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‘Take immediate action:’ Reed calls on SBA’s Carranza to investigate disaster loan fraud

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PROVIDENCE, R.I. (WPRI) – In response to a Target 12 investigation of a federal disaster loan program, U.S. Sen. Jack Reed is calling on the head of the U.S. Small Business Administration to investigate widespread claims of fraud.

Rhode Island’s senior senator penned the letter to SBA Administrator Jovita Carranza, calling on her to investigate the program, known officially as Economic Injury Disaster Loans, which was designed to help small businesses make ends meet during the coronavirus pandemic.

“I write to urge you to take immediate action to investigate claims of fraud associated with the Small Business Administration disaster loan program, hold Rhode Islanders who are victims of fraud harmless from any liability, and protect victims from future acts of fraud,” Reed wrote in the letter shared with Target 12.

Carranza did not immediately respond to a request for comment.

In his letter, Reed specifically cited the Target 12 investigation from Monday that revealed the SBA in Rhode Island had approved nearly $4 million to at least 80 farm businesses that do not exist. The fake farms were all listed at single-family homes, apartment complexes or other non-farm properties.

“It is unclear whether these constituents have been alerted that they are not expected to pay back the loans taken out in their names,” Reed wrote.

(Digital graphic by Lisa Mandarini)

The top Democrat on the Senate Armed Services Committee also underscored that fraud tied to the program is likely happening in other states, pointing to an October report by the SBA inspector general that showed the agency approved $14.3 billion in disaster loans to bank accounts that differed from the original accounts listed in the loan applications.

Following the report, Annette Wojnaroski reached out to Target 12 claiming an SBA disaster loan had been approved for a fake farm at her home in the Upper Peninsula of Michigan. She said there was no farm where she lived.  

“I live in an apartment complex of over 300 units,” Wojnaroski wrote in an email.

And it’s not just farms.

In Rhode Island, a growing number of people are reporting other types of fake businesses listed at their homes have been approved for thousands of dollars in disaster loans. It remains unclear exactly how widespread the fraud extends, but the SBA inspector general said the agency’s decision to lower its vetting process at the start of the pandemic opened the door for fraudulent behavior.

Reed blamed the SBA for its lax oversight, writing, “victims of fraud have already had to suffer the consequences of having their personally identifiable information used or stolen.”  

“They should not be further punished by being financially or legally on the hook for loans taken out with this information,” he added. “Therefore, I urge the SBA to expeditiously start an investigation and review reports that a person has been a victim of fraud in the EIDL program, and to ensure that victims of fraud are held harmless from any financial or other liability.”

The letter was sent in the wake of Congress this week approving an additional $20 billion for the disaster loan program, which passed as part of the latest coronavirus relief package Monday night. In a press release issued earlier in the day, Reed touted the additional money, saying it would help the state’s small businesses with their fixed costs and operating expenses.

But his tone shifted later in the day after learning about the local reports of fraud, and he called on the SBA to take action to ensure the latest influx of cash doesn’t fall into the wrong hands.

“I also urge you to take corrective steps, including following recommendations from the SBA Inspector General, to prevent additional EIDL fraud – particularly given that Congress has just approved an additional $20 billion for this program,” he wrote.

Here are the addresses where disaster loans have been approved

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Eli Sherman ( is an investigative reporter for WPRI 12. Connect with him on Twitter and on Facebook.

Tim White ( is the Target 12 managing editor and chief investigative reporter at 12 News, and the host of Newsmakers. Connect with him on Twitter and Facebook.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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