Federal Investigators Want You To Talk About PPP Fraud



BATON ROUGE, Louisiana (WAFB) – The Paycheck Protection Program, known as PPP, provided a lifeline for millions of business owners when the pandemic was at its peak. The forgivable loans were intended to cover employee payrolls and, later, other eligible expenses at a time when customers were not coming. Almost 11.5 million people applied, resulting in more than $ 792 billion in loans. Every loan paid out was guaranteed by taxpayers’ money.

“The Paycheque Protection Program has saved millions of jobs. It was this rough road that we had for about a week, but our bankers made it and, and our businesswomen and businessmen stepped in and took advantage of it, ”said Senator John Kennedy, R -The.

However, not all federal program participants were keen to keep their business doors open.

The Justice Department confirms that it is reviewing reports of PPP fraud across the country. In Louisiana, a federal grand jury recently indicted a woman from Plaquemine named Lestreonia Rodrigue with fraud. She is accused of setting up bogus businesses to raise over $ 20,000 through a PPP loan and an additional $ 500,000 in prepaid debit cards through jobless claims.

“I don’t know why some people take advantage of a program like this in times of crisis. To me, it’s like looting after a hurricane. And I think we should prosecute each of them with all the force of the law, ”Kennedy said.

The program worked that way. A borrower has applied for a PPP loan from a lender or bank. The lender had to keep a fee based on the loan amount. If the borrower can prove that they used the money to pay employees and eligible expenses, they can ask the SBA for a loan forgiveness. If approved, the SBA reimburses the lender using federal funds. Otherwise, the borrower is on the hook for the money. If someone defaults or cannot repay it, the SBA will always repay the lender.

It is up to the SBA and the Department of Justice to prosecute anyone caught stealing PPP money. Senator John Kennedy said that in the rush to get help to those in need as quickly as possible, Congress did not have time to build many fraud safeguards into the program.

“With more time we might have been able to implement fraud prevention measures, but we knew there would be fraud,” Kennedy said.

According to the SBA, lenders are responsible for reviewing claims and making sure the claimant is telling the truth in the way they see fit.

“The SBA has very broad rules, very, very wide latitude over what the lender had to ask the bar to get that guarantee,” said Louisiana SBA district manager Michael Ricks.

Information on PPP loans is publicly available through the SBA, and several groups have even published this information in the form of searchable online databases that anyone can use.

Using this public data, the 9 News Investigators took a close look at PPP loans made in Louisiana. Hair salons were one of the most common businesses to apply for. For example, in the town of Gonzales, 70 people claiming to own a hair salon applied for loans. The amounts ranged from less than $ 2,000 to over $ 20,000. Almost a dozen of these people took out two loans. In total, in the city of 43,000 people, lenders have approved $ 1.3 million just for barber shop owners.

The largest loan paid was $ 20,833. Lenders approved this amount for eight people, seven of whom received checks. Two people were approved for this amount twice, and one of those people was paid twice.

However, a public records check for business licenses with the Secretary of State’s office found no active business licenses for those eight people. At the request of WAFB, the Louisiana Board of Barber Examiners also searched for these eight names and addresses in their apprentice, student, barber, and store records, and also returned empty.

According to the Board of Barber Examiners, to legally operate a barber shop, an owner must have a business license and a barber’s license if they cut their hair, even if that business is operated from a home. However, industry insiders say the hair salon industry is largely money-based, which makes it easy to operate under the radar.

Louisiana SBA District Office Director Michael Ricks said while this information may raise red flags on the surface, he explained that failure to meet an industry’s licensing requirements does not necessarily disqualify someone from being eligible for a PPP loan.

“As far as the state of Louisiana is concerned, there is no requirement that a sole proprietor have a specific license in the state,” Ricks said. “You have to understand from the lender’s point of view, really, they’re only looking at income. They don’t check the licenses. You know, is that something they should have done? Maybe, maybe not all.

Senator Kennedy admits that the program may have had shortcomings, due to the speed with which it was deployed, and that the loan program has been updated several times to expand eligibility. So now he’s saying agencies should go after anyone who might take money they’re not entitled to.

“My direction to the SBA and the Department of Justice will be to work with our state attorneys general, work with local DHS, work with local sheriffs, and make sure people understand that if you steal money. ‘money is finite resources,’ Kennedy said. “If you are going to steal money, limited resources from people in need, then by God we are going to sue you.”

However, Kennedy and Ricks claim that the good the program has done far outweighs any possible fraud.

“My feeling is that despite the fraud, the program has helped many, many, many more of my people than it has hurt,” Kennedy said.

Federal investigators cannot comment on ongoing investigations or give an estimate of the extent of fraud that may have occurred under federal pandemic relief programs, but a spokesperson for the U.S. Attorney’s Office of the Central District of Louisiana confirms that there have been fraudulent claims submitted in Louisiana through several relief programs including the PPP. Dozens of people have been charged with fraud nationwide, according to the U.S. Attorney’s Office, and there are five ongoing federal civil proceedings where agencies seek to recover $ 2.3 million in fraudulent assets, including two. high end cars, a house and cash. .

Both the US attorney’s office and the Louisiana attorney general have encouraged the community to report suspicions of fraud. The National Center for Disaster Fraud (NCDF) is in Baton Rouge and reports can be filed here.

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