Jean Rabbittand Kevin Aguilarwere charged with bank fraud and conspiracy to engage in monetary transaction charges. Help us crowdsource fraud detection in the PPP program! Both the U.S. Attorneys Office and the Louisiana Attorney General have encouraged the community to report suspected fraud. The Biden administration published a fact sheet on February 2 detailing new measures to prevent fraud in the program. It was this difficult road that we had about a week, but our bankers got it done and, and our businesswomen and businessmen stepped up to the plate and took advantage of it, said Sen. John Kennedy, R-La. According to the House Select Subcommittee on the Coronavirus Crisis, the SBA Office of Inspector General has received nearly 750,000 referrals of suspected identity theft related to the program over the last year. And this is not the only case. 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. 2020 Louisiana Individual Income Tax returns and payments are due Monday, May 17, 2021. According to a court filing signed by a Secret Service agent, a family of four was behind a scheme Kindambu applied for two Paycheck Protection Program loans representing Papillon Holdings, Inc. and Papillon Air, Inc., according to court documents. (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.) 66625. PPP loan information is available to the public through the SBA, and several groups have even published that information in the form of online searchable databases that anyone can use. 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. Not all the blame can be placed at the Small Business Administrations feet. In a case that garnered national attention, the U.S. Secret Service seized over $8.4 million in Paycheck Protection Program funds from a seemingly bogus ministry in Orlando, Florida that had no apparent operations at its physical location and a website filled with generic language taken from other religious organizations. 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. 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. 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. The case led to criminal charges, including aggravated identify theft, filed in Texas in February. Louisiana has a total of 217,332 businesses that received Paycheck Protection Program (PPP) loans from the Small Business Administration. The PPP was developed to ease the pain of COVID-19 economic restraints on working Americans. The auditor found that the deficiencies were caused by an inadequate entity wide control environment.. You know, is it something that they should have done? More due diligence on the part of lenders or the Small Business Administration could have prevented at least some instances of fraud, especially when applicants appear to have inflated or fabricated payroll expenses or used defunct or bogus companies to illicitly obtain loans. 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. In addition to allegedly submitting a fraudulent PPP loan application for a fictious [sic] business in his own name, Saintvil also allegedly stole the identities of eight elderly individualsseven of whom were residents of senior living facilities and one who was related to him, according to a Justice Department press release. SOUTHERN MAGNOLIA LANDSCAPING LLC. That watchdog office has recommended that the agency use data analysis as a means to detect potentially ineligible and fraudulent applications.. 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. 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. 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. Data is available, but its reliability for the purpose of assessing whether Paycheck Protection Program loans are reaching the underserved communities that Congress wanted prioritized is limited because the demographic data is incomplete. Thats because, at least in part, its optional for loan applicants to supply that information. You have to understand from the lenders perspective, really, theyre just looking at income. However, both Kennedy and Ricks say the good the program did far outweigh any possible fraud. But such gaps can create ambiguities that muddy the waters in overseeing spending., Still, much can be done with the data that does exist. 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 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 offices 44 investigators have been working at least three times the caseload that theyre usually used to working. The FBI, Secret Service, Homeland Security Investigations, and other offices of inspectors general are also part of the federal law enforcement effort. 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. From at least in or about April 2020 through at least in or about June 2020, NGUYEN, VICTORIA HO, and DAT HO engaged in a scheme to submit online applications to at least two financial institutions for a total of over $13 million in government-guaranteed loans for the Victoria Companies through the SBAs PPP. Those who suspect PPP fraud or may have been a victim of such fraud should contact the National Center for Disaster Fraud (NCDF) hotline at 866-720-5721. The DOJ says falsified tax records were submitted and in some cases, stolen personal information was also used in these attempts to defraud the PPP. There is abundant evidence that there was too little upfront vetting of loan applications in both the Paycheck Protection Program and Economic Injury Disaster Loan program. (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. Shes accused of making up fake businesses to collect more than $20,000 through a PPP loan and another $500,000 in prepaid debit cards through unemployment claims. With more time, we might have been able to implement some preemptive fraud measures, but we knew there would be some fraud, said Kennedy. Both the outgoing Trump administration and the Biden administration appear to have learned lessons from the fraud that occurred in 2020. Both laws have provisions allowing whistleblowers to receive a reward for successful recoveries obtained for the U.S. government. A borrower applied for a PPP loan from a lender or bank. In July, banks filed nearly seven times the average number of suspicious activity reports. U.S. Attorney's Office, Eastern District of Louisiana, Former Louisiana Woman Indicted for Preparing Over 110 Fraudulent PPP Loans Totaling Over $1.1 Million Dollars, 2_ecf_doc_1_-_sharnae_every_indictment_redacted_sanitized.pdf, Dr. Charles J. Southall, III Sentenced to 60 Months in Prison for Money Laundering, Obtaining Over $889,000 Through Fraud, New Orleans Man Sentenced for Theft and Sale of Motor Vehicle from Mississippi Car Dealership, Two More New Orleans Residents Sentenced in Staged Automobile Collision Scheme, Former Louisiana Woman Indicted For Preparing Over 110 Fraudulent PPP Loans Totaling Over $1.1 Million Dollars. The PPP loans are forgivable under certain conditions and the loan forgiveness is not taxable income for federal tax purposes. The inspector general offices workload has increased significantly, Grossman said. 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. The SBA has very broad rules, very, very large leeway on what the lender had to request from the bar to get that guarantee secure, said the SBA Louisiana District Director Michael Ricks. If youre going to steal money, finite resources from people who need them, then, by God, were going to prosecute you.. As former federal prosecutor Tarek Helou told the Wall Street Journal, The scandal is whats legal, not whats illegal., Lenders may also be more likely to face civil enforcement than criminal enforcement. Grossman said his office has shared data with the Department of Health and Human Services Office of Inspector General, which identified some repeat offenders. NEW ORLEANS, LOUISIANA United States Attorney Duane A. Evans announced today the indictment of SHARNAE EVERY (EVERY), age 27, of Houston, Texas, who was charged with one (1) count of Conspiracy to Commit Mail Fraud in violation of Title 18, United States Code, Section 1349 and two (2) counts of Mail Fraud in violation of Title 18, United States Code, Section 1341. Who in Louisiana got Paycheck Protection Program loans during the pandemic? Giving back to the community through a variety of venues & initiatives. I dont know why it is that that some people take advantage of a program like this in a time of crisis. 5 min read. The oversight failures of the last year have become increasingly clear, eventually leading to changes. First Home Bank approved the $8.4 million loan, among the less than 0.1% of Paycheck Protection Program loans this large or larger (the maximum is $10 million). U.S. Attorney Evans reiterated that the indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt. But in the year since the CARES Act became law, it has received nearly 150,000 hotline complaints, representing a 19,500% increase over prior years, according to a staff memo from the House Select Subcommittee on the Coronavirus Crisis. Congress also authorized the Small Business Administrations existing Economic Injury Disaster Loan (EIDL) program to lend in response to the pandemic, and nearly $202 billion in loans through that program have been approved as of April 1. (Eligible companies and nonprofit organizations can apply for and receive both Paycheck Protection Program and Economic Injury Disaster loans.). But even with an allegedly corrupt insider, a loan system with adequate checks should have prevented Greenbergs loans from being approved. The program worked like this. Investigators say those accused made false statements about things like how many people they employ, their average monthly revenue, and payroll figures. Ryan Summers is a research fellow for POGO. (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. I urge anyone who believes he or she is a victim of this type of fraud to report it to the National Center for Disaster Fraud," said US Attorney Brandon Fremin. 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. They allegedly exploited a program designed to provide vital funding for small businesses that are legitimately struggling in the midst of the pandemic. (212) 637-2600, Human Trafficking & Child Sexual Exploitation, Department of Justice Harassment Prevention Resource, Download Ngoc Manh Nguyen et al. The SBA Employee would and did use her access to the SBAs computer systems and her access to EIDLs to manipulate the status of EIDLs to trigger the system to extend funding for EIDLs submitted for the benefit for Joel Micah Greenberg, the indictment alleges. During the programs first round, the Small Business Administration issued 5.2 million loans between April and August 2020. 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. About one year after the passage of the CARES Act, $626 million in funds have already been seized or forfeited related to criminal and civil investigations of pandemic loan fraud. 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 program has traditionally been used to help small businesses facing revenue loss in the wake of natural disasters. Use our searchable database to see who in Louisiana received funds. On March 30, the Justice Department unveiled new charges against Joel Greenberg, a former Florida tax collector. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. They have never said they won't seek prison time for below a minimum dollar amount. Analyzing that data for red flags is a way to identity subsets of loans and grants that warrant closer scrutiny and to help direct scarce investigative resources. Buried within the court filing are allegations that Greenberg bribed an unnamed Small Business Administration insider to fraudulently obtain nearly $433,000 in Economic Injury Disaster loans. The PPP loan forgiveness is not subject to Louisiana state income tax. 650 Poydras Street, Suite 1600
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