U.S. Small Business Administration, Office of Inspector General

#DidYouKnow: The U.S. Small Business Administration, Office of Inspector General has an Insights and Tips page with advice on how small businesses can protect against scams and fraud. Check it out here: https://ow.ly/BmsW50Ss5yB

The U.S. Small Business Administration, Office of Inspector General remains committed to protecting the interests of American taxpayers by addressing the fraud in the COVID-19 relief programs and identifying billions of tax dollars. Here are some of the top stats from last month’s congressional newsletter highlighting our oversight work in the areas of audits, data analytics, and investigations in our continuous effort to improve the integrity, accountability, and performance of SBA and its programs for the benefit of the American people.

Recently, the U.S. Small Business Administration, Office of Inspector General joined United States Attorney Erek L. Barron of the District of Maryland to announce that a former Baltimore City Department of Finance employee pled guilty to conspiracy to commit wire fraud involving a scheme to defraud a financial institution and the United States Small Business Administration (SBA) in order to obtain fraudulent loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program for various purported businesses. The defendant also admitted to engaging in a bribery scheme for over eight years, in exchange for bribes from various property owners in Baltimore. The defendant would use his official position as an employee of Baltimore City to extinguish various financial obligations owed to the City, including for water bills and property taxes. Based on the false representations and fraudulent submissions made on behalf of the defendant as the owner of an investment company, the PPP loan was funded on March 6, 2021, and approximately $138,000 was distributed to a bank account controlled by the defendant. The defendant agreed to pay the co-defendant kickbacks totaling $38,000 for his work in submitting the false application and obtaining the fraudulent PPP loan. After receipt of the PPP loan, the defendant established payroll services for his investment company to facilitate documentation that would later be used to substantiate a request for the PPP loan to be forgiven. According to the plea agreement, beginning in or about early 2016 and continuing until about September 20, 2023, the defendant engaged in a bribery scheme in which he abused his position of trust as a public official for his own personal gain. Read more: https://ow.ly/s7hg50TlqXc

If you have a question about an SBA loan or SBA program that’s not fraud, waste or abuse, here's what to do: Get in touch with your local SBA District Office or the SBA Answer Desk by telephone (1-800-U-ASK-SBA).

Recently, the U.S. Small Business Administration, Office of Inspector General - Western Region Special Agent in Charge Weston King joined United States Attorney Tara McGrath of the Southern District of California to announce that the owner of a San Diego-based accounting and tax preparation business pleaded guilty in federal court to fraud charges, admitting that he submitted bogus applications for more than $5 million in pandemic-related loans. The defendant used his using his accounting and tax preparation business, to illegally apply for more than 40 loans from the Paycheck Protection Program known as PPP. According to court documents, the defendant solicited and recruited clients of the defendant’s tax preparation business and people to apply for fraudulent PPP loans. The defendant then prepared fraudulent tax and other documentation to support fraudulent PPP loan applications. Co-conspirators then prepared and filed the PPP applications using the fraudulent documentation provided by the defendant. Read more: https://ow.ly/L7PQ50TkrJF

Recently, the U.S. Small Business Administration, Office of Inspector General - Western Region Special Agent in Charge Weston King joined United States Attorney Vanessa R. Waldref of the Eastern District of Washington and our law enforcement partners in the COVID-19 Fraud Strike Force to announce that a Washington resident was sentenced for fraudulently obtaining more than $360,000 in COVID-19 relief funding. The defendant was sentenced to 12 months imprisonment to be followed by 3 years of supervised release, as well as restitution of $402,020.32, representing the total loss to the public as a result of the fraud. According to court documents and information presented at trial and the sentencing hearing, the defendant admitted to fraudulently obtaining $368,829 in PPP and EIDL funding for three purported businesses. The defendant admitted that these entities were not eligible for CARES Act funding because the businesses were not active as of February 2020. To fraudulently obtain COVID-19 program funds, the defendant submitted false and fraudulent payroll, revenue, and other information associated with the three purported businesses. The U.S. Attorney General established the Eastern Washington COVID-19 Fraud Strike Force to marshal the resources of the Department of Justice in partnership with agencies across the government to enhance efforts to combat and prevent pandemic-related fraud. OIG will continue to work with the DOJ and law enforcement partners to highlight the many successes produced by cross-collaboration on behalf of American taxpayers and small businesses. Read more: https://ow.ly/49o250Tklyl

Report fraud, waste, and abuse in SBA programs to the OIG Hotline: https://ow.ly/YOwG50ThwZJ

This November, IG Hannibal “Mike” Ware will be representing the U.S. Small Business Administration, Office of Inspector General at the 2024 National Association of Government Guaranteed Lenders' Annual Conference. At this event, he will be joining an ensemble of power-packed leaders to share the latest insights into our oversight of SBA’s 7(a) Program and Paycheck Protection Program. Stay tuned for more information leading up to this event!

The U.S. Small Business Administration, Office of Inspector General remains committed to addressing the fraud in the COVID-19 relief. Join us in the fight against fraud, waste, and abuse by reporting suspected fraud to the OIG Hotline at https://ow.ly/BlkO50Sw3P5

Recently, U.S. Small Business Administration, Office of Inspector General joined the United States Attorney Erek L. Barron of the District of Maryland to announce a Maryland man was sentenced to 18 months in federal prison followed by 2 years of supervised release for fraudulently obtaining over $3.5 million in COVID-19 Coronavirus Aid, Relief, and Economic Security (“CARES”) Act Payroll Protection Program (PPP) loans. The Court also ordered the defendant to forfeit all property and assets derived from or obtained as a result of his criminal activity, including a 2018 Tesla Model 3, property located in Upper Marlboro, Maryland, and at least $2,231,141.49 from 17 bank accounts controlled by the defendant.   According to court documents, between April 2020 and September 2021, the defendant, who at times served as pastor, participated in a scheme to obtain PPP loans fraudulently, used the loan proceeds for his personal enrichment, and concealed his misappropriation of the funds by laundering the loan proceeds. In each case, the defendant grossly inflated the number of employees and average monthly payroll, and submitted fraudulent IRS Forms 940, Employer’s Annual Federal Unemployment Tax Return, and other fraudulent IRS forms to support the loan applications.   This sentencing further highlights the power of strategic partnerships to hold wrongdoers accountable for their fraudulent actions. Read more: https://ow.ly/Rhew50TeLnO