PROVIDENCE, R.I. (WPRI) – Reports of fraud tied to the federal disaster loan program for small businesses are rolling in after a Target 12 investigation revealed millions of dollars were approved to companies that don’t exist.
Dawn Bouchard of Tiverton said she and her husband turned on 12 News Monday night only to learn they were ensnared in a widespread scheme surrounding the U.S. Small Business Administration disaster loan program, known officially as the Economic Injury Disaster Loans program.
“We realized that the envelopes that we’ve been receiving for the last few months were actually fraudulent, and we didn’t realize that,” Bouchard told Target 12. “I was like, ‘Oh, my God. I can’t believe this.’ I try to be so careful.”
Here are the addresses where disaster loans have been approved
Tips? Email: firstname.lastname@example.org
Fraudsters have successfully used people’s identities, addresses and other personal information to apply and get approved for loans through the federal program that was designed to help floundering companies stay afloat during the coronavirus pandemic.
Bouchard, like many Rhode Islanders, has been getting unsolicited bill notices from the SBA for months. And Target 12 has confirmed a $63,000 loan was approved for a fake business called ROV Farm Produce at Bouchard’s single-family home where there is no farm.
“For this to happen to me – I’m a banker – I was totally shocked,” she said. “I deal with this stuff with people all the time, so when it actually happens to you it’s unnerving.”
Bouchard is hardly alone.
As first reported Monday, Target 12 found nearly $4 million in loans were approved to at least 80 farm businesses that don’t exist. And it’s not just fake farms popping up in the scheme.
In total, SBA data shows nearly $562 million was approved to more than 10,000 borrowers with Rhode Island addresses through the program, but it remains unclear how much might be tied to fraud.
After the story aired, David Cook of Warwick copied Target 12 in an email to the SBA inspector general, saying the SBA approved $148,200 disaster loan for a fake company listed at his home called “Bobby Lee Cook.” The company does not exist in the database of businesses maintained by the R.I. Secretary of State’s Office.
“A simple address validation should have been sufficient to catch this fraudster before disbursement of the funds,” Cook wrote in the email.
The SBA Rhode Island district office has declined to comment for this story, reinforcing reports in other media outlets that indicate the federal agency isn’t giving local offices any control over the response effort. Bloomberg News last month reported the SBA had privately directed employees not to use the word “fraud” in writing.
In a response to Cook’s email, a local SBA representative wrote, “Unfortunately, the District Office has no authority in fraud matters as it pertains to” the disaster loan program.
“We are only able to encourage people to send the complaint to the [Office of the Inspector General] Hotline email,” the representative added.
The SBA inspector general in October nonetheless released a scathing report that showed billions of dollars was likely caught up in fraud.
In many cases, suspected scammers applied for the loans using someone’s real bank account before swapping it out for a fraudulent one before the money was disbursed. The federal SBA office has pushed back on claims of fraud, and the federal program is now poised to receive another $20 billion thanks to the latest coronavirus relief package approved by Congress Monday night.
And while it’s difficult to know exactly the scope of fraud tied to the program, and whether it continues, there are signs the SBA is tightening up its application process. As part of the relief package, new rules indicate the agency will be given “more flexibility” to verify applicants “have submitted accurate information,” according to a congressional summary of the 5,500 page bill. The agency will also have three weeks instead of three days to approve and disburse disaster loan money, according to the legislation.
Cooks said he’d like to see the fraudster get caught and for the program to improve.
“I hope justice prevails and that you will tighten overall control and oversight over the process to prevent future fraud/theft,” he wrote the inspector general.
Anyone who believes they might be the victim of fraud is encouraged to reach out to the following: