COVID-19 scammers keep prosecutors busy | #employeefraud | #recruitment | #corporatesecurity | #businesssecurity | #

© Spencer Platt / . North America / TNS
A Brooklyn store announces a sale on July 7, 2020.

A Hollywood film producer allegedly tried to use $ 1.7 million from the federal coronavirus business aid fund to pay his personal credit card bills. Two New England men reportedly applied for more than half a million in repayable loans through the program, claiming to have dozens of employees at four businesses. They had none.

Many scammers have filed false state unemployment claims. In Washington state, the unemployment system temporarily fell under the weight of hundreds of millions of dollars in payments for false claims.

These are just a few examples of what prosecutors say are tens of thousands of attempts to scam governments by fraudulently applying for expanded unemployment benefits or lying on applications for the Paycheck Protection Program (PPP), which was designed to help small companies forced to close or drastically reduce their activity due to the pandemic.

Due to urgent need, officials designed the programs to send money quickly, but that speed also presented more opportunities for scams, experts said.

State attorneys general, from Massachusetts to California, are on the lookout for possible fraud and warn legitimate companies to be vigilant.

Attorney Generals are cracking down on false unemployment claims and working to get the money back. They also collect reports of alleged paycheck protection fraud; The United States Department of Justice has prosecuted several high-profile cases.

And several attorneys general have warned banks that they are investigating lenders’ practices to make sure they detect fraudulent PPP loan applications and that they are not aggravating the problem with some underhanded practice of their own.

The number of scams is significant. The FBI’s PPP Fraud Working Group is investigating $ 42 million in fraud. The Federal Trade Commission received 91,000 fraud reports before June 8 that cost victims $ 59.2 million. And Google reported that it is blocking 18 million fraudulent emails every day.

President Donald Trump signed an extension to the PPP on Saturday that will allow companies to apply for loans until August 8. Otherwise, the program would have expired today with about $ 130 billion unused. The extension also increases the chances of fraud, experts said, and they expect more complex hoaxes to continue.

Brian Hayes, a partner in the Chicago office of the Holland and Knight law firm and a former assistant U.S. attorney general and FBI special agent, said attorneys general are warning lenders to be vigilant of requests from people who they pose as small business owners or claim to have large numbers of employees when they don’t exist.

Small business owners should be cautious of offers to help them obtain PPP loans, especially those made by companies that want a payment for doing so, since applying for a loan is free.

« Circumstances require that help be readily available to people, » Hayes said in a telephone interview. He added that federal administrators « relaxed the due diligence and underwriting rules that would otherwise apply to business loans. That made it easier (loans) but was necessary because of the crisis. »

Hayes also noted that pandemic aid has taken the form of large amounts of money sent in one go. « That is different from other government programs like food assistance and unemployment insurance, where the money (usually) comes out in small amounts, » he explained. « You can end up with a very large check from some of these programs. That’s unique in terms of suspected fraud. »

The extent of unemployment fraud is beginning to surface, and states are paying unprecedented millions to the record number of unemployed. In Washington state, officials announced a theft of between $ 550 and $ 650 million, of which about $ 333 million was recovered. State officials commented that the robberies were the result of a large number of false statements by people who were not entitled to benefits.

However, efforts to eradicate fraud continue to delay legitimate payments for tens of thousands of jobless people in Washington, said Suzi LeVine, commissioner of the Department of Employment Security.

New York Attorney General Letitia James, a Democrat, has issued a list of warnings for small businesses that risk scammers trying to offer « help » to get PPP loans. James issued a cease and desist order for a fraudulent company with a website labeled SBA.com. The true website for the Small Business Administration is SBA.gov.

The fake site advertises a link to « Covid-19 Relief, » James noted in a press release, and a link to a button that says « Your Paycheck Protection Program Loan Starts Here. » James advised small businesses seeking loans to visit the SBA government website directly without seeking help from any third-party company.

« It is imperative that small businesses know about the financial aid that is available and do not be fooled in the application process for these life jackets, » said James.

The confusion of .com and .gov even confused United States Secretary of the Treasury Steven Mnuchin, who incorrectly urged small businesses to visit SBA.com to learn more about PPP loans at a press conference in April. It was corrected by the White House.

Delaney Kempner, a spokeswoman for James, said that in addition to advising companies on how to detect fraud, the attorney general is also accepting and processing consumer-based fraud complaints.

« In terms of price scam, we have received more than 7,000 complaints, issued more than 1,590 cease and desist orders to companies for price scam on essential products, » Kempner wrote in an email. « And we also sued a large wholesaler for Lysol’s drastic cost increase in recent months. »

Arkansas Attorney General Leslie Rutledge, a Republican and a senior member of the National Association of Attorneys General’s consumer protection committee, has warned that scammers are contacting business owners who claim to be affiliated with the federal payment program.

Like James, he advised merchants to contact the Small Business Administration directly.

« These payroll protection loans are a key part of our economic recovery to help hard-working Arkansas companies and their employees, » it said in a statement. « But, it is shameful and illegal to impersonate a government entity to provide false and misleading services to companies that are trying to use the payroll protection loan to survive. »

Massachusetts Attorney General Democrat Maura Healey is examining several banks based in her state to see if they unfairly favored larger clients over smaller companies in facilitating PPP loans, after her The office received several complaints, the Boston Globe reported.

Banks under scrutiny include Bank of America, Santander, TD Bank and Wells Fargo. In addition, Bank of America, Wells Fargo, JPMorgan Chase, and US Bank are the subject of a class action lawsuit filed by plaintiffs’ attorneys in California on behalf of an optometrist, restaurant, and promotions company as representative clients of the group, claiming that they favored large repeat customers over smaller and new customers in the processing of PPP loans. There are likely to be other lawsuits.

Bank of America spokesman Bill Halldin in an email denied the allegation. He wrote that 73 percent of the loans Bank of America issued under the PPP were for less than $ 50,000, and 82 percent were for companies with 10 or fewer employees.

Less than two percent of the loans went to companies with more than 100 employees, Halldin said.

Lee Henderson, a spokesman for US Bank, said « it is by no means accurate » that it prioritized the wealthiest customers, adding that most of the loans the bank made in Phase One of the programs went to « very small companies « 

A Wells Fargo spokesperson declined to comment, and the other banks did not respond to requests for comment by email.

Healy, who led a group of 24 attorneys general, in May sent comments as part of the rulemaking to the Small Business Administration (SBA) and a letter to Congress asking for more clarity in obtaining small business loans.

Healy said the program « suffers from a lack of transparency, technical knowledge, and functionality that has led to funds being distributed in a way that excessively benefits large, well-connected companies, and leaves many small companies unattended. »

Anne Hartman, a partner in the San Francisco office whistleblower group at the law firm Constantine Cannon, said that when it comes to fraudulent loan applications, « it is up to banks to underwrite and due diligence. Law enforcement officers should go after the banks that give money without verifying the borrowers, ”he said.

« The PPP has some rules that keep banks unscathed. That only goes so far, when they are confronted by a borrower who is making statements that no reputable lender would trust. » But, he said, those kinds of abuses will come to light more slowly.

Hollywood producer William Sadleir, 66, of Beverly Hills, allegedly paid his personal credit card debts and other personal expenses with the PPP loan, according to Brian Benczkowski, deputy attorney general of the Justice Department’s criminal division from the United States.

« As the department has made clear, those who defraud the PPP to fill their pockets at the expense of the American people will be brought to justice, » Benczkowski said in a statement.

Samuel Yates, 32, of Maud, Texas, allegedly sought millions of dollars in forgivable SBA-guaranteed loans from two different banks, claiming to have more than 400 employees earning wages when, in fact, no employee worked for his alleged business. Benczkowski revealed in a separate statement.

Prosecutors also charged David A. Staveley, 52, of Andover, Massachusetts, and David Butziger, 51, of Warwick, Rhode Island, with inventing businesses and employees and asking for about $ 544,000 in loans under the program. .

– This text was translated by Kreativa Inc.

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