How fraudsters got away with SBA disaster loan money

Investigates

SIOUX FALLS, S.D. (KELO) — It all started with one Sioux Falls business owner contacting KELOLAND Investigates about a fake SBA disaster loan taken out in her name for $150-thousand dollars. That prompted us to dig into the data that the SBA was required to release on the thousands of people who got Emergency Injury Disaster Loans in South Dakota.

KELOLAND Investigates uncovered at least $1.14 million dollars in fraud in mostly fake farms. That has many of you asking how the fraudsters got away with it.

Our number one question following our investigation, “Fake farms: The new cash crop,” was how the thieves got away with the money. While every case may be a little different and there aren’t always answers. We do have some idea of how they did it.

Victims all across the state were shocked to find their names and addresses had been used to take out fraudulent SBA disaster loans.

“It’s kind of frightening actually how much information people can just find on the internet,” said Jeff Pochop of Pierre, whose identity was used to obtain a fraudulent loan.

“Really any sort of state search is going to give you my information–my home address; my business address and our EIN number,” Keys said.

Korena Keys found out additional information on how it happened from the SBA, when she reported the fraud.

“They were able to confirm that it was my name and social security number of the application. But they were also able to confirm it was not my email address and it was not my phone number.” Keys said.

A Small Business Administration Inspector General report shows nationally SBA approved $14.3 billion to accounts that were not the same from the original bank accounts listed on the loan applications. Nearly $63 billion was approved to applicants who used the same IP addresses, email addresses, bank accounts or businesses listed at the same addresses.

The SBA has a task force dedicated to fraud cases, but admits it’s a challenge because payments were deferred and most of the money was long gone by the time the fraud was discovered, although the SBA says it is making progress.

“They’ve already cracked many cases that have taken place, hunted down the perpetrators and the perpetrators have been held accountable,” South Dakota SBA Director Jaime Wood said.

In Keys’ case, even credit monitoring didn’t help prevent the problem.

“I do have credit monitoring on my social security number as well and I did not catch this. What I learned is that the credit monitoring that I had only checked one of the credit bureaus. And the SBA only checked one credit bureau who didn’t report it to the others,” Keys said.

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.

You may also want to check your credit report from all credit bureaus and put a freeze on your credit, to stop this kind of thing from happening. A freeze can be lifted should you need to legitimately apply for a loan.

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

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