Hundreds of Public-Private-Partnership (PPP) Loans Went to Fake Farms in Odd Locations

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Kabbage the online lending firm, provided 378 loans that were fraudulent, totaling $7 million to fictional companies (mainly farms) with names such as “Deely Nuts” and “Beefy King.”

It is said that the Ocean County, New Jersey Seaside towns that are dotted with resorts and ice cream parlors are popular summertime destinations for urban residents. Not exactly natural, which is a bit odd considering the countless Paycheck Protection Program loans to farms that were poured into the seaside towns this year.

“Ritter Wheat Club” and “Deely Nuts,” apparently both a wheat farm as well as an nut farm, each was awarded $20,833, the highest amount permitted for sole proprietorships when the initial round of the federal government’s small business aid program ended this summer. In the coastal region of Brielle, “Tomato Cramber” was awarded $12,739 and “Seaweed Bleiman” in Manahawkin was awarded $19,957.

None of these companies is registered in New Jersey’s business registers. When ProPublica approached the owners of the homes that they’re believed to be located and they were shocked. “Beefy King,” a cattle ranch that was registered at the residence at the residence of Joe Mancini, the mayor of Long Beach Township, according to PPP documents.

“There’s no farming here: for Christ’s sake, we’re a sandbar,” Mancini declared on the phone. Mancini stated that he did not have cows in his house , and he only three dogs.

Before the initial round of funds was exhausted in August 2020 Kabbage is an online platform for lending, and had completed around 300,000 PPP loan, which is second only to Bank of America. ProPublica found 378 loans that totaled $7 million to fake companies. A lot of them were established as single-person businesses and received nearly the entire amount of loan that micro-businesses can get. In the oddest areas, like the potato fields close to Palm Beach and orange groves in Minnesota Most of these are classified as farms.

This pattern of Kabbage is one aspect of a serious fraud problem that has been a problem for this Paycheck Protection Program since its introduction in March 2020, as a way of keeping small businesses afloat when they had to shut down. According to watchdogs from the government the federal Small Business Administration’s initiative that emphasized speed, at first was not equipped with the most basic security measures to deter opportunists who would submit fraudulent documents.

This has enabled thousands of businesses to stay operational, it has forced a major back-end clean-up task. According to the inspector general of the SBA the agency granted loans to 55,000 non-eligible businesses in January 43,000 of them receiving more than their actual payrolls justifications. Many people were charged with gaming programmes to combat pandemics by authorities from the Department of Justice, which relied on special agents across the federal government to look into.

Kabbage was one of the online lenders that were eagerly in generating loans using their automated systems. They were rewarded by high fees for every loan made. This was a boon to customers who were rejected by conventional banks, but also increased the likelihood of fraud. Kabbage appears to have created the majority of loans to businesses which don’t exist, and also the only source of loans for fraudulent farms, according to PaydayNow: Direct Lender

These issues could be easily discovered with greater scrutiny prior to situations, that the framework of the program did not encourage.

“Forcing this via financial institutions generated some really poor incentives,” said Naftali Harris, the CEO of Sentilink, a firm that aids lenders in identifying the possibility of identity theft. “This is absolutely an instance where enterprises who elected to be more cautious when it came to loan distribution were punished.”

After being confronted by ProPublica’s findings SBA spokeswoman for inspector general Farrah Saint-Surin stated that her agency was involved in hundreds of investigations, but “did not have any material to release or accessible for public reporting at this time.” In the words of Reuters, Federal authorities are investigating whether Kabbage as well as other Fintech lenders undervalued PPP loan amounts, and the DOJ has yet to confirm or claim the existence of any investigation to ProPublica.

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