Vietnam Veteran With Purple Heart Hit by Heartless Fraudsters

'Tempted by greed'

"I said, ‘Sure. Why not? What do I have to lose?'” he recalls. “Ten thousand dollars sounded like free money, so I guess I was tempted by greed."

The three met in his friend's apartment on July 11, when he says he gave them $600 for a “processing fee.” Kenneth says they took down his Social Security number and checking account and bank-routing numbers. He also let them take a photo of his Illinois driver's license, which lists his address and date of birth.

For identity thieves, that is like striking gold.

Grant goes awry

As the younger woman typed at the older woman's laptop, she talked about trouble with a website, says Kenneth, who does not use a computer.

"I really didn't know what they were talking about,” he says. “They seemed to be in tune, and I seemed to be out of sync with whatever it was."

The women did not respond to AARP's requests for comment.

'Pervasive’ fraud in SBA loan program

Across the U.S., officials have warned about fraudsters peddling phony relief benefits that purportedly have arisen due to COVID-19. The pandemic and economic fallout have unleashed nearly $3 trillion in U.S. aid.

Yet in Kenneth's case, signs point to a real program: a Small Business Administration (SBA) loan program that a government watchdog in a July 28 report singled out for “pervasive fraudulent activity.” Potential fraud losses are nearly $300 million, the report said. Some money went to ineligible recipients; other dollars to bankroll potentially duplicate loans.

At issue is the SBA's Economic Injury Disaster Loan (EIDL) program, which loans tax dollars to small businesses to cover fixed debts, payroll, accounts payable and other specified bills.

Notably, applicants could get a $10,000 advance even if their loan ultimately was not approved. Assuming there was no fraud, there was no requirement to repay the $10,000.

'It's a feeding frenzy'

In a story on July 15, the Washington Post reported numerous suspicious SBA loan requests in Chicago from apartment dwellers claiming to be growing crops, repairing autos or operating a 10-seat barbershop; some applicants gave their residence as their place of business.

"It's a feeding frenzy,” an official told the Post. “A lot of these are going through with little or no due diligence."

The SBA watchdog, formally, is its Office of Inspector General (OIG), whose report said investigators have “identified several organized fraud rings that use social media to recruit applicants who split advance money with ringleaders."

Ongoing probes

Some loan accounts were set up with stolen identities, the report said, and “numerous” investigations are underway.

Kenneth says he knew nothing about where the promised grant would actually come from. Coincidentally, July 11 — the day he met with the women — is the day the SBA stopped giving $10,000 advances on EIDL loans.

In announcing the cut-off date, the SBA said the warning signs of fraud included:

• Use of stolen identities
• Applications from ineligible people, such as those who have no business
• Fake businesses, or real entities that inflated business or financial information
• Applications for EIDL funds to launch a new business, which the program does not allow

Identity at risk

Kenneth never saw the $10,000. He says the older woman finally told him the grant window had closed. She returned $400 of his $600 and kept the rest. But the partial repayment didn't soothe a headache: His personally identifiable information had been hijacked. “I just want this nightmare to go away,” he says.

He's since ended the friendship — “She's a scam artist,” he says — and urges people to avoid such hijinks. “If someone comes to you with something that sounds too good to be true, it's not true.”