U.S. Small Business Administration, Office of Inspector General

Today, the U.S. Small Business Administration, Office of Inspector General joined Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division and U.S. Attorney Leigha Simonton for the Northern District of Texas to announce that an indictment was unsealed yesterday in the Northern District of Texas charging two co-founders of a lender service provider, for their alleged participation in a scheme to obtain, through multiple fraudulent Paycheck Protection Program (PPP) loan applications. According to court documents, the defendants allegedly submitted false and fraudulent PPP loan applications on behalf of themselves and their businesses, including by fabricating documents that they submitted in their loan applications in order to receive loan funds for which they were not eligible. The indictment also alleges that the defendants, who are married, purportedly assisted small businesses and individuals in obtaining PPP loans. To obtain larger loans for certain PPP applicants, the defendants and co-conspirators fabricated documents, including payroll records, tax documentation, and bank statements. The defendants charged borrowers illegal kickbacks based on a percentage of the funds received, despite knowing that borrowers were prohibited from using PPP loan proceeds to make such payments. As part of the alleged scheme, the defendants and others expanded operations through lender service provider agreements (LSPAs) with two lenders. Under the LSPAs, the business collected and reviewed PPP applications from potential borrowers on behalf of the lenders and worked with the lenders to submit applications to the SBA in exchange for a percentage of the fees the SBA paid to the lenders for approved PPP loans. The defendants and the co-conspirators submitted and caused to be submitted PPP loan applications that they knew contained materially false information to obtain a greater volume of kickbacks from borrowers and percentage of lender fees from the SBA. Read more: https://ow.ly/Nst550Ue4nz

#DidYouKnow: In 2001, OIG instituted its strategic plan articulating its vision to improve SBA’s programs by identifying key issues facing the agency, ensuring corrective actions were taken, and promoting a high level of integrity. In this plan, our office focused on serving the needs of our customers and stakeholders; safeguarding SBA resources from fraud, waste, and abuse; and providing a formalized work environment that was conducive to excellent performance by our employees.

Read the U.S. Small Business Administration, Office of Inspector General's Spring Semiannual Report to Congress. This report summarizes our activities from April 1, 2024 – September 30, 2024, as required by law. This reporting period, we continued to bring fraudsters to justice and provide an exponential return on investment to American taxpayers. During this reporting period, we issued 15 reports with 37 recommendations to improve SBA operations and reduce fraud and unnecessary losses in agency programs. In addition, OIG investigations resulted in 137 indictments and 154 convictions. Overall, OIG’s investigations and audit work achieved a total dollar accomplishment of over $420 million during this semiannual period. Read more: https://ow.ly/p0PV50Uc7uQ

The U.S. Small Business Administration, Office of Inspector General is proud to announce that our very own IG Hannibal “Mike” Ware has been elected to serve as the next CIGIE Chairperson and will begin his two-year term on January 1, 2025. As stated by IG Ware, “I am honored to serve as CIGIE Chairperson. I started my career in the IG community, and after almost 35 years of Federal IG experience, I’m looking forward to celebrating CIGIE’s rich history, allowing the past to inform our present, and building upon our core tenets of independence and objectivity.” IG Ware added: “I deeply appreciate our past CIGIE Chairpersons, who continue to serve and lead within our community today. I stand on the shoulders of giants and will utilize that high ground in great fashion, combined with voices that may have been untapped.” As CIGIE Chairperson IG Ware will, among other duties, convene and preside over CIGIE meetings; appoint the Vice Chairperson; exercise CIGIE’s functions and duties; oversee CIGIE’s administrative and business functions; establish CIGIE standing committees; and transmit CIGIE’s annual report to the President and the Congress.

The U.S. Small Business Administration, Office of Inspector General to be recognized as one of the top OIGs to work for in the Federal Government by Partnership PublicService. Today is the last day to apply for this position!

Recently, the U.S. Small Business Administration, Office of Inspector General joined United States Attorney Matthew M. Graves to announce that a former D.C. public official pleaded guilty to one count of bank fraud, for a scheme to submit fraudulent Paycheck Protection Program (PPP) applications seeking money from the COVID-19 pandemic relief program that netted her $844,000. According to the government’s evidence, between March 31, 2020, and August 4, 2021, the defendant submitted eight PPP loan applications with various financial institutions and 15 Economic Injury Disaster Loan (EIDL) applications with the Small Business Administration (SBA), all of which contained materially false statements. The defendant submitted loans on behalf of fake businesses and inflated the number of employees, the average monthly payroll, the gross yearly revenue, or the cost of goods sold. In doing so, she tried to steal between $2.6 million and $5.5 million. While most of the defendant’s loan applications were denied, she successfully secured over $844,000 in PPP and EIDL funds. The defendant used the funds to pay off her student loans, pay off the car loan on a BMW SUV, and buy luxury items. Read more: https://ow.ly/focb50Uaizk

Learn about SBA Fraud by watching the video below and report fraud, waste, and or abuse. https://ow.ly/8oBs50PzTfu

Recently, the U.S. Small Business Administration, Office of Inspector General joined United States Attorney Dena J. King of the Western District of North Carolina to announce that a North Carolina man pleaded guilty today to securities fraud and wire fraud for orchestrating a multimillion-dollar investment fraud scheme and fraudulently obtaining more than $2.6 million in COVID-19 relief funds. According to the plea agreement and documents filed in the case, from 2018 to 2021, the defendant operated an investment fraud scheme and induced victims to invest money in businesses that were both real and fictitious, by making false representations about where and how the money would be invested. In addition to the investment scheme, the defendant also engaged in COVID-19 fraud. Court records show that, from April 2020 to March 2021, the defendant obtained funds from the Paycheck Protection Program (PPP) by submitting fraudulent applications for disaster relief loans intended for businesses that suffered economic hardship due to the pandemic. To obtain the PPP funds, the defendant submitted applications that contained false financial information about his businesses, including fake employment data and inflated revenues, costs, and payroll expenses. Through OIG’s “whole of government” approach, our office has partnered with the DOJ and law enforcement across the nation to hold wrongdoers accountable for their actions while safeguarding SBA programs and initiatives intended to assist eligible American small businesses. Read more: https://ow.ly/fV7x50U7YnJ

Read the latest U.S. Small Business Administration, Office of Inspector General's audit report conducted by an independent certified public accounting firm KPMG LLP. Our contract with KPMG required that the audit be performed in accordance with auditing standards generally accepted in the United States of America, Government Auditing Standards issued by the Comptroller General of the United States, and Office of Management and Budget (OMB) Bulletin No. 24-02, Audit Requirements for Federal Financial Statements. In the audit, KPMG reported significant matters for which they were unable to obtain sufficient and appropriate audit evidence to provide a basis for an audit opinion on SBA’s balance sheet as of September 30, 2024. Accordingly, KPMG issued a disclaimer of opinion on the consolidated balance sheets as of September 30, 2024, and 2023. The basis for the disclaimer was that due to inadequate processes and controls, SBA was unable to provide adequate evidential matter in support of a significant number of transactions and account balances related to the Paycheck Protection Program, Economic Injury Disaster Loan program, Restaurant Revitalization Fund, and the Shuttered Venue Operators Grant program. For the period that ended September 30, 2024, KPMG identified seven material weaknesses and two significant deficiencies in internal control over financial reporting. Read more: https://lnkd.in/eBA2eKJa

#DidYouKnow: In accordance with the Inspector General (IG) Act, IGs are to keep the head of establishments and Congress fully and currently informed about problems and deficiencies relating to the administration of programs and operations and the necessity for, and progress of, corrective action.