[Hedley Lamarr]

“The House Select Subcommittee report details serious problems of fraud and self-dealing by lenders and by companies who were paid fees by lenders to help PPP funds reach small business owners. In response to new revelations detailed in the report of possible fraud facilitated by third-party companies, the Small Business Administration (SBA) is taking additional action,” reads a statement by the SBA.

On Wednesday, the SBA released a statement in response to the findings in the House Select Subcommittee on the Coronavirus Crisis report on PPP fraud. The SBA plans to continue working with the Select Subcommittee to review the evidence within the report and continue taking corrective action to address fraud and weak controls that were “so prevalent at the onset of the PPP”.

In response to the PPP fraud report, the SBA suspended Blueacorn and Womply from working with the SBA in any capacity. In addition, they will be investigating appropriate actions against the companies’ owners, management, and successor companies.

Further, the SBA stated that they will launch full investigations of the lenders who were partnered with fintechs including Benworth, Capital Plus, Celtic Bank, Customers Bank, Cross River Bank, Fountainhead, Harvest, and Prestamos. This will also include any individuals and related entities that were named in the 130-page report.

SBA states that they will work with the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the U.S. Department of the Treasury, the Federal Reserve Board, and the Office of the Comptroller of the Currency to ensure federal financial regulators are coordinating their response to any wrongdoings by lenders.

“The SBA will continue to prioritize its response to findings of potential fraud in pandemic relief programs, efforts that have been positively recognized by the SBA Office of the Inspector General.”

[abfunders]

Honestly, while I didn't make money on the PPP cycle unlike a LOT of my colleagues, I've been kinda glad that I neither took this money nor brokered any of it.

[Olderguy]

I've dealt with Cross River and Harvest...and the VP at Harvest told me his biggest issue is not getting any money for servicing these loans if they don't get forgiven. My experience with both of these companies has been straight up and I did a lot of PPP loans. Same goes for the forgiveness process.

[Hedley Lamarr]

They are looking into EVERYONE that was involved with PPP......EVERYONE.....

[Olderguy]

Hahahaha...my former boss bought 50% interest in a company - they were doing PPP's getting an illegal kickback from the CEO of the bank. That's why he wouldn't let me do them.
Will be interesting to see how that plays out.

[abfunders]

#whistleblowers get paid well

[Hedley Lamarr]

#whistleblowers get paid well

Don't need whistle blowers......just follow the money.

[Olderguy]

Too many scumbags to chase...

As a side note, my former boss had me get 7 EIDL loans totalling $1.3M for a "major" MCA lender and his brothers.....they stiffed me for my fee....took me 4 months to get $2,500.

[Hedley Lamarr]

Too many scumbags to chase...

As a side note, my former boss had me get 7 EIDL loans totalling $1.3M for a "major" MCA lender and his brothers.....they stiffed me for my fee....took me 4 months to get $2,500.

I thought MCA companies and other lenders were ineligible from receiving EIDL/PPP???

[Olderguy]

I thought MCA companies and other lenders were ineligible from receiving EIDL/PPP???

I was able to get them an added a letter of explanation for change in business activity code.. None of the lender's brothers were in the industry. Going fintech from lender was pretty reasonable at the time as lending was pretty much cooked.

[Hedley Lamarr]

I was able to get them an added a letter of explanation for change in business activity code.. None of the lender's brothers were in the industry. Going fintech from lender was pretty reasonable at the time as lending was pretty much cooked.

So the company is a "large MCA" company and you were able to get them a letter of explanation to change their business code.

[Olderguy]

So the company is a "large MCA" company and you were able to get them a letter of explanation to change their business code.

A lot of these companies were doing multiple business functions, one of which was fintech. Providing an explanation and sample allowed them to be accepted into the program using the fintech naics business code.

[Hedley Lamarr]

A lot of these companies were doing multiple business functions, one of which was fintech. Providing an explanation and sample allowed them to be accepted into the program using the fintech naics business code.

So you were able to alter an NAICS code so they were able to obtain a EIDL they otherwise would not qualify for?

[Olderguy]

So you were able to alter an NAICS code so they were able to obtain a EIDL they otherwise would not qualify for?

Not alter - use one that fits with what they do that is within the guidelines. Companies can operate under different naics in actual operations. Only one shows on the tax return. Lending declined and fintech filled in supporting revenue to keep the business operating. And LOE with specifics does that.

[Hedley Lamarr]

Not alter - use one that fits with what they do that is within the guidelines. Companies can operate under different naics in actual operations. Only one shows on the tax return. Lending declined and fintech filled in supporting revenue to keep the business operating. And LOE with specifics does that.

Similar to a case that was just closed in the South East. The business owner used another NAICS code to obtain less than $5,000 in PPP claiming that the NAICS code was "part of his business". He's now serving 7 years for bank fraud and defrauding the govenment....felony. Another similar case the "advisor" also went to jail for conspiracy to the fraud. He aided the business owner in obtaining to funds for a fee.

[Olderguy]

In this case the transactional activity was real moving from one type of business to another...Owner was originally software development.

[Hedley Lamarr]

Good luck..... The SBA Inspector General basically said "Welcome to Let's **** Around and Let's Find Outsville.....I will be your tour guide". They are looking at everybody.... The Fed's are a little more than pissed so much fraud occurred. Word is they are especially looking very hard at EVERY transaction and people who were paid for facilitating transactions. Low hanging fruit is the banks and facilitators that had poor forgiveness rates first and anyone who got paid to facilitate a transaction.

[Rickinindy]

Same here, I sat that one out too...

[Hedley Lamarr]

This will go on for a while. The Feds will seek out fraud first related to fintech and low forgiveness rate institutions. The next shoe to drop thereafter will be the Feds going after banks who gave PPP to new customers. They will pop them for know your customer rules.

A LOT of banks declined PPP to companies that were NOT already bank customers due to know your customer rules and they were busy obtain funds for companies that were already clients. Smart banks that were able to obtain PPP for their clients required the funds be help in a separate account and used for intended purposes only.....mainly payroll. It made it MUCH easier to track and get forgiveness.

[Bcooper]

glad i refused to have any part in the PPP loans now