![]() (Kao and his lawyer did not respond to requests for comment.) When a local bank hesitated to approve his application, Kao barraged its employees with emails, claimed he worked “very closely” with government officials and demanded to know if the bank’s executives were “willing to get onto a call with Congress.”Ī few days later, the bank approved his loan. The man, Martin Kao, obtained $12.8 million in loans from the program by lying about his company’s head count and payroll, according to prosecutors. Lenders typically followed up on suspicious applications with emails and phone calls, and the applicants who were angriest about being questioned were the ones most likely to be scammers, bank executives said.Ī criminal complaint against a man in Hawaii describes a tactic that several bankers said was common - bluster and threats. One lender, who asked for anonymity to describe her company’s security measures, used a software tool to detect alterations on PDF files it flagged thousands of forgeries. Others had many employees collecting a monthly paycheck of $8,333, reflecting a $100,000 salary, the largest that a Paycheck Protection Program loan could be used to subsidize.įabricated documents were also common: doctored payroll lists, faked business tax returns and modified bank statements. Many attempts were lazy and unsophisticated, like listing employees who all made the same salary. In more than a dozen interviews, bank executives described the fraudsters’ methods. And there are hundreds of active investigations across more than a dozen government agencies, meaning a program that offered borrowers a few months of relief will spark years of court actions. The House Select Subcommittee on the Coronavirus Crisis said it had identified more than $4 billion in potentially improper loans, and some bankers believe the total will be much higher.Ī Small Business Administration fraud hotline that took in 742 complaints in 2019 has received more than 100,000 this year. So far, the Justice Department has brought criminal charges against more than 80 people accused of stealing at least $127 million from the relief program, but there’s far more to uncover. “A lot of my employees, including me, were a little frustrated with humanity.” “We couldn’t believe how many people were trying to take advantage and game the system,” said Hurn, whose firm made more than 8,000 loans. ![]()
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