Panel widens probe into pandemic aid fraud © getty: Rep. Jim Clyburn (D-S.C.) A congressional subcommittee investigating financial fraud during the pandemic widened the scope of its investigation on Tuesday to include two of the leading processors of COVID-19-related financial assistance. Rep. James Clyburn (D-S.C.), who chairs the Select Subcommittee on the Coronavirus Crisis, expanded the committee's investigation into fraud in the Paycheck Protection Program (PPP) to include Blue Acorn PPP, LLC and Womply, Inc., two online startups that processed a third of all PPP loans this year. "I am deeply troubled by reports alleging that financial technology (FinTech) lenders and their bank partners failed to adequately screen PPP loan applications for fraud," Clyburn said in a letter to each company. "This failure may have led to millions of dollars worth of FinTech-facilitated PPP loans being made to fraudulent, non-existent, or otherwise ineligible businesses." Backstory: The Small Business Administration allowed non-bank and non-insured depository institution lenders, including FinTechs, to provide loans to eligible recipients. But, some FinTechs and their bank and non-bank partners may have insufficiently screened applicants for indicators of financial crime and fraud. At the same time, those same companies, including Blue Acorn and Womply, were each paid over a billion dollars in taxpayer funds to process these potentially fraudulent loans. Clyburn's expansion of the probe followed information from the University of Texas at Austin’s McCombs School of Business that indicated possible widespread fraud from the companies. Researchers at the school found fintechs are almost five times more likely than traditional banks to have made "highly suspicious" loans through the PPP. Read more here. |
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