SIOUX FALLS, S.D. (KELO) —This story has been updated to included new information on how the SBA wants victims of identity theft in the EIDL program to report the fraud.
In our KELOLAND News investigation last month, we told you about the potential for widespread fraud in an SBA disaster loan program. We even spoke with a Sioux Falls’ business owner whose identity was stolen to obtain a $150,000 loan.
Our investigative team has been combing through the SBA data and has uncovered that it’s far from an isolated case. Our work exposes fake farms all across the state that used the identities of real people in KELOLAND to get away with government money.
The Small Business Administration’s Emergency Injury Disaster Loans or EIDL for short went to 7,598 businesses for a total of $463.5 million. According to the SBA’s own inspector general, there appears to be rampant fraud in the program adding up to billions of dollars.
KELOLAND Investigates extrapolated the list of South Dakota borrowers and were shocked by the blatant fraud we easily unveiled.
Angela Kennecke: So is this Beth MB Potato Farm?
Beth Boyens: No.
Angela Kennecke: No potato farm here?
Beth Boyens: No potato farm here.
Augustana Professor Beth Boyens is not growing potatoes at her Sioux Falls McKennan Park home.
But according to the SBA data, someone took out a loan for $42,700 using her name and address.
“When you first contacted me about it, I just thought at first it was sort of comical–I grew up in Minneapolis and Sioux Falls. I know nothing about farming and I’m an English teacher. But then I was like, oh this could be serious, because somebody has used my name and address to obtain money,” Boyens said.
When the Boyens called the SBA to report the fraud, they found out their name and address had also been fraudulently used to obtain another loan for a phony tomato farm as well.
“It feels like a violation to have your name and address used for something that’s fraudulent,” Boyens said.
KELOLAND Investigates searched the nearly 8,000 entries and found plenty of hot potatoes–cases of fraud connected to both potato and tomato farms–and more. In addition to another Augustana University’s professor’s name and address being used to obtain a $42,900 loan for a fake potato farm, we also found a group of Black Hills State professors whose identities were used for loans on farms they don’t have.
Biology professor Shane Sarver’s name and address were used for a $42,700 loan for “Shane K.S. Tomatoes.
“In the past, I’ve had a small personal garden. But no, I don’t grow tomatoes,” Sarver said.
Sarver had no idea of the fraud until we contacted him.
“I thought it was a big joke. But then I Googled your name and saw you were a legitimate reporter. And I was like, “Oh my God, this is so bizarre,” Sarver said.
Sarver wonders if recent big data breaches could be the reason his personal information fell into the wrong hands.
“It’s hard to me to comprehend how this could happen. It’s so obvious that I’m not a tomato farmer. There’s nothing you could find that would indicate I’m a tomato farmer,” Sarver said.
In all, KELOLAND Investigates narrowed down the list of borrowers with only the word “farm” in the name and found dozens of cases of fraud by locating the people who lived at the addresses, who in turn, confirmed they did not have farms.
Our investigation uncovered at least 29 cases of fraud, mostly fake farms, equaling $1.14 million.
The fake farms were not on farmland at all. Like the dairy farm listed at the corner of 49th Street and Louise Avenue. The dairy farm supposedly at a strip mall got a $31,000 SBA loan.
“You can see around, this is my acreage right here and this is my house and we live right next to the river. If this is a farm, this is all I’ve got,” Jeff Pochop said.
Jeff Pochop is a Pierre print shop owner, not a farmer, yet the Pochop farm at his address got an $8300 SBA disaster loan.
“So much money was thrown at this corona deal–to me in would have been easy for the SBA to just check–pull up my name, which they probably have better access to information than I do–and just see well, he doesn’t own any acreages or farms or anything, so why would he be applying for a loan?” Pochop said.
We asked South Dakota SBA Director Jaime Wood about the amount of fraud in the EIDL program.
Jaime Wood: There’s more good in this program than the fraud that is taking place. The fraud is minimal.
Angela Kennecke: It’s still a lot of money in fraud.
Jaime Wood: Even one case, we take seriously and we’re very concerned even one case.
The SBA is asking people to report it if they discover their name and address have been used fraudulently to obtain a disaster loan.
“I am not a farmer, no,” Brendan Dix said.
Sioux Falls Attorney Brendan Dix contacted the SBA after he got notice that he would need to start paying back a $9,900 loan for Dix Farm at his southwestern Sioux Falls home.
“They said, don’t worry, the funds were never distributed, so we won’t be seeking payments from you,” Dix said.
Despite that, Dix has still has received several notices that payment is coming due.
“Dealing with the government, how long is this going to take? What kind of boondoggle have they got with this? Why was this ever approved? I didn’t want the money; didn’t apply for it. I thought they should be able to take that off their books pretty quickly, but apparently not,” Dix said.
And it’s not only phony farms that are part of the scheme. KELOLAND Investigates also discovered a fraudulent loan of $43,000 in the name of Sioux Falls school board member, Todd Thoelke. In that case and nearly all that we found, the victim, whose identity was stolen, was in the dark.
“I’m appreciative. I wouldn’t have know this happened to me, if you had not done the story and contacted me. I just want to say I thank you for that,” Sarver said.
KELOLAND News has compiled all of the data of the more than $463 million dollars in these SBA Emergency Injury Disaster Loans given out in South Dakota. While we narrowed our search to farms and found a few others along the way, anyone potentially could be a victim. You can cross check your address to see if your identity has been compromised here:
The SBA now says if your identity was used to fraudulently obtain a COVID-19 Economic Injury Disaster Loan, you should download the SBA’s COVID-19 EIDL Identity Theft Letter and return the documents to IDTheftRecords@sba.gov. The SBA says it will then conduct a review of the reported identity theft and take steps to release the loan the victim’s name so they are not liable for the debt.
The U.S. Small Business Administration issued the following statement to KELOLAND Investigates on Friday, March 19th:
“The Biden-Harris Administration takes seriously its responsibility to safeguard taxpayer dollars and prevent fraud, waste, and abuse in federal programs. In recent months, new enhanced checks have been put in place to intensify system validations used to mitigate the occurrence of fraud in the Economic Injury Disaster Loan and Paycheck Protection programs. In instances of suspected fraud, SBA coordinates closely with the Office of Inspector General, Justice Department and other law enforcement agencies to share information and support criminal investigations. While the agency does not comment on individual borrowers, the lessons learned from these coordinated efforts with federal partners help to inform and strengthen internal controls.”U.S. Small Business Administration