I've spoken with several colleagues in the industry over the past few weeks on the issue and can confirm it is in-fact an issue. There were several instances of this crime ring kidnapping/extorting legitimate business owners to apply for an advance and then would steal the money before releasing the kidnapped family member or dropping the threats of blackmail. While avoiding sole props in Cali is of course one option, if a legitimate business is forced to apply - there really isn't much we can do to stop it.