Federal Government Investigates SBA Disaster Loan Program Fraud in Rhode Island
PROVIDENCE, RI (WPRI) – The FBI has launched an investigation following a Target 12 report showing the US Small Business Administration approved millions of dollars for Rhode Island companies that do not exist under ‘a disaster loan program.
Target 12 confirmed that RI State Police are forwarding all local complaints related to the program to the FBI for further investigation. The federal agency declined to comment.
Meanwhile, the victims of the fraud continue to come forward. “I just wonder how this money is received so easily,” said Kelly Porter, a resident of Warwick, who discovered that a loan of $ 52,500 had been given to a business that does not exist at her home.
Porter learned about the loan after his parents watched the Target 12 report then searched for his address using the database below.
Here are the addresses where disaster loans have been approved
The SBA’s Office of Disaster Assistance last year approved $ 562 million for at least 10,000 borrowers with Rhode Island addresses through its Economic Disaster Lending Program. The hastily put together program – created as businesses struggled financially over spring pandemic shutdowns – was quickly infiltrated by fraudsters.
Criminals have managed to swindle millions of dollars using stolen identities and fake business names. In Rhode Island, farms were a popular disguise.
Target 12 identified $ 3.8 million approved for at least 80 “farm” businesses that don’t exist, using addresses of apartments, single-family homes, or other non-farm properties. Since the publication of the first report, dozens more people claiming to be victims of the program have contacted Target 12, reporting other types of bogus companies, including several named after people.
For Porter, the fake business listed on her property is named after her uncle, who she says grew up in the house long before he bought it 11 years ago. His property has also been targeted by fraudsters in other ways, including through the recent unemployment insurance fraud at RI’s Ministry of Labor and Training – a common crossbreed that has emerged among victims of the SBA’s disaster loan program.
“It’s very, very frustrating,” she said, saying she had taken several different steps over the years to try to protect her identity. “I wonder why I’m still being targeted.”
Since the Target 12 report, the SBA district office has become so inundated with fraud claims, investigations and complaints that officials have implemented automatic email responses to explain that all complaints should be directed to the SBA Inspector General and the Disaster Assistance Office in Washington, DC
Anyone who believes they are a victim of fraud is encouraged to contact the following:
The SBA regional office declined to comment on any issues related to the fraud, but reports from Target 12 prompted U.S. Senator Jack Reed to call the federal agency to investigate the allegations.
The Rhode Island Democrat has since said a major program failure occurred when the federal SBA office took control of the program from district offices, meaning SBA workers in Providence could not control any of the loans made to local businesses.
With greater local control, Reed argued, officials would have had an easier time identifying bogus businesses, especially when the businesses were so extravagant – like a listed cattle farm in the middle of a residential neighborhood. from East Providence.
“They were essentially cut up”, Reed told Target 12 last month. “If you were running this program, you would want local input. You would like someone to call saying, “There is something wrong with these loans. We know virtually every farm in the state and have never heard of it. “
It is still unclear how the fraudulent SBA loans will be resolved. As it stands, approved borrowers are still obligated to repay debt, which in many cases amounts to tens of thousands of dollars, although payments have all been deferred for a year.
Several people interviewed by Target 12 said the only advice they received from officials was to continue reporting fraud allegations whenever they received invoice notifications in the mail. For many, mailings have been arriving every month since the summer.
The SBA does not comment publicly and even rejected a report by the SBA Inspector General in October that suggested disaster loan fraud was rife across the country. Bloomberg announced leadership of the SBA in November actively discouraged employees to use the term “fraud” when discussing the program.
It is not known if this approach will change under President-elect Joe Biden, whose inauguration is on January 20. But the former vice president pointed to the fraud during a speech appointing Isabel Guzman, who will become the agency’s next administrator, pending confirmation from the US Senate.
Guzman, who currently works in the SBA’s California office, previously served in Washington under the Obama administration.
“I promise you that we will investigate the waste and fraud in these programs, so that the money goes to the businesses that deserve it,” Biden said.
Porter, like many others who have been caught up in the ploy, says she is frustrated that federal relief funds are going to scammers instead of small businesses struggling to stay afloat during the coronavirus pandemic. And she fears it will happen again, as new federal funding has been approved for the SBA to continue to provide loans and grants to struggling businesses.
“I have friends who own small businesses in the state and they haven’t received any funding,” Porter said. “Then you have these random people who can get that money so easily. The way everything is going is mind blowing. ”