SBA loan fraud surging throughout state

All of our Oklahoma banks have been doing a great job of detecting and returning ACH funds received on COVID-19-related unemployment scams.

This has not abated, but just hits different states in waves. Arizona, Nevada and Illinois have been among the many states hit the hardest right now. OBA has sent out keyword lists to help watch for these items and the most recent can be found here.

But.

Just when we hoped to see these decrease in number, we have now been slammed with SBA loan fraud, also COVID-19 related. ACH keywords would be “SBAD Treasury” (or “MISC PAY SBAD Treasury”). Loan applications were made directly to the SBA and deposited directly into customers’ accounts. The same money-mule system used in the unemployment scams (usually romance scammers using older customers) is being employed.

This is the most common scenario, but financial institutions are also seeing instances where older customers claim to be opening a business, but then will admit they are to wire the money to a “friend.”

There are also numerous cases where customers claim to be opening businesses that you can easily determine are bogus. One common mechanism to get the money to the scammers is the use of BitCoin. One of our Oklahoma banks stopped their customer at a BitCoin machine today and was able to keep the money from the fraudsters. To give you an idea of how widespread this is, stats on Oklahoma loans are below, and one larger financial institution is working over a hundred cases of suspected SBAD (EIDL) fraud.

After detecting potential SBAD loan fraud, it is reasonable to ask pertinent questions of the customer. If you determine it to be fraudulent, you have all the funds and are within the time limit, the easiest option is to return funds directly to the SBA. We are trying to get direction for other fact patterns, such as the existence of partial funds or being past the time limit. Our FBI partners are working to get an SBA contact and further direction on this for us and we will get that information to you immediately via another OBA Fraud Alert.

For further information, you can click to find two notices from the SBA and SSA furnished by our Secret Service partners. Toward the end of this document, you will find an email address for an SBA contact. It is likely this email is being inundated, so we will also continue to work to get you a person to contact.

The following is advice received from the FBI OKC:

• SBA Treasury Deposits

o We are receiving some calls from banks about customers receiving deposits labeled differently from the SBA PPP deposit. These could be Economic Impact Disaster Loans (EIDL). You can apply for these loans on the SBA’s website, and financial institutions do not administer EIDL.

o EIDL is normally loans given to business that suffered financial losses due to natural disasters:

• EIDL contains a loan advancement application, which caps at $10,000, at $1,000 each employee per SBA guidelines, and the person can also apply for a greater loan amount also.

• Here is a link to the application which contains the requirements: https://covid19relief.sba.gov/#/.

o The Washington Post did an article last week detailing allegations of fraud with EIDL advance loans.

• If you research further with Google searches on this topic, it will detail a fraud scheme with telemarketers recruiting subjects with the promise of a free government grant.

o If a customer received this loan, it does not automatically indicate fraud. Some factors to examine if the loan might have been made fraudulently are:

• Customer is a new account with the bank and sets up a non-business account.

• Customer is vague about the type of business he or she has, states business is run out of their home in conjunction with receiving the full $10,000 advance loan amount.

• No history of the customer operating a business via internet, Oklahoma Secretary of State or social media searches.

• Customer withdraws the loan proceeds in cash as soon as the funds hit his/her account.

• Customer is receiving multiple small deposits from SBA and not in the account holder’s name or a businesses’ name.

o Some numbers on from SBA website on this program:

• Oklahoma approved 52,002 advanced EIDLs for $161,227,000.

• Oklahoma approved 24,546 EIDLs for $1,398,674,142.

As always, if you feel a customer received this type of loan fraudulently, please file a SAR. If you need more information or have questions, please feel free to reach out.

Thank you and stay safe,

IA John M Bernardo
FBI Oklahoma City
Office: 405.290.3975
Cell: 405.655.1249

Finally, if you have questions about SBAD fraud or any other issues, you can always contact Elaine Dodd at elaine@oba.com.