Congress launches inquiry into fake farms that took $7 million in pandemic relief loans
Congress has launched an inquiry into potential fraud within the Paycheck Protection Program (PPP), as online banks and lending startups face accusations of facilitating loans for fake farms. In mid-May, ProPublica identified 378 loans that went to entities that weren’t registered businesses—many of which presented themselves as farms in unlikely regions, such as a melon farm and cattle ranch in beachfront towns in New Jersey—totaling $7 million in value. As reporters pointed out, lenders faced little risk and high reward for processing loans: The federal government paid them fees of up to 5 percent of loan values. Now, lawmakers are calling into question just how much scrutiny lenders applied to the process. As the head of the House Select Subcommittee on the Coronavirus Crisis put it: “The illegitimacy of these purported farms would have been obvious if even the bare minimum of due diligence had been conducted on the loan applications.” Read the letter here.