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Hundreds of millions of dollars in emergency disaster loans have been made to South Dakota businesses through the Small Business Administration. Now there is evidence of fraud in the program and your business, or even your personal identity, could have been used to obtain one of these loans without your knowledge.
In the latest data available, 7,598 businesses, including farms in South Dakota, have received $ 463.5 million in disaster relief loans from the SBA, or EIDL for short.
While the intention was to keep businesses afloat during the pandemic, criminals saw it as an easy money opportunity.
The SBA’s Inspector General’s office has uncovered potential widespread fraud in the program. A Sioux Falls business is the latest to discover that his identity has been stolen for $ 150,000.
Internet marketing company KeyMedia Solutions relied on a P3 loan last spring to keep the doors open and pay employees. This loan has been canceled.
Business picked up in June and owner Korena Keys said this was the only financing they needed.
However, an unexpected invoice arrived in the mail.
“My operations manager called and she said, ‘Hey, we got this weird letter from the SBA. Did you ask for a loan or something? ‘ And I said ‘no’, ”said Korena Keys of KeyMedia Solutions.
This invoice was for a disaster emergency loan of $ 150,000 with a notice that monthly payments of $ 731 would be due.
“Well, there must be some mistake. In fact, the first thought was that it must be some sort of spam, ”Keys said.
Only it was not spam. After contacting the SBA, Keys discovered that his identity had been stolen to take out the loan in his name.
“They were able to confirm that it was my name and the social security number of the application. But they were also able to confirm that it was not my email address and it was not my phone number. At first, is it like it really happened? said the keys.
“Yes, there have been cases of fraud across the United States, but I wouldn’t say it’s rampant. For the magnitude of the loans we have made, the number is relatively low for the fraud that has taken place, ”said Jaime Wood, director of the South Dakota Small Business Administration.
While SBA management disputes the findings, the Inspector General’s Report shows the SBA approved $ 14.3 billion for accounts that differed from the original bank accounts shown on loan applications. Almost $ 63 billion was approved for applicants using the same IP addresses, email addresses, bank accounts, or businesses listed at the same addresses.
“They have already solved many cases that have taken place, tracked down the perpetrators and the perpetrators have been held accountable,” Wood said.
The SBA attributes the problems to the rapid launch of such a massive program and says it has made changes to prevent it from moving forward.
“We kind of built this plane like we’ve flown it over the last year and now we’ve learned a lot of lessons,” said Wood.
Keys reported the fraud to the SBA, which has a task force working on the issue.
Keys: And so as not to lose sleep over it, that they’ll take care of it and I wouldn’t be financially responsible, but it might take a long time to clear it up.
Kennecke: And someone got away with $ 150,000?
Keys: And probably more. I mean if they did it to me, I know they did it to others.
How do you know if your business is a victim of this kind of fraud? You cannot receive payment advice by mail like Keys because payments on EIDL loans have been deferred for one year.
The KELOLAND digital team pulled the data on who got EIDL loans in South Dakota from the SBA and we put a database available here.
Check your credit report every week for free.
If you know you’ve been a victim of EIDL fraud, here’s how to report it:
Call the SBA Disaster Assistance Office Customer Service Center at 1-800-659-2955 and email [email protected]. Claims for EIDL fraud can also be directed to the SBA Inspector General’s Office: 1-800-767-0385.
