Representative Jim Clyburn Seeks Further Details in Congressional Investigation into Online Financial Company P3 Fraud
Congress is expanding its investigation into financial fraud during COVID-19, including taking a closer look at two of the major financial aid processors linked to the pandemic.
According to At USA Today, South Carolina Representative Jim Clyburn, chairman of the select subcommittee on the coronavirus crisis, sent letters to Blueacorn and Womply on November 23 requesting information on fraud prevention. Both companies emerged as major players who integrated technology and financing to accelerate lending through the federal government. Paycheque Protection Program.
Womply apparently wouldn’t have any loan experience before COVID-19, and Blueacorn didn’t exist. But the combined companies grabbed more than $ 3 billion in fees, overtaking their direct rivals.
FinTechs aren’t banks, but operate as intermediaries – marketing to struggling businesses and swift loan approval with partner banks, backed by the Small Business Administration. Businesses earn their money from fees paid by the government to facilitate loans. The SBA helps run PPP.
“Unfortunately, many of these fees may have been earned by processing fraudulent or ineligible loan applications,” Clyburn wrote.
He requested internal compliance documents, including “emails, logs and chat room transcripts, direct emails and minutes” that dealt with financial crimes.
Womply has worked with 17 lenders and processed 1.4 million loans worth over $ 20 billion from the government’s $ 800 billion programs. Clyburn reported that Blueacorn processed at least $ 14 billion in loans.
A University of Texas study found oThe processes of online financial companies have facilitated fraud in PPP loans. In August, USA TODAY focused on an article from the University of Texas, Austin, which identified more than 1.8 million loans with indications of potential borrower fraud. Some of the more egregious examples cited by researchers involved Kabbage, Womply, and Blueacorn.
Clyburn sent letters during his February investigation to Kabbage, BlueVine, Cross River Bank and Celtic Bank. He also gave Womply and Blueacorn until November 26 to show if they would cooperate with the requests.
In a previous statement to USA TODAY, Blueacorn CEO Barry Calhoun said the company was “incredibly proud of the work we have undertaken to dramatically reduce fraud in the PPP program,” adding that it is focusing on the service of a “traditionally neglected population”. A spokeswoman said on Tuesday that the company would cooperate with the congressional investigation.
Founder and CEO of Womply Toby Scam called PPP a “flawed program” that nevertheless managed to save millions of small businesses.
“Womply helped the program succeed, and I’m especially proud that our efforts leveled the playing field so that very small US businesses and minority-owned businesses were able to participate,” said Scammell.