Here’s how pandemic aid attracted hordes of gleeful and gutsy scammers.
Chris Hurn, chief executive of Fountainhead Commercial Capital, said fraud associated with the Paycheck Protection Program had tested his faith in humanity.
Chris Hurn, chief executive of Fountainhead Commercial Capital, said fraud associated with the Paycheck Protection Program had tested his faith in humanity.Credit…Todd Anderson for The New York Times
Chris Hurn wasn’t surprised scammers were trying to get government money. An enormous relief effort like the $523 billion Paycheck Protection Program is bound to attract grifters.
As thousands of applications for government-backed loans flooded into his firm, Fountainhead Commercial Capital, it reported at least 500 suspicious cases to federal officials, Mr. Hurn said. But what shocked him was the brazen glee of the scammers who got money anyway.
At least a dozen times, “someone tried to defraud us, got turned down and then followed up to taunt us that they got their loan,” said Mr. Hurn, Fountainhead’s chief executive.
Four months after the federal government’s signature coronavirus relief program for small businesses expired, investigators and lawmakers have only scratched the surface of schemes that illicitly tapped its forgivable loans. The program’s hastily drafted and frequently revised rules, its removal of normal lending guardrails and governmental pressure to swiftly approve applications created the ideal conditions for thievery to thrive.
“We couldn’t believe how many people were trying to take advantage and game the system,” said Mr. Hurn, whose firm made more than 8,000 loans. “A lot of my employees, including me, were a little frustrated with humanity.”
So far, the Justice Department has brought criminal charges against more than 80 people accused of stealing at least $127 million from the relief program, but there’s far more to uncover. The House Select Subcommittee on the Coronavirus Crisis said it had identified more than $4 billion in potentially improper loans, and some bankers believe the total will be much higher.
— Stacy Cowley The New York Times