Fake SWFL farms received thousands of dollars in PPP loans

FORT MYERS, Fla. (WBBH) – Among the millions of businesses that received PPP loans during the COVID-19 pandemic were small farms in southwest Florida.

The problem? Some of the farms don’t actually exist, NBC2 investigators found.

A wheat farm in Lehigh Acres received a loan of over $ 20,000, but there is no farm at the address listed. It is a one-story house in the countryside.

Melon growers in San Carlos Park also received a taxpayer-funded loan. But there is no fruit there, only a house guarded by a small dog in a dense neighborhood.

A PPP loan was also given to an apple orchard – yes you read that right – in southwest Cape Coral. No surprise, there are no apple trees at the address. It’s just a house in a beautiful gated community.

“It’s weird,” said Tom Smythe, professor of finance at FGCU, of our findings. “You don’t grow apples on the southwest coast of Florida. ”

NON-EXISTING FARMS LISTED IN PPP LOAN DATA

The bizarre trend was originally discovered by ProPublica, a nonprofit newsroom that discovered hundreds of fake farms had received pandemic loans across the United States.

NBC2 investigators wanted to know if this was happening in Southwest Florida, so we looked through publicly available P3 loan data in the United States. Small business management.

Ultimately, we identified a list of five farms with suspicious characteristics: each was a sole proprietorship, each used the same original lender, each received identical loan amounts – or nearly so – and each loan was approved within the framework. exact same week.

More importantly, we were unable to find any Florida trade records for all of the five farms.

When we finally visited each of the addresses listed in the loan data, our suspicions were confirmed: farms don’t actually exist.

“I think criminals are, like it or not, really smart people,” Smythe told NBC2.

STOLEN IDENTITIES USED TO OBTAIN LOANS?

Corn, who are criminals defrauding the loan program?

NBC2 investigators have discovered that each of the fake farms is named after a real person living at the address listed.

However, once we finally got in touch with these people, they were all surprised and said they had no idea about the loans.

The suspicion is strong that the crooks are behind the fraud.

“These people who do that?” Probably the people who committed the scams – pick your topic – 2-3 years ago, ”Smythe explained.

ProPublica suggested that the fake farms were created by scammers using stolen identities and addresses of real people across the United States.

When NBC2 investigators contacted those who lived at the addresses of the non-existent farms in Southwest Florida, not only were they surprised, but several confirmed that they were indeed recent victims of identity theft.

“It’s just a new take on an old crime,” said Lauren Kocinski, a Fort Myers-based IRS special agent, in an interview with NBC2. “With any new government program, there are always criminals out there looking to take advantage of the program. “

NBC2 investigators presented our findings to Kocinski, who said she could not comment on specific cases or possible future cases. She said the IRS worked daily with the SBA to investigate crimes under loan programs.

“We are aware of this fraud. We are aware that stolen identities are being used to perpetuate this fraud, ”Kocinski explained. “Frankly, it’s not surprising.

“These criminals were opportunistic and said, ‘Hey, there’s a potential gold mine here,’” Smythe said.

LENDERS NOW UNDER INVESTIGATION

The loan programs were vulnerable to fraud, especially at the start of the pandemic, Smythe explained. He said the government was accepting some risk in quickly paying out money to struggling small businesses.

But ProPublica also blamed Kabbage, the company behind the loans for the bogus farms. It is not a traditional bank, but an online bank lender who is now accused of not having the proper controls in place while processing loans.

“The fintech lending process is all about technology,” Smythe said of online lending platforms. “Unless the technology is robust enough to detect things like a business in southwest Florida that is an apple orchard, it will go unnoticed. “

A United States House Subcommittee Currently investigating Kabbage and other Fintech lenders.

“I am deeply disturbed by recent reports alleging that FinTech lenders and their banking partners have failed to properly review PPP loan applications for fraud,” wrote a committee chair. “This failure may have led to millions of dollars in FinTech-facilitated PPP loans to fraudulent, non-existent, or otherwise ineligible companies.”

NBC2 investigators contacted Kabbage, but a spokesperson said PPP loans were now managed by a separate company called K Servicing. American Express reportedly acquired Kabbage last year, but not its existing loan portfolio, which included PPP loans.

NBC2 investigators have also contacted K Servicing, but have yet to receive a response.

WHAT HAPPENS WITH THE LOANS?

Typically, a loan is either paid off or a business owner requests that it be canceled.

We do not know what will happen to the loans that went to bogus farms, because we do not know exactly where the money went.

None of the people whose identities appear to have been stolen to obtain the funds have been notified that they have to repay the loans, at least not yet.

Some people are currently investigating to try to rectify the situation. Everyone has asked that their names be withheld, expressing concern over identity theft.

NBC2 investigators have also contacted the Small Business Administration, but have yet to receive a response. The agency has set up a web page where people can report PPP identity theft.

“You have criminals and crooks who directly steal the funds you pay,” Kocinski said. “So that should make us all upset. “

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