11 December 2023

I Help Pass Bills to Crack Down on Fraudulent Loans for Small Businesses

By Ronald Smith

Hi there! I just wanted to share some exciting news: I’m part of the House Small Business Committee, and we recently made a big step forward in protecting small businesses. We’ve been working hard to pass two important bills that target loan fraud in the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program.

If you’re not familiar with these programs, let me give you a quick rundown. The PPP provides loans to help small businesses keep their employees on the payroll during tough times, while the EIDL program offers financial assistance to cover temporary loss of revenue.

Unfortunately, there are some people out there who take advantage of these well-intentioned programs. They commit fraud, stealing money that was meant to support struggling businesses. This is something we simply can’t tolerate, which is why we’re taking action.

The first bill we passed focuses on PPP loan fraud. We’re implementing stricter guidelines and protections to ensure that the loans go to the businesses that genuinely need them. We want to make sure that hardworking entrepreneurs, like you, can access the help they deserve.

The second bill targets EIDL loan fraud. We’re strengthening the safeguards to prevent individuals from taking advantage of this program as well. By doing so, we aim to protect the funds allocated to support small businesses through these challenging times.

I want you to know that the House Small Business Committee is committed to fighting fraud and ensuring that small businesses receive the help they need. We understand how important it is for you to keep your doors open and your employees paid.

So, rest assured that I’m dedicated to taking every necessary step to hold those responsible for loan fraud accountable. By doing so, we can safeguard the integrity of these vital loan programs and guarantee that they continue to provide genuine support to small businesses like yours.

Thank you for your time, and please don’t hesitate to reach out if you have any questions or concerns. Together, we can make a difference!

I Help Pass Bills to Crack Down on Fraudulent Loans for Small Businesses

I’ve got some news for you about recent developments in the House Small Business Committee. They’ve been working on a couple of bills to tackle fraud in the Paycheck Protection and Economic Impact Disaster Loan programs.

Now, let me break it down for you. There are two bills in play here. HR 7352 focuses on the PPP, while HR 7334 deals with the EIDLs. Both bills aim to establish a ten-year statute of limitations for prosecuting fraud cases. The PPP bill covers all types of PPP fraud, while the EIDL bill targets EIDL advances and targeted EIDL advances.

Exciting Progress from the House Small Business Committee

The cool thing is that the ten-year time frame they’re proposing aligns with the current time frame for prosecuting bank fraud. It’s all about bringing consistency to these legal matters.

Now, get this: the total estimated amount of fraud for both the PPP and EIDL programs is a whopping $80 billion! That’s about 10% of the money allocated to these programs. It’s important to crack down on this kind of stuff to protect the integrity of these programs.

If you happen to come across any fraud or suspicious activity, you can report it to the SBA’s Office of the Investigator General at 800-767-0385. Rest assured that your reports will be kept confidential.

A Shocking Case of Fraudulent Loans in California

Can you believe it? I recently came across a jaw-dropping story about a group of eight criminals right here in California. These devious individuals managed to swindle an astonishing $18 million from the Covid relief funds by taking advantage of the PPP and EIDL programs. How did they do it? They cleverly applied for a whopping 150 loans!

A Twist of Fate

The tale took an unexpected turn when three members of this crime ring were found guilty and convicted in June 2021. But wait, there’s more! Instead of facing the consequences of their actions, these audacious individuals decided to make a daring escape. Guess where they ended up? Montenegro in Europe! However, luck was not on their side. Just this February 2022, they were apprehended and brought back to California to face justice.

A Mastermind’s Demise

Among the criminals, there was a ringleader named Richard Ayvazyan, a 43-year-old man who orchestrated this elaborate scheme. Justice was served when he received a severe punishment of 17 years behind bars. But that’s not all. His wife, Marietta Terabelian, aged 37, was also sentenced to 6 years for her involvement. It’s heartbreaking to learn that they chose to abandon their three innocent children when they made their escape.

A Lavish Lifestyle Built on Fraud

Curious about how they spent this ill-gotten fortune? Brace yourself. The fraudsters didn’t hold back. They splurged on luxury homes, diamonds, and even gold coins. It’s truly astonishing how one can be so audacious and greedy.

When the SBA sent out that money, they basically told people, ‘Apply, sign, and let us know that you truly deserve the money’, explained Michael Horowitz, the Inspector General of the Justice Department, during an interview on NBC’s Nightly News. But what they didn’t do was conduct even the most basic checks to ensure that the money reached the right people at the right time.

According to Horowitz, fraudsters took advantage of this lack of oversight and took money that should have gone to rightful applicants. He also stated that the way these programs were set up, they practically encouraged fraudsters to take advantage of them.

Methods Employed by Fraudsters

Let’s dive into some interesting facts about the PPL and EIDL programs. Now, when it comes to the PPL program, a major issue is that fraudulent applicants often exaggerated the number of employees they had. You see, one of the conditions for a loan to be forgiven under the PPP was that the applicant had to bring back all their employees to work. Additionally, the funds were meant to cover payroll expenses. However, in cases of fraud, although the employees mentioned were indeed real people, they were never actually employed by the company. Quite sneaky, right?

Now, let’s talk numbers. Can you believe that over $800 billion has been spent on the PPL so far? That’s a massive chunk of change! And what’s even more impressive is that this money has covered more than 21 million loans. It just goes to show the scale of this program and the impact it has had on businesses.

Now, let’s shift our focus to the EIDL. This program has its own set of issues, particularly when it comes to documentation. Some folks decided to get a little creative and provide false information about the extent of damage they suffered and the value of equipment that was supposedly damaged. And get this, in some cases, companies were simply created on paper but didn’t actually exist in the real world. Talk about a wild ride!

But what about SBA Lender Banks, you ask?

When it comes to the PPP and EIDL programs, us small business owners have to apply through lenders who are approved by the SBA. But at the end of the day, it’s the SBA that has the final say. If there’s any funny business going on like fraud, the lenders are in the clear and don’t have to take the blame.

The SBA has put it in writing that lenders won’t be held responsible if we borrowers don’t follow all the rules and requirements of the programs. They call it being held harmless.