HOUSTON - A Houston man has pled guilty to fraudulently obtaining $1.6 million in Paycheck Protection Program loans. It’s one of many cases of PPP fraud that left some business owners, who needed the money, out of luck.
"Looked like you've already gotten a loan. I said I haven’t. Said it looked like you’re on your second round to get a second loan. And I was like, Are you serious?" said business owner Sharae Young.
Young says she learned someone had taken out $40,000 in PPP loans in her name, preventing her from getting a loan for her wine and marketing businesses and charity organizations.
"A person like me that really needed the funds at the time, and couldn’t get the funds. I had to go take money from my savings," said Young.
The U.S. Department of Justice says it has prosecuted more than 100 defendants for fraudulent PPP loans.
The DOJ says 30-year-old Lee Price, III of Houston has pled guilty to fraudulently obtaining $1.6 million in PPP loans, using the name of someone who died, and bought a Lamborghini Urus, a Ford F-350, and a Rolex with the proceeds.
A University of Texas report suggests one in six PPP loans is suspicious. But the Small Business Administration says the number is much lower.
"In the case of PPP, it’s less than half a percent of loans we even suspect were ineligible," said Tim Jeffcoat, District Director of the Houston SBA office.
Jeffcoat says the vast majority of PPP loans are helping legitimate businesses.
"Here in Houston, we were averaging about 1,300 PPP loans every day to small businesses, about $85 million, every business day during COVID. So there were 350,000 businesses, give or take, that got those loans," Jeffcoat explained.
Meantime, Young says the SBA's Office of the Inspector General has removed one of the loans from her credit report, and she's waiting for the second to be removed. She says it's been months of work to clean up and lock down her credit.
"I had to write to all three credit bureaus and put locks on my accounts. Every time something happens, I get an email or alert to my phone, letting me know someone is trying to do something," said Young.
The PPP loan program has ended, but Jeffcoat says 67% of those loans have already been forgiven, and the remaining 33% of recipients can still apply for forgiveness through the SBA's new PPP Director Borrower Forgiveness Portal.
The SBA writes, "In fewer than 45 days, 91% of all loans eligible for direct forgiveness in the 2020 PPP portfolio have been submitted, showcasing the SBA’s efficiency in delivering relief to entrepreneurs who suffered during the height of the pandemic. Furthermore, the number of Direct Forgiveness participating lenders has more than doubled from 600 when the portal opened, to over 1,400 today."
Businesses in need can apply for SBA Economic Injury Disaster Loans and the following business grants: