Congress Widens PPP Fraud Probe To More Online Financial Companies

&NewLine;<p> Rep&period; James Clyburn&comma; D-S&period;C&period;&comma; chairman of the choose commission on the Coronavirus Crisis&comma; seeks info regarding preventing fraud in pandemic assistance&period; <&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<div class&equals;"mh-content-ad"><script async src&equals;"https&colon;&sol;&sol;pagead2&period;googlesyndication&period;com&sol;pagead&sol;js&sol;adsbygoogle&period;js&quest;client&equals;ca-pub-9162800720558968"&NewLine; crossorigin&equals;"anonymous"><&sol;script>&NewLine;<ins class&equals;"adsbygoogle"&NewLine; style&equals;"display&colon;block&semi; text-align&colon;center&semi;"&NewLine; data-ad-layout&equals;"in-article"&NewLine; data-ad-format&equals;"fluid"&NewLine; data-ad-client&equals;"ca-pub-9162800720558968"&NewLine; data-ad-slot&equals;"1081854981"><&sol;ins>&NewLine;<script>&NewLine; &lpar;adsbygoogle &equals; window&period;adsbygoogle &vert;&vert; &lbrack;&rsqb;&rpar;&period;push&lpar;&lbrace;&rcub;&rpar;&semi;&NewLine;<&sol;script><&sol;div>&NewLine;<p> A general assembly subcommittee aimed toward work financial fraud throughout the pandemic broadened its probe into on-line disposal in the week to incorporate 2 of the foremost distinguished processors of coronavirus assistance&period; <&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p> Rep&period; James Clyburn&comma; D-S&period;C&period;&comma; chairman of the choose commission on the Coronavirus Crisis&comma; sent letters to Blueacorn and Womply on Tues requesting information about fraud prevention&period; Both emerged as major players that fused tech and financing to speed up lending through the government’s Paycheck Protection Program&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>Womply had no lending experience before COVID-19 and Blueacorn did not exist&comma; yet together the companies captured more than &dollar;3 billion in fees – eclipsing their direct competitors&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>The startups are not banks but worked as middlemen&comma; marketing to struggling businesses and quickly approving loans with partner banks&comma; backed by the Small Business Administration&period; The companies make their money through a government-paid fee for facilitating the loans&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>&OpenCurlyDoubleQuote;Unfortunately&comma; many of these fees may have been earned by processing fraudulent or ineligible <a class&equals;"wpil&lowbar;keyword&lowbar;link" href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;category&sol;loans&sol;amp&sol;" title&equals;"loan" data-wpil-keyword-link&equals;"linked" data-wpil-monitor-id&equals;"313">loan<&sol;a> applications&comma;” Clyburn wrote in his letter requesting a trove of internal compliance documents&comma; including &OpenCurlyDoubleQuote;emails&comma; chat room logs and transcripts&comma; direct electronic messages and minutes” that discussed financial crimes&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>Womply worked with 17 lenders and processed 1&period;4 million loans totaling more than &dollar;20 billion of the government’s &dollar;800 billion program&period; Blueacorn processed at least &dollar;14 billion in loans&comma; according to Clyburn&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>More&colon; Online <a class&equals;"wpil&lowbar;keyword&lowbar;link" href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;tag&sol;financial-fraud&sol;amp&sol;" title&equals;"financial" data-wpil-keyword-link&equals;"linked" data-wpil-monitor-id&equals;"958">financial<&sol;a> companies&&num;8217&semi; processes facilitated fraud in PPP loans&comma; Texas university study finds<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>In August&comma; USA TODAY spotlighted a University of Texas&comma; Austin paper that identified more than 1&period;8 million loans with indications of potential fraud by borrowers&period; Some of the most egregious examples cited by the researchers involved Kabbage&comma; Womply and Blueacorn&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>The Texas report outlined how borrowers&comma; including criminals&comma; could create fake companies with fake head counts and fake salaries to capture a slice of the pandemic assistance&comma; facilitated by the largely automatic review of lenders&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>Story continues<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>&OpenCurlyDoubleQuote;I am deeply troubled by reports alleging that financial technology &lpar;FinTech&rpar; lenders and their bank partners failed to adequately screen PPP loan applications for fraud&comma;” Clyburn wrote&period; &OpenCurlyDoubleQuote;This failure may have led to millions of dollars worth of FinTech-facilitated PPP loans being made to fraudulent&comma; non-existent&comma; or otherwise ineligible businesses&period;”<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>Fintechs have raised concerns throughout the pandemic among regulators at the SBA&comma; Department of Justice and Congress&period; In February&comma; Clyburn sent letters in his probe to Kabbage&comma; BlueVine&comma; Cross River Bank and Celtic Bank&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>Clyburn gave Womply and Blueacorn until Nov&period; 26 to indicate whether they would cooperate with the requests&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>In a previous statement to USA TODAY&comma; Blueacorn CEO Barry Calhoun said the company was &OpenCurlyDoubleQuote;incredibly proud of the work we have undertaken to dramatically reduce fraud in the PPP program&comma;” adding that it focused on serving a &OpenCurlyDoubleQuote;traditionally overlooked population&period;” A spokeswoman said Tuesday the company would cooperate with the congressional inquiry&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>Toby Scammell&comma; founder and chief executive officer of Womply&comma; called PPP &OpenCurlyDoubleQuote;an imperfect program” that nonetheless succeeded in saving millions of small businesses&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>&OpenCurlyDoubleQuote;Womply helped the program succeed&comma; and I am particularly proud that our efforts leveled the playing field&comma; so America’s very small and minority-owned businesses were able to participate&comma;” Scammell said Tuesday&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>On its website&comma; Womply directs anyone who suspects fraud to report it directly to the SBA&period; &OpenCurlyDoubleQuote;We know the vast majority of PPP borrowers are deserving&comma; eligible businesses&comma;” it says&period; &OpenCurlyDoubleQuote;We will seek to address potential fraud in a manner that minimizes the negative impacts to legitimate borrowers using our platform&period;”<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>Nick Penzenstadler is a reporter on the USA TODAY investigations team&period; Contact him at npenz&commat;usatoday&period;Com or &commat;npenzenstadler&comma; or on Signal at &lpar;720&rpar; 507-5273&period;<&sol;p>&NewLine;&NewLine;&NewLine;&NewLine;<p>This article originally appeared on USA TODAY&colon; PPP companies Blueacorn&comma; Womply added to congressional probe<&sol;p>&NewLine;

Financial Fraud