U.S. Rep. Sharice Davids of Kansas is urging the federal Small Business Administration to investigate claims of fraudulent small business pandemic relief loans, which have impacted dozens of Johnson County homeowners.
Davids’ announcement comes after a Shawnee Mission Post investigation revealed nearly $1 million of pandemic relief loans, called Economic Injury Disaster Loans, or EIDL, were distributed to fraudulent businesses in Johnson County. The loans were obtained using the addresses, and in most cases names, of at least 35 Johnson County residents.
The EIDL program expanded in the past year to support small businesses throughout the COVID-19 pandemic.
In October, the SBA’s Office of Inspector General flagged the program as rife with fraud, estimating approximately $1.1 billion in loans were extended to potentially ineligible businesses.
“Every dollar wasted by fraud is a dollar that could have gone to a struggling business,” said Davids, who serves on the House Small Business Committee, as well as the Subcommittee on Investigations, Oversight and Regulations. “We must find the balance between rapid distribution of funds and preventing waste, fraud and abuse.”
Davids also called for the victims of identity theft in the EIDL program to be “held blameless.”
Impact on residents
Eight Johnson County residents told the Post that they received mail from the SBA indicating that loans they had not applied for had been taken out using their addresses, names or both, and that the loans needed to be paid back in the coming year.
An SBA spokesperson said that victims of identity theft would not be held liable for loans taken out in their name, but each case needed to be investigated. Still, several Johnson County residents the Post spoke with said that they had not received written confirmation from the SBA that they would not be held liable for the loan in question.
“Not only does this abuse undermine this vital program and the small businesses who do deserve and need those funds, but Kansans who are victims of identity theft are also left to prove their innocence before these fraudulent loans in their name come due,” Davids said. “This is the last thing they should have to worry about during what is already such a difficult time for our community.”
What victims can do next
In her letter to Tami Perriello, Acting Administrator of the Small Business Administration, Davids requested the agency provide insight into how they are investigating EIDL fraud and providing support to victims of identity theft in the loan program.
Davids also said she is making her office available to residents of Kansas’ Third Congressional District, which covers all of Johnson County, who have been impacted by potentially fraudulent claims.
Residents can call (913) 621-0832 to speak with a caseworker about the issue. Several constituents have contacted the hotline so far, according to Davids’ office.
Several victims the Post spoke with applauded Davids’ decision to press for an investigation and said they planned to contact her office as a next step.
“That’s a good idea,” said James Kilian of Olathe, whose address was used to take out a loan for which neither he nor his wife applied. “It seems like this is a really widespread problem.”
After spending months reporting the fraud to different federal agencies, Kilian said he has yet to receive written confirmation that the issue has been resolved.
Others the Post spoke to said they felt like they’d already done enough by reporting the problem to local police departments and to the SBA.
“I just reported it,” said Rodney Gochenour in Shawnee, whose name and address were fraudulently used to apply for a loan. “If they can’t stop from giving people money who aren’t supposed to get it, that’s their problem. I pointed it out to them.”
In response to Davids’ statement, an SBA spokesperson said suspected fraudulent EIDL loan activity should be reported to the Office of the Inspector General’s Hotline at 800-767-0385 or online.