PPP Covid cash: According to a report that was made available to members of the United States Congress on Thursday, a married couple from Arizona who started a financial technology company in the early days of the pandemic raked in an estimated $120 million in processing fees from handing out billions of dollars in Paycheck Protection Program loans, from a report that detailed how the couple profited from the distribution of the loans.
These findings are an excerpt from a study provided to the couple by the Congressional Research Service of the United States of America.
This information comes from a report that the United States Congress commissioned. Even though their organization did nothing to prevent or detect fraudulent activity, this resulted. The in the information. One fintech company’s employees treated more minor PPP loan applicants with disdain, writing things like “remove them” and “Who the cares” in response to their applications. Here we will discuss more PPP Covid cash in detail.
Facts about PPP Covid cash:
According to the research, the corporation invested less than 1% of its revenue towards anti-fraud measures. The probe further revealed that less than 1% of Blueacorn’s revenue was invested in anti-fraud measures. According to the findings of the Select Subcommittee on the Coronavirus Crisis, the company Blueacorn had been involved in the fraud that led to the outbreak of the Corona. The report also states that Blueacorn hired only “one direct employee who assisted with processing PPP Covid cash.
Even though the program was designed to assist smaller businesses in surviving the pandemic, according to the report, Blueacorn treated more minor loan applicants with disdain, writing things like “delete them,” “Who the f cares,” and “we’re not the first bank to decline borrowers who deserve to be funded…. they go elsewhere.”
Black veteran independent contractor:
Blue corn co-owner Nathan Reis and his wife, Stephanie Hockridge-Reis, asked for and received roughly $300,000 in PPP loans for themselves and their small businesses. It is in addition to the millions of dollars they received as co-owners of the company. The committee noted that Nathan Reis characterized himself on one loan application he signed in February 2021 as a Black veteran independent contractor. Nathan Reis applied. According to the study, Reis does not identify as Black and is not a veteran.
Investigation of $80 billion:
It is well known that the PPP initiative, which had a budget of 800 billion dollars, was riddled with fraud, with some estimates placing the amount of fraud at 80 billion dollars. Officials from the Department of Justice have stated that PPP prosecutions are a continuing priority. Some individuals who obtained loans for as little as $25,000 have been charged with wire fraud.
According to multiple reports from government watchdogs, the focus of the investigation has recently shifted to some of the more prominent actors responsible for facilitating the historic funding distribution during the early days of the pandemic, when the federal government prioritized speed over diligence.
Many earlier studies have pointed to the role that fintech play in fraud. One such study is a 2021 report from the University of Texas that concluded that “suspicious lending by fintech ” Fintech companies are those in the technology sector that facilitate or assist banking services.
Jim Clyburn, D-South Carolina:
The most recent report from the House of Representatives lends credence to the argument by stating that the businesses did little to stop the extortion.
Some of these people may have increased their illegal gains by participating in PPP fraud, in addition to the windfall they gained from assisting others in participating in PPP fraud. Department of Justice on Thursday stated that “fintech owners charged with identifying fraudulent PPP applications may have committed fraud themselves.” in a report that the committee released on Thursday. The letter does not identify any specific companies or executives as having committed fraud, nor does it make any such allegations.
Fraud prevention practices and technologies:
The Reises did not respond immediately to a request for a statement. However, in the documents made public by the committee, a lawyer for Blueacorn refuted that the company had inadequate safeguards against fraudulent activity. The lawyer stated, “Blueacorn did not simply accept completed applications from any applicant for its partner lenders to approve or deny.” Instead, Blueacorn used several fraud prevention practices and technologies throughout its adaptive application process.
All of these results are possible if the lender rejects the loan application after the Small Business Administration has already given its approval. These outcomes may have resulted from a lender’s late-stage denial due to irregularities discovered after the Small Business Administration had already authorized the loan.
One or more of these outcomes may have been precipitated by the lender rejecting the loan application at a late stage owing to irregularities identified after the Small Business Administration had already approved the loan. The SBA had already approved the loan when these discrepancies surfaced. According to a message sent by Hockridge-Reis and retrieved by the committee, the executives of Blueacorn prioritized larger loans that were more profitable and referred to them as PPP Covid cash.
The company processed PPP loans:
The report demonstrates the lightning-fast pace at which the money was distributed. Reis made his remarks about his company’s profitability in a text message the committee received. In the statement, he mentioned that his company processed PPP loans and made nearly $1.5 billion in less than six months. Blue corn to committee investigators, the company depended on another Arizona company called Elev8 Advisors to process hundreds of thousands of loans. Elev8 Advisors was founded by a couple named Kristen and Adam Spencer.
An application for PPP Covid cash:
An application for PPP loan forgiveness submitted in August 2021 and retrieved by the committee’s staff indicated only one employee. However, how many individuals worked for the company is still being determined. According to the committee, Spencer told a member of the Blueacorn team that “she was the fraud department” of Elev8 Advisors and was in charge of screening loans for the federal loan program. Spencer’s previous expertise included owning an online clothes shop.
A former employee of Elev8 is quoted in the committee report as saying that the Spencers engaged “at least 30” of their “closest friends and family” members to examine loans. One of these individuals was a young adult who had recently completed high school.
Processing PPP Covid cash:
The report referred to a text message sent by Kristen Spencer in which she discussed the potential profit from processing PPP loans. According to what she wrote, “We are doing this for the people that we hired to generate money.” Our loved ones and close friends. It is the direction that the money is heading. And the money that everyone who accomplishes it will make will completely transform their lives.
Elev8 and its owners were led to believe in an accurate reporting of the facts and an opportunity to respond to any report before it was released to the media.
Subcommittee’s process misled:
With the release of this report, it is evident that the Subcommittee’s process misled elev8, and its owner, ‘s elev8, did not engage in any form of self-dealing. The company’s loans to themselves were entirely appropriate and would have passed muster in any objective evaluation. According to the property records in the area, the Spencers purchased a mansion with 10,975 square feet and a price tag of $8 million in July of 2021. It was two months after.
Blame on the government:
The research investigates the activities of Kabbage Inc. and those of several other fintech companies. In an email sent in September 2020 and obtained by committee staff, the head of policy for Kabbage accused the United States government and the Small Business Administration, which was in charge of administering the program, of not conducting sufficient due diligence. The email stated that “at the end of the day,” “it is the SBA’s policies that produced fraud, not.
In October, Kabbage submitted its bankruptcy petition. Kabbage disclosed in a court filing back in June that the company is currently being investigated for potential violations of the False Claims Act by federal prosecutors in Houston and Boston. Kabbage’s attorneys stated that the investigation is being overseen by the Department of Justice’s civil division in Washington.
Small Business Administration:
Clyburn stated that he has requested the Small Business Administration (SBA) and the office of the Inspector General to “conduct further investigation into these companies and pursue all appropriate remedies.” He also stated that he had brought the findings to the attention of the Department of Justice.