Panel faults lax screening in PPP fraud
WASHINGTON – 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 minorityowned 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.