PHOENIX — More details are coming to light about how fraudsters are taking advantage of COVID-19 relief funds.
A new watchdog report shows millions in business rescue money went to fake farms, including some claiming to exist in Arizona.
Here are some takeaways:
378 loans totaling more than $7 million went to fake businesses
The nonprofit journalism site ProPublica reported this week that 378 loans totaling more than $7 million allegedly went to fake business entities, primarily fake farms across the country. The phony companies included several in Arizona.
The loans were facilitated by the online bank Kabbage. Kabbage tells Pro Publica they reported fraud when they discovered it.
Fraudsters likely created businesses and used stolen identities of real people in an attempt to collect the money, the website reports.
Tens of thousands of potential fraudulent loans
The findings are part of an avalanche of potential fraud being uncovered now that some of the dust has settled from the pandemic.
A recent inspector general report estimates that the Small Business Association approved loans for 55,000 potentially ineligible businesses and another 43,000 businesses obtained more money than their reported payrolls would justify.
12 News asked AZ Senator Kyrsten Sinema about the progress being made to expose PPP fraud.
“Kyrsten believes defrauding American taxpayers is unacceptable, and strong oversight and investigations into Paycheck Protection Program fraud must continue,” said Hannah Hurley, a spokeswoman for Sinema.
1,200 restaurants closed in last 12 months
“I think about the fact that over 1,200 restaurants in the state of Arizona had to close in the last 12 months. And how many of those folks couldn’t get enough PPP money to stay alive?” said Suzie Timms, owner of Knife and Fork Media Group.
Timms advises restaurants and other companies.
“I guess the good news is the fraud is getting exposed,” Timms said. “The companies that took money and didn’t use it appropriately will have to pay it back or suffer federal crimes, felonies for misusing it.”
Local business owner under investigation
12 News has reported on one business owner, Bridgett O’Brien, who runs disability therapy clinics in the Valley. Three businesses linked to her got between one and two and a half million dollars in PPP money. O’Brien purchased a million-dollar home around the time of getting loan money.
The most employees she ever had last year were four, says a whistleblower. Records suggest O’Brien claimed more than 20 full-time employees.
O’Brien has declined to comment.
The Attorney General’s Office is investigating O’Brien’s companies. The reason for the investigation is unknown.
The SBA has stated publicly they have hundreds of investigations underway.
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