{"id":1758724,"date":"2022-12-01T16:48:06","date_gmt":"2022-12-01T21:48:06","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1758724"},"modified":"2022-12-01T16:48:11","modified_gmt":"2022-12-01T21:48:11","slug":"coronavirus-loan-fraud-prevention-fell-to-unvetted-firms-that-profited-hugely-while-ignoring-fraud-congress-finds","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/coronavirus-loan-fraud-prevention-fell-to-unvetted-firms-that-profited-hugely-while-ignoring-fraud-congress-finds\/","title":{"rendered":"Coronavirus Loan Fraud Prevention Fell To \u2018Unvetted\u2019 Firms That Profited Hugely While Ignoring Fraud, Congress Finds"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">32<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fcoronavirus-loan-fraud-prevention-fell-to-unvetted-firms-that-profited-hugely-while-ignoring-fraud-congress-finds%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1758724&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>Firms the federal government hired to distribute\u00a0<a href=\"https:\/\/www.dailywire.com\/news\/only-2-of-childrens-deaths-were-from-covid-and-school-closures-didnt-reduce-the-number\" target=\"_blank\" rel=\"noopener\">coronavirus<\/a> Paycheck Protection Program loans\u00a0promised to use high-tech methods to prevent fraud, but failed in part because abuse hurt taxpayers and not their own bottom line, according to a congressional investigation.<\/p>\n<p>The Select Subcommittee on the Coronavirus Crisis found that two financial tech, or \u201cfintech,\u201d firms allegedly earned billions in profits by taking a percentage of each loan that they processed \u2014 often while barely looking at it. Some of the firms involved had little relevant experience, and one was run by a man who pleaded guilty in 2014 to insider trading.<\/p>\n<p>\u201cThe investigation found that two unvetted and unregulated fintechs that, together, facilitated nearly one in every three PPP loans funded in 2021 \u2014 Womply and Blueacorn \u2014 failed to implement systems capable of consistently detecting and preventing fraudulent and otherwise ineligible PPP applications,\u201d a <a href=\"https:\/\/coronavirus.house.gov\/sites\/democrats.coronavirus.house.gov\/files\/2022.12.01%20How%20Fintechs%20Facilitated%20Fraud%20in%20the%20Paycheck%20Protection%20Program.pdf\" target=\"_blank\" rel=\"noopener\">committee report<\/a> released Thursday said.<\/p>\n<p>Blueacorn gave nearly $300 million in profits to its owners but spent only $8.6 million on fraud prevention, the report said. It spent far more on marketing, and Blueacorn advertised \u201cfree money\u201d in \u201c30 seconds\u201d to applicants, according to the report from the committee, which is led by Rep. Jim Clyburn (D-South Carolina).<\/p>\n<p>Blueacorn had a small company called Elev8 Advisors, which was \u201crun by a member of Blueacorn\u2019s senior leadership,\u201d review loan applications, and it was staffed with dozens of friends and family of the owner. The owner, Kristen Spencer, wrote in a text message obtained by the committee: \u201cWe are doing this for the people we hired to make money. Our friends and family. That is where the money is going. And it will be life changing money for anyone who does it.\u201d<\/p>\n<p>Employees were told that reviewing each loan should take them \u201cless than 30 seconds,\u201d employees told the committee.<\/p>\n<p>Elev8\u2019s owners, Kristen and Adam Spencer, also received $200,000 in PPP loans \u2014 even though the pandemic had been a boon for their business, not a hardship \u2014 around the same time they purchased an $8 million mansion in cash, the report said. One of the loans claimed Kristen was an \u201cinterior architect\u201d for her husband\u2019s company, even though that company was located in a WeWork, according to the investigation.<\/p>\n<p>Blueacorn\u2019s owners focused on big loans, which brought the largest commissions, and ignored those from small business owners, writing \u201cwho f***ing cares\u201d and \u201cdelete them,\u201d the report said. Blueacorn is owned by Nathan Reis and Stephanie Hockridge. The company also received $300,000 in PPP loans for itself, some of which were vetted by itself. And on the application, Reis falsely claimed to be black and a veteran, the report said.<\/p>\n<p>Another fintech company, Womply, had revenue of $2 billion in 2021 and a gross profit margin of nearly 90%. Lending partners said its anti-fraud controls were \u201cput together with duct tape and gum,\u201d the report said. Additionally, the SBA said that even the application for $5 million in PPP loans that Womply filed for itself was ineligible.<\/p>\n<p>Womply CEO Toby Scammell was convicted of insider trading in 2014 and led the company\u2019s fraud prevention efforts. He also instructed the company not to cooperate with federal investigators, the report said.<\/p>\n<p>Criminals quickly realized that they should\u00a0apply through fintech firms if they wanted fake loans approved, according to the report. One gang member said that \u201ceverybody in the hood\u201d was using Womply, according to the report. Investigators believe the PPP loans were used to buy guns and drugs.<\/p>\n<p>Another fintech called Kabbage approved more than 300,000 loans. Its employees were concerned that fraud rates were \u201cwildly underestimated,\u201d but a manager told them \u201cthe risk here is not ours \u2013 it is SBA\u2019s risk,\u201d the report said.<\/p>\n<p>The report concluded that \u201cBased on these findings, Congress and the SBA should consider carefully whether unregulated businesses such as fintechs, many of which are not subject to the same regulations as financial institutions, should be permitted to play a leading role in future federal lending programs.\u201d<\/p>\n<p>The PPP program is overseen by the Small Business Administration. The SBA\u2019s Inspector General has said the levels of fraud present in the PPP program were \u201cunprecedented,\u201d and that \u201cThis problem occurred because the agency did not establish a sufficient fraud risk framework at the start of and throughout PPP implementation.\u201d<\/p>\n<p><strong>Related: <a href=\"https:\/\/www.dailywire.com\/news\/biden-uses-little-known-covid-waiver-to-write-off-9b-in-student-loans-for-150000-government-nonprofit-workers\">Biden Uses Little-Known COVID Waiver To Write Off $9B In Student Loans For 150,000 Government, Nonprofit Workers<\/p>\n<p><\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Anti-fraud policing in the coronavirus PPP program was often subcontracted to small firms who promised to use tech voodoo to prevent fraud, but who actually let obvious fraud through and boasted that they had little incentive to stop fraud because the risk was to taxpayers, not their own bottom line, according to a congressional investigation.<\/p>\n","protected":false},"author":128,"featured_media":1758727,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[541],"tags":[],"class_list":["post-1758724","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-daily-wire"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1758724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/128"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1758724"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1758724\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1758727"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1758724"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1758724"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1758724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}