We conduct in-depth data analysis across federal programs to flag potential fraud. In this fraud prevention alert, we highlight a fraud scheme in which recipients may have misrepresented their incomes when they applied for benefits from multiple federal assistance programs.
What We Found
In our review of the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), our analysts found evidence of substantial disparities between the derived income for sole proprietor applicants seeking PPP loans as compared to the income reported to the Department of Housing and Urban Development (HUD) by the same individuals applying for housing assistance. These discrepancies were related to $860 million in PPP loans.
For example:
A sole proprietor applicant received two PPP loans totaling roughly $40,000. As defined by SBA’s loan calculation, that amount equated to an annual income of $190,000. An applicant with the same personally identifiable information (PII) reported an annual income of $15,000 to HUD.
A sole proprietor applicant received a PPP loan for $20,833, which equated to an annual income of $100,000. An applicant with the same PII reported an annual income of $600 to HUD.
Why it Matters
While there could be justified reasons for the potential discrepancies in some applicants’ income across programs, our analysis suggests that some individuals may have knowingly committed fraud. If applicants misrepresented their incomes to qualify for the HUD programs or SBA loans, they unfairly prevented access to those who needed the benefits the most.
Key Takeaway:
We found discrepancies between the derived income of sole proprietors applying for PPP loans and the income they reported when applying for housing assistance.