Local business owner’s identity stolen for fraudulent SBA loan

Hundreds of millions of dollars in Emergency Injury Disaster Loans went out to businesses in South Dakota through the Small Business Administration. Now there is evidence of fraud in the program and your business, or even your personal identity, could have been used to obtain one of these loans without you knowing it.

In the latest data available, 7,598 businesses, including farms in South Dakota, received $463.5 million in SBA Emergency Injury Disaster Loans, or EIDL for short.

While the intent was to keep businesses afloat during the pandemic, criminals saw it as an opportunity for easy money.

The SBA’s Office of Inspector General found widespread potential fraud in the program. A Sioux Falls business is the latest to discover its identity was stolen in order to obtain $150,000.

Internet Marketing Company, KeyMedia Solutions, relied on a PPP loan last spring to keep the doors open and pay employees. That loan was forgiven.

Business began picking up again in June and owner Korena Keys says that was the only funding they needed.

However, an unexpected bill arrived in the mail.

“My operations manager called and she said, ‘Hey, we got this weird letter from the SBA. Did you apply for a loan or something?’ And I said, ‘no,’” Korena Keys of KeyMedia Solutions said.

That bill was for a $150,000 Emergency Injury Disaster Loan with a notice that monthly payments of $731 would be coming due.

“Well there must be some mistake. Actually the first thought was, this must be some kind of spam thing,” Keys said.

Only it wasn’t spam. After contacting the SBA, Keys discovered her identity had been stolen to take out the loan in her name.

“They were able to confirm that it was my name and social security number of the application. But they were also able to confirm it was not my email address and it was not my phone number. At first it’s like, did this really happen?” Keys said.

“Yes, there have been some fraudulent cases across the United States, but I wouldn’t call it rampant. For the magnitude of loans that we’ve done, the number is relatively small for the fraud that has taken place,” Jaime Wood, Small Business Administration’s South Dakota Director said.

While SBA leadership disputes the findings, the administration’s Inspector General report shows that SBA approved $14.3 billion to accounts that differed from the original bank accounts listed on the loan applications. Nearly $63 billion was approved to applicants who used the same IP addresses, email addresses, bank accounts or businesses listed at the same addresses.

“They’ve already cracked many cases that have taken place, hunted down the perpetrators and the perpetrators have been held accountable,” Wood said.

The SBA blames the problems on the rapid launch of such a massive program and says it’s made changes to prevent it going forward.

“We’ve kind of built that airplane as we’ve been flying it for the past year and now we’ve learned a lot of lessons,” Wood said.

Keys has reported the fraud to the SBA, which has a task force working on the issue.

Keys: And not to lose any sleep over it, that they’re going to get it taken care of and that I would not be financially responsible, but it could take a really long time to clear it up.
Kennecke: And somebody got away with $150,000?
Keys: And probably more. I mean if they did it to me, I know that they did it to others.

How do you know if your business is a victim of this kind of fraud? You may not get a payment notice in the mail like Keys, because payments on the EIDL Loans were deferred for a year.
KELOLAND’s digital team has extracted the data on who got EIDL loans in South Dakota from the SBA and we’ve put a searchable data base here.

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If you know you’ve been a victim of fraud in the EIDLE program here’s how to report it:

Call the SBA’s Office of Disaster Assistance customer service center at 1-800-659-2955 and email disastercustome[email protected]. EIDL fraud claims may also be directed to SBA’s Office of Inspector General: 1-800-767-0385.