For example, in Carranza’s response to the Inspector General, she wrote that the SBA detected duplicate loan applications from potential fraudsters, in part by identifying “matching tax ID numbers (EIN or SSN)” related to employee and social security numbers. She wrote that the SBA’s internal controls have uncovered and denied tens of billions of dollars of potentially fraudulent loan and grant applications.
However, from the beginning of the widespread lockdowns in March until the end of July, these internal controls appear to have not been fully in place. On July 31, eight days after Carranza replied to the Inspector General, an SBA manager informed the agency’s loan processing staff that the loan processing software system had recently been updated to require correct tax numbers. “The” Approve / Commit “buttons will be disabled until the tax number has been corrected in the application,” the manager wrote in one E-mail.
The POGO source said the SBA’s system should have required correct tax identification months earlier and that despite an IRS, the agency approved large numbers of loans without the correct ID before the end of July Requirement that companies with employees and even some others have an employee identification number. For companies with EIN, a 2020 IRS guide specifically says, “Don’t use an SSN in place of an EIN” in tax documents.
A spate of emails sent on August 14th and 16th also shows how far behind SBA has come to grappling with the fraud problem and dropping ineligible applications.
In an email dated August 14th an SBA overseer wrote that “due to the widespread presence of fraudulent applications with immediate effect all COVID-19 applications that display the following message: Information message: gross economic loss is 0 or negative, must be rejected.” , the action taken by the loan officer is to decline the loan. “