Oklahoma banks are still working hard to detect fraud in EIDL SBA loans, and to get those funds returned to our government.
John Bernardo, with the FBI, reached out to his contacts and was able to get us contact with Roger Pak, a special agent with the SBA. Both have provided questions that will be helpful in making a fraud assessment.
From Special Agent Pak:
For reference, please see the downloadable form here as a guide of the SBA EIDL program. Unlike the PPP program, where the lender is directly involved with the application process, the SBA EIDL is usually conducted between the applicant and the SBA.
The below-listed questions are great for what we commonly refer to the “sniff test.” Above and beyond that, other indicators to consider would be:
• Is this a personal bank account? If so, why is there an EIDL transaction?
• How long has this business account been open? What is the historical activity?
• Is there a spike or sudden increase in ACH deposits? The electronic wire transfers would reflect origination from SBA or U.S. Treasury.
• If the resources are available, I would encourage the lenders to follow up with questions for account holders and make them aware of the unusually high volume of fraud activity. They may even consider banks “are aware” of Federal Agencies conducting large scale fraud investigations concerning the COVID-19 related fraud schemes.
Considering the enormous volume of the EIDL activities, the usual form of fraud “indicators” would occur after the activity vs. on the application process.
I would like to offer assistance with a line of communication between the BSA groups and myself.
Bernardo’s advice follows:
I would continue to advise banks to conduct due diligence in regards to these loans by asking questions:
• What type of business is it, where does it operate from, how long has this business been in operation (key date is before Feb. 7)?
• How did you hear about this type of loan and is the loan for your business?
• Do you have a business account, work with anyone (have employees)and if you have employees, how did you pay them? For EIDL advance loans, it is $1,000 an employee, so if they got $10,000, it could indicate fraud.
• Do you handle all the paperwork for your business or use an accounting service?
• How do you advertise for your businesses? Do you list it on your social media? Does it have any reviews on google or on the internet?
• Who are your customers and how do they pay you?
The aforementioned SBA attachment includes the hotline email OIGHotline@sba.gov and they provide a point of contact for questions regarding suspicious activity: email@example.com. Special Agent Pak has also agreed to be a contact for BSA questions at firstname.lastname@example.org.
If all else fails, you can, as always, contact Elaine Dodd at email@example.com.