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 researchers have found.
A wheat farm in Lehigh Acres received a loan of more than $ 20,000, but there is no farm at the address listed. It is a one-story house in the country.
Melon growers in Parque San Carlos also received a taxpayer-financed loan. But there is no fruit on site, just a house guarded by a small dog in a dense neighborhood.
A PPP loan was also made to an apple orchard (yes, you read that right) in southwest Cape Coral. Not surprisingly, there are no apple trees in the address. It is just a house in a nice gated community.
“It’s weird,” FGCU finance professor Tom Smythe said of our findings. “You don’t grow apples on the southwest coast of Florida.”
NON-EXISTING FARMS INCLUDED IN PPP LOAN DATA
The strange trend was originally discovered by ProPublica, a nonprofit newsroom that discovered that hundreds of bogus farms had received pandemic loans across the United States.
Researchers at NBC2 wanted to know if it was happening in southwest Florida, so we looked for publicly available PPP loan data from the US. Small Business Administration.
Finally, we identified a list of five farms with suspicious characteristics: each was a sole proprietor, each used the same originating lender, each received identical or nearly identical loan amounts, and each loan was approved in the exactly same week.
More importantly, we were unable to find Florida business records for some of the five farms.
When we finally visited each of the addresses listed in the loan data, our suspicions were confirmed: the farms don’t really exist.
“I think criminals are, like it or not, really smart people,” Smythe told NBC2.
STOLEN IDENTITIES USED TO GET LOANS?
But, who Are criminals defrauding the loan program?
NBC2 investigators discovered that each of the fake farms is named after a real person who lives at the indicated address.
However, once we finally got in touch with those people, they were all shocked and said they had no idea about the loans.
The strong suspicion is that the scammers are behind the fraud.
“These people who are doing this? It’s probably the people who did the scams, choose 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 living at the addresses of non-existent farms in southwest Florida, they were not only shocked, but several confirmed that they were in fact recent victims of identity theft.
“It’s just a new version of an old crime,” Lauren Kocinski, a Fort Myers-based IRS special agent, said in an interview with NBC2. “With any new government program, there are always criminals looking to profit from the program.”
The NBC2 researchers presented our findings to Kocinski, who said he cannot comment on specific cases or possible future cases. He said the IRS is working with the SBA on a daily basis to investigate crimes within the 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 in saying, ‘Hey, here’s a potential gold mine,'” Smythe said.
LOAN LENDERS NOW UNDER INVESTIGATION
Loan programs were vulnerable to fraud, especially at the beginning of the pandemic, Smythe explained. He said the government was taking some risks by taking money quickly from struggling small businesses.
But ProPublica also blamed Kabbage, the company that originated the bogus farm loans. It is not a traditional bank, but an online one lender who is now accused of not having the proper controls in place while processing the loans.
“Fintech’s lending process is purely technology-based,” Smythe said of online lending platforms. “Unless the technology is robust enough to capture things like a business in southwest Florida that is an apple orchard, it will go unnoticed.”
TO Subcommittee of the US House of Representatives he is now investigating Kabbage and other Fintech lenders.
“I am deeply concerned by recent reports alleging that financial technology (FinTech) lenders and their banking partners failed to adequately screen PPP loan applications for fraud,” wrote a committee chairman. “This failure may have led to millions of dollars in FinTech-facilitated APP loans to fraudulent, non-existent or ineligible companies.”
NBC2 investigators reached out to Kabbage, but a spokesperson said the PPP loans are now handled 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 reached out to K Servicing, but have not yet received a response.
WHAT ABOUT THE LOANS?
Typically, a loan is repaid or a business owner requests forgiveness.
It is not known what will happen to the loans that were made to the fake farms, because it is not clear where the money actually went.
None of the people whose identities appear to have been stolen to obtain the funds have received notices that they have to repay the loans, at least not yet.
Some of the people are now investigating to try to rectify the situation. All asked that their names not be released, expressing concern about identity theft.
NBC2 investigators have also reached out to the Small Business Administration, but have not yet received a response. The agency has created a website where people can Report PPP Identity Theft.
“There are criminals and scammers who steal directly from the funds you are paying,” Kocinski said. “So you should ask us everybody disgusted.”