In September, Suzanne Sanders received a notice in the mail. It said she needed to start paying back a $9,100 coronavirus relief loan to the federal Small Business Administration (SBA) by August 2021.
The notice went on to say the loan had gone to support her small business: Suzanne Sanders Farm. But Sanders doesn’t own a farm. She doesn’t live on one either. She lives in a two-story suburban tract home in Lenexa, and she never took out a pandemic relief loan.
She reported the notice to the SBA, but each month since September, Sanders says she has continued to receive repayment notices.
“I’m just sick about it,” Sanders said. “And I don’t even know what else to do, because you only have so much time during the day to try to resolve things like this. It’s disturbing to think that people can just get a loan without signing or anything.”
Hundreds of thousands of dollars in fraudulent loans
Starting in March 2020, the SBA made billions of dollars of pandemic relief available through COVID-19 Economic Injury Disaster Loans, or EIDL.
The loans were made available to small businesses, including agricultural operations, so that the owners could pay basic operating expenses, such as inventory or office supplies. It was such a loan for which the entity named Suzanne Sanders Farm had applied.
To speed up relief distribution, the SBA relaxed internal controls, according to the SBA’s own Office of Inspector General. The office reported in October that this resulted in “billions of dollars in potentially fraudulent loans and loans to potentially ineligible businesses.”
This fraud has impacted dozens of Johnson County residents.
A Shawnee Mission Post analysis revealed that the addresses, and in most cases the names, of at least 35 Johnson County residents have been used to apply for loans to apparently non-existent or fake farm businesses. All told, the fraud in these cases topped $940,000.
That’s only about 0.3% of the total $295 million in EIDL payments approved for Johnson County entities. But for individuals like Sanders, who worry about being held liable for a loan she never took out, it’s a big headache.
In December, the SBA was court-ordered to release the names, addresses and loan amounts of all loans made under EIDL as well as the larger and more well-known Paycheck Protection Program, or PPP, which went towards helping small businesses keep employees on payroll.
To find instances of fraud, the Shawnee Mission Post narrowed this database to EIDL loans applied for in Johnson County. Then, the Post narrowed that list to those with “farm” in the applicant name. If the business did not appear in a Google search or the Kansas Secretary of State’s Business Entity Database, the Post reached out to the owner of the property.
The loan amounts fraudulently taken out using these Johnson County residents’ addresses range from $3,600 to $123,500.
The addresses accompanying the entity’s application were, in most cases, typical residential homes like Suzanne Sanders’, but were listed as vegetable farms, tomato farms, poultry farms and potato farms.
“As much as I love potatoes, and would love to make vodka, that is not me,” said Paige Darby of Olathe.
The database lists a $9,800 loan to Paige Darby Potatoe Farms. (With ‘potato’ misspelled.)
Police investigating some cases — but finding fraudsters is difficult
Local law enforcement agencies say they have only heard of a few cases related to such alleged pandemic relief fraud.
The Shawnee Police Department was contacted by at least one resident who called after being notified by the Post that their address was in the federal database. The Olathe Police Department says it has received two reports in the past month, one for a loan of $68,600 and another for $75,600.
Police departments in Lenexa, Overland Park and Shawnee all told the Post they have received no reports or heard no complaints about this type of scam.
It’s not clear who used the personal information of Sanders, Darby and dozens of others to secure these federal loans, and getting answers may be difficult.
“These cases are hard to investigate and a lot of times the suspects in these cases are in different countries, and it’s all — now it’s electronic, so a big part is trying to make the victim whole, and trying to restore their identities,” said Joel Yeldell with the Olathe Police Department.
Individuals whose names and addresses appear in the federal EIDL database are likely victims of fraud and identity theft, said Michael Rapp, a consumer advocacy lawyer in Kansas City, Kan.
“Why would you be on that list if it’s not you?” Rapp said, adding “If they got a loan in (your) name, using (your) information to get this loan, then you should be real worried that eventually this is going to impact your credit, someway or the other.”
He added that “by implication, it is very possible that their social security number is going to be impacted — whether it was used or not.” Notably, the EIDL loan application asks for a social security number or employer identification number.
A representative from the SBA said that victims of identity theft will not be held liable for loans taken out in their name.
“But it’s a process, because it has to be investigated,” said June Teasley, Regional Communications Director for the SBA’s Region 7, which includes Kansas.
Residents struggle to get answers
Eight different Johnson County residents told the Post that, like Sanders, they had received mail from the SBA indicating that a loan had been taken out using their address, name or both.
With the exception of several who had noticed an inquiry from the SBA on their credit, the majority of those whom the Post spoke with were unaware that their addresses and names were listed in the SBA’s database.
“If $85,000 was released, I was never notified,” said Katie Stevens of Leawood
According to the database, a loan for $85,800 was approved for her address — to a business called Niemann Flavoured Agriculture Farming.
Multiple people the Post spoke with voiced frustration at what they perceived to be a lack of communication from the SBA.
After reporting the fraud, these people said they are still not sure if the loan debt in their names and linked to their addresses has, in fact, been released, nor do they know how much information of theirs was used to apply for the loan.
Many have continued receiving monthly mailers reminding them to pay back the loan. Under this program, payments are deferred for one year.
After she received her first piece of mail, Suzanne Sanders called the SBA and the SBA’s Office of Inspector General. She was told to fill out a report form at identitytheft.gov, which is run by the Federal Trade Commission, and freeze her credit.
“But I’ve never been able to contact anyone since,” said Sanders, who works in the mortgage industry. “When I call I sit on hold for minimum of an hour, and I have a job, so I can’t.”
James Kilian, of Olathe, received a bill for a loan made to an entity called Kilian Bury Farm about four months ago.
After he reached out to the SBA’s Office of Inspector General the first time, he was told his case was put down on a list. But Kilian still does not know to where or whom the funds were disbursed, or what bank it was done through — though he’s now called three times.
He said he has not received written confirmation that he will not be required to pay off the loan.
“They haven’t given us any information whatsoever,” Kilian said. “I’m considering seeing a lawyer just to get information.”
What to do if you suspect you’ve been the victim of fraud
People who suspect they have been the victim in a fraudulent EIDL loan are encouraged to report it to the SBA’s Office of Inspector General Hotline at 1-800-767-0385 or by email at OIGHotline@sba.gov.
You should also file a local police report and freeze your credit.
The Post confirmed that the SBA’s Office of Disaster Assistance should follow up with the individuals who report that their information has been used to obtain a pandemic relief loan through EIDL. In some cases, the SBA’s Office Inspector General may follow up and contact individuals who reported identity theft.
No Johnson County residents the Post spoke with said that they had been contacted by the SBA’s Office of Disaster Assistance or the OIG. The Post did confirm that the monthly mail statements are sent automatically by the SBA and do not reflect the SBA and OIG’s work to flag loans as identity thefts.
The SBA says it will share additional guidance in the coming weeks on how the agency plans to release the loan debt taken out fraudulently in individuals’ names.
If individuals do not receive a direct communication from the SBA in the next few weeks, they should email firstname.lastname@example.org to obtain instructions on how to release the loan debt due to identity theft.