checking account. Although the memo lines on two of the cashier’s checks referred to “payroll” or other business expenses, GIS did not have any employees or any legitimate business expenses. Between May 2020 and March 2021, the defendant transferred $81,131.60 from GIS’s NFCU business checking account to his personal bank account. In March 2021, the defendant and his co-conspirator collaborated again to electronically submit a second-draw PPP loan application to Atlantic Union Bank on behalf of GIS. Based on these misrepresentations, Atlantic Union Bank awarded GIS a second-draw PPP loan for $143,715. The defendant set up payroll and expense accounts for GIS at Atlantic Union Bank and transferred the second-draw funds into them. The defendant then used those funds for other purposes, such as payment to Ford Motor Credit, and transferred funds into his personal accounts. To conceal his misuse of the PPP loans, the defendant set up a Quickbooks account in which transfers falsely appeared as “payroll” in bank statements. From June 15 to July 15 in 2021, the defendant made seven such transactions knowing they involved criminally derived property and were not being used for payroll. Read more: https://ow.ly/33na50SpAuT

Recently, the U.S. Small Business Administration, Office of Inspector General joined United States Attorney Matthew M. Graves of the District of Columbia to announce that the owner of an ‘agriculture’ business has been charged with defrauding SBA of $150,000 in COVID-19 relief funds, which were meant to provide relief to businesses suffering economic hardship as a result of the COVID-19 pandemic. The defendant allegedly submitted an EIDL application to the Small Business Administration (SBA), in which she claimed to own 100% of an “agriculture” business that was based out of her Washington D.C. apartment. Morgan claimed to employ 10 people and to have generated $7.5 million in gross revenues in 2019. There allegedly was no such business. On July 8, 2020, the SBA deposited $149,900 into the defendant’s bank account. The defendant allegedly used the money to pay off her debts and pay for auto repair, restaurant tabs, shopping purchases, and trips to Atlantic City and Las Vegas. By December 31, 2020, the defendant’s account balance was down to $829. Read more: https://ow.ly/1Tbm50SoHjW