House panel says lax screening helped facilitate PPP fraud

Nov 30, 2022, 6:46 PM | Updated: Dec 1, 2022, 9:45 am
FILE - House Majority Whip James Clyburn, D-S.C., leaves the chamber at the Capitol in Washington, ...

FILE - House Majority Whip James Clyburn, D-S.C., leaves the chamber at the Capitol in Washington, Nov. 17, 2022. Financial technology firms abdicated their responsibility to screen out fraud in applications for a federal program designed to help small businesses stay open and keep workers employed during the pandemic, a report by a House investigations panel said Thursday, Dec. 1. The House Select Subcommittee on the Coronavirus Crisis, chaired by Clyburn, launched its investigation of the firms in May 2021 after public reports that the firms were linked to disproportionate numbers of fraudulent loans issued under the Paycheck Protection Program. (AP Photo/J. Scott Applewhite, File)

(AP Photo/J. Scott Applewhite, File)

WASHINGTON (AP) — Financial technology firms abdicated their responsibility to screen out fraud in applications for a federal program designed to help small businesses stay open and keep workers employed during the pandemic, a report by a House investigations panel said Thursday.

The House Select Subcommittee on the Coronavirus Crisis launched its investigation of the firms in May 2021 after public reports that the firms were linked to disproportionate numbers of fraudulent loans issued under the Paycheck Protection Program.

Former President Donald Trump rolled out the Paycheck Protection Program to help small businesses stay open and keep their workers employed. President Joe Biden maintained the program and directed money to more low-income and minority-owned companies. All told, $800 billion was spent on the program.

The financial technology firms reviewed PPP applications for lenders, which would ultimately distribute PPP money to businesses.

The report said two start-ups, Blueacorn PPP and Womply Inc. — which reviewed one in every three funded PPP loans in 2021 — were connected to significant percentages of PPP loan applications with indicators of fraud.

It said the firms used questionable screening procedures and business practices in reviewing the loans, leading to “the needless loss of taxpayer dollars,” the report said. The firms “took billions in fees from taxpayers while becoming easy targets for those who sought to defraud the PPP.”

Neither firm responded immediately to a request for comment.

The report said Womply’s fraud prevention practices were so lax that lenders describe its systems as “put together with duct tape and gum.” It said Womply’s software became a preferred product for criminal enterprises seeking to defraud the government of PPP loans. The firm also received over $5 million in PPP loans for itself, which the Small Business Administration later determined it was ineligible to receive.

Womply said in a statement sent to the committee in January that the firm’s role in the screening process was limited. “Womply did not approve PPP loan applications, issue PPP loans, or otherwise serve as a lender in the PPP. Womply helped connect borrowers with PPP lenders, which were responsible for reviewing, approving, submitting, funding, and servicing the PPP applications and loans,” the company’s lawyers wrote.

Womply referred 128,813 PPP applicants to lenders in 2020, and 2,584,420 applicants to lenders in 2021.

“We must learn from this inexcusable misconduct to erect guardrails that will help ensure that federal programs — including emergency assistance programs in future crises — are administered more effectively, efficiently, and equitably while keeping waste, fraud, and abuse to an absolute minimum,” said Rep. Jim Clyburn, D-S.C., who chairs the coronavirus crisis subcommittee.

Clyburn said the committee’s findings were sent to the Justice Department and the Small Business Administration.

In March, the Government Accountability Office reported that while agencies were able to distribute COVID-19 relief funds quickly, “the tradeoff was that they did not have systems in place to prevent and identify payment errors and fraud” due in part to “financial management weaknesses.”

Billions have been fraudulently claimed through various pandemic relief programs — including Paycheck Protection Program loans, unemployment insurance and others that were rolled out in the midst of the worldwide pandemic that shut down global economies for months.

The U.S. Secret Service in August said it has recovered $286 million in fraudulently obtained pandemic loans and returned the money to the Small Business Administration.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

In this photo provided by the U.S. Coast Guard Pacific Northwest, a Coast Guard rescue swimmer reac...
Associated Press

Man rescued by Coast Guard wanted in ‘Goonies’ fish incident

A man who was saved by a Coast Guard rescue swimmer at the mouth of the Columbia River as a massive wave rolled the yacht he was piloting Friday was wanted for a bizarre incident in which police said he left a dead fish at the Astoria, Oregon, home featured in the classic 1985 film, "The Goonies."
18 hours ago
FILE - An Amazon company logo on the company's building in Schoenefeld near Berlin, Germany, March ...
Associated Press

Amazon violated labor law with delivery app

A Spanish court has ruled that Amazon broke labor laws by forcing more than 2,000 delivery drivers to use an app that the company controlled for scheduling work and payments and requiring them to use their own cars and cellphones on the job.
18 hours ago
Associated Press

Saturday’s Scores

GIRLS PREP BASKETBALL= Bellarmine Prep 54, Olympia 43 Chiawana 76, Hermiston, Ore. 41 Hazen 40, Liberty 36 Kamiakin 77, Pasco 17 Orcas Island 67, Concrete 13 South Kitsap 39, Bethel 37 ___ Some high school basketball scores provided by Scorestream.com, https://scorestream.com/ Copyright © The Associated Press. All rights reserved. This material may not be published, […]
18 hours ago
Associated Press

Saturday’s Scores

BOYS PREP BASKETBALL= Adna 66, Raymond 47 Goldendale 56, Kittitas 33 Issaquah 65, Newport-Bellevue 46 Klahowya 79, North Mason 50 Lummi 65, Lopez 25 Mount Vernon Christian 81, Shoreline Christian 33 Neah Bay 91, Taholah 36 Orcas Island 82, Fellowship Christian 36 Puyallup 63, Emerald Ridge 52 Woodinville 73, North Creek 49 ___ Some high […]
18 hours ago
Associated Press

Crash averted at Austin airport; FAA, NTSB to investigate

AUSTIN, Texas (AP) — A FedEx cargo airplane attempting to land at Austin-Bergstrom International Airport on Saturday had to reverse course after a second plane was cleared to depart from the same runway, according to the Federal Aviation Administration. “The pilot of the FedEx airplane discontinued the landing and initiated a climb out,” the FAA […]
18 hours ago
Skateboarders skate in front of city hall in remembrance of Tyre Nichols, who died after being beat...
Associated Press

Tony Hawk to donate photo proceeds to Tyre Nichols fund

NASHVILLE, Tenn. (AP) — Skateboard legend Tony Hawk says he will donate half of the proceeds of autographed photos of himself and BMX rider Rick Throne to the memorial fund for Tyre Nichols. “My proceeds from these will go to the Tyre Nichols Memorial Fund, which includes plans to build a public skatepark in his […]
18 hours ago

Sponsored Articles

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.
SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
House panel says lax screening helped facilitate PPP fraud