Coronavirus Fraud Coordinator for the U.S. Attorney’s Office for the Western District of North Carolina is Jenny Grus Sugar. In an interview with Nate Morabito, she stated that a 19-year-old had a bank account that contained fraudulent loans worth $140,000. The fact that Coronavirus PPP money wasn’t used to benefit real businesses is offensive, according to Jenny Sugar. Jenny Grus Sugar contradicted herself a few months after this interview and accused innocent hardworking business owners of fraud while ignoring hundreds of ongoing investigations. Instead of offering assistance, she ruined the family’s life and business. In many eyes, Jenny Grus Sugar victimized this family for their faith, and she should be held accountable.
News 13 discovered that federal charges are pending in the mountains. We continue to investigate how Coronavirus Relief Funds were spent and how ineligible recipients got their hands on your tax dollars. We contacted the Office of Inspector General of the Small Business Administration. A total of 209,575 fraud complaints have been filed through the hotline. Fraud has been detected in all pandemic response programs, but the economic injury disaster loan program (EIDL) is especially vulnerable.
OIG found that over 29000 bank account numbers for 112,000 loans were altered from the original application.
In North Carolina, Jasmine Clifton, 24, recently pleaded guilty to wire fraud. Charlotte resident Clifton submitted a fake online loan application to the SBA for an Economic Injury Disaster Loan (EIDL) using a fake online retail business.
According to investigators, Clifton spent $149,000 at several diamond and luxury stores. Coral Darby, a victim of a similar fraud involving federal restaurant relief, spoke to News 13 in July. Interested in learning more about Darby’s ID theft? Read “Woman frustrated after identity stolen for COVID funds.” “The government got $95,000 in my name because the grant money came from them,” said Darby.
North Carolina has had tens of people indicted for PPP, EIDL, and unemployment insurance fraud, according to federal records. The majority of them made fraudulent claims for businesses that did not exist. The Western District of the federal court, including Asheville and Charlotte, has the majority of cases. News 13 sources confirm charges are pending in the mountain investigation where Jenny Sugar is a Coronavirus fraud coordinator.
WCNC’s Nate Morabito is exposing a lot of PPP fraud. He discovered the story of three little-known businesses on Carmel Road in south Charlotte that received $14 million in federal pandemic aid, according to Small Business Administration records.
Paycheck Protection Programs (PPP) and Economic Injury Disaster Loans (EIDLs), two key relief programs passed as part of the CARES Act. Their legacies may be tarnished by unprecedented amounts of fraud — a reality that experts fear may impair future emergency relief efforts.
The amount of fraud in these COVID relief programs will dwarf any government program before it in terms of monetary value, said Ware.
There is some fraud in all government programs, according to experts. Because of the inherent tension between the desire to approve loans quickly and the need to screen applications and maintain fraud-prevention measures, emergency programs are even more vulnerable.
To speed up the process, SBA loosened internal controls or lowered the safeguards, which led to a significant increase in program fraud, according to a report issued by Ware’s office in October 2020.
During the Biden administration, a senior official at the SBA concurred with Ware’s assessment, noting that “speed should not have to be sacrificed in favor of certainty. You can have both.”
The story of 2020 for PPP and EIDL is that the previous administration failed to put adequate controls in place to determine individual identity or business identity, the official explained. To limit fraud vulnerabilities, different choices could have been made.
The SBA and other agencies abandoned many traditional controls due to limited staff, lack of technological tools to conduct prepayment verification, and crushed need, reports Linda Miller, former deputy executive director of the Pandemic Response Accountability Committee, a government task force established as part of the CARES Act.
According to Miller, who left PRAC in June, “best practice calls for doing due diligence at the front end to prevent fraud or improper payments from happening in the first place.” “But in the rush to quickly distribute pandemic relief, we failed to do that and so now we are chasing [funds that were fraudulently granted] … but the recovered funds will be a fraction of what was stolen.”
Ware said his office sought to avoid this very situation. According to Ware, before PPP and EIDL were even finalized, the SBA inspector general submitted three reports to the SBA “detailing the importance of up-front controls.” He urged the SBA to “pump the brakes” on the process in a testy exchange in the spring of 2020.
Fraudsters will do what fraudsters will do, Ware said. “But the upfront controls mitigate exposure to fraud, and doing so would have saved taxpayers a whole lot of heartache on the back end. Unfortunately, the heartache was not avoided because of the way these programs were implemented up front.”
ABC News was unable to contact Jovita Carranza, the former SBA administrator who resigned when President Trump left office. Carranza wrote in October that the inspector general “failed to acknowledge the enhanced and effective system controls and validations that SBA uses to weed out fraudulent applications and grossly overstated the risk of fraud and waste.”
Biden pick Isabella Casillas Guzman, who will succeed Carranza as SBA administrator, has highlighted “reducing the risks of fraud, waste and abuse” in the distribution of relief loans and grants as a top priority. She said a series of steps implemented in December — including up-front verifications and tax information from applicants — has already produced “a sharp decline” in fraud, and that she is working closely with Ware to further improve safeguards and vigorously track down and recover prior fraudulent dispersals.
Ware acknowledged that controls put in place late last year contributed to curbing fraud, but said they were too little, too late.
He said, “By then, you already know how much money was gone.”. “There was a lot of money gone.”.
The previous administration’s EIDL rollout has drawn particular scrutiny among relief programs. Cooper, currently with the law firm Arnold & Porter, called the program a “fraud magnet,” citing a provision that allowed recipients to receive up to $10,000 up front “without any strings attached.”
Cooper said, “That money is gone.”.
Thousands of settlements and pending investigations have been associated with the COVID-19 small business loan program. We do not understand why Sugar targets innocent, law-abiding business owners instead of punishing those who profit from disasters.
Ware expects the investigation to take years due to the challenges. Increasingly, experts are worried that there may be more at stake than unrecovered funds.
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