A secret service agent.
Julia Nikhinson | PA
The US Secret Service has repaid $286 million in fraudulently obtained pandemic relief loans to the Small Business Administration, the agency said on Friday.
The funds returned to the SBA were obtained through the Economic Disaster Loan Program (EIDL) using both fabricated information and stolen identities.
The suspects used Green Dot Bank, a fintech institution, to hold and move the fraudulent funds. More than 15,000 accounts were used in the plot, by individuals in the United States as well as domestic and transnational organized crime networks, the agency said.
Investigations are ongoing and further information on the suspects was not immediately released. The An investigation was launched by the Secret Service Field Office in Orlando, Florida, and Green Dot Bank worked with the agency to identify the fraudulent accounts.
“Scammers in general are always looking for ways and techniques to do their crimes better and modern conveniences are just one of those things they use. So right now cryptocurrency is a big thing, the fintechs, third-party payment systems. But there’s no institution, even our traditional financial institutions, that haven’t been targeted during the pandemic,” Assistant Special Agent in Charge Roy Dotson told CNBC. Senior Secret Service Investigator, in an interview.
Early investigations indicated that the majority of Green Dot’s fraudulent accounts were created with synthetic and stolen identities, and the use of “voluntary and non-voluntary money mules,” Dotson said.
The Secret Service and the SBA Inspector General’s Office issued notices to 30,000 financial institutions in early 2020 to outline indicators of fraud and guide banks to partner with federal agencies to recover fraudulent funds , Dotson said. He added that the investigations will likely last for years due to their size and scope.
OIG Inspector General Hannibal Ware said the Secret Service partnership has resulted in more than 400 indictments and nearly 300 convictions related to pandemic fraud to date.
The US government has allocated more than $1 trillion to Main Street through the Paycheck Protection Program and the EIDL program. The PPP allowed small businesses to borrow loans that could be forgiven if the borrower used the majority of capital on the payroll, while the Covid-19 EIDL program allowed borrowers to access loss-based loans temporary income due to the pandemic. An advance was also available under the EIDL.
Reviews of both programs by the SBA’s Office of Inspector General have warned that criminals could potentially exploit the system due to the rapid nature of the deployment and request for assistance. CNBC investigations revealed, in some cases, how easy it was for criminals to get fraudulent help via stolen identities.
The SBA OIG said it identified $87 billion in potentially fraudulent EIDL loans.
Over the past two years, the Secret Service said it seized more than $1.4 billion in fraudulently obtained funds and helped return some $2.3 billion to state unemployment insurance programs. Nearly 4,000 investigations and inquiries into pandemic-related fraud have been opened by the Secret Service. More than 150 field offices and 40 cyber working groups are involved.
“It’s not going to be a silver bullet. As we talked about today, 15,325 accounts at a financial institution – that’s one case, so you can just think about the potential number of suspects and the number of investigations that could come out of it. And with all of our federal, state and local partners, who work and have the same mission. It’s going to be a long process,” Dotson said at a press conference announcing the returned funds.