ROCHESTER, N.Y. — More cases are emerging of the federal government sending fraudulent COVID-19 loans to collections and destroying people’s credit scores.
Every single COVID relief loan flagged in these cases is the exact same amount: $20,833.
Feds transfer fraudulent COVID loans to collection agencies
In June, the U.S. Small Business Administration transferred half a million “suspected fraudulent” COVID PPP loans to the federal Treasury Department. Treasury sent the unpaid loan to collection agencies. Now local victims who thought they resolved this identity theft years ago are being hit again, and they’re showing News10NBC Chief Investigative Reporter Berkeley Brean how their credit scores have taken a major hit.
Two years ago in Chili, Donna Zimmerman got a notice from the Small Business Administration that she owed $20,833 in a COVID loan. Then a second notice arrived.
“Same amount. Different loan number,” Zimmerman said.
She never owned a business and never applied for a COVID Payroll Protection loan. She disputed it and thought it was fixed. But last week she got a collection notice saying she owes both loans, plus late fees.
“I think it’s a joke,” Zimmerman said. “Because I don’t owe $50,000 and I’m not going to pay $50,000.”
“Same numbers, same everything”
Dr. Paul Carpenter in Rochester got the same notice from the SBA. Like Zimmerman, the fraudulent loan with his name on it got sent to collections. That move dropped his credit score last week from the 800s, considered “exceptional” to the 600s, considered “good.”
“Paul we’re talking about the federal government of the United States that processed a fraudulent loan, said you owed money, sent you to collections and now your credit score is down almost 200,” Brean said. “I want to know how you feel.”
“Angry. Upset. Frustrated,” Carpenter said.
In June, the SBA sent half a million delinquent, suspected fraudulent COVID loans to the U.S. Treasury, which passed them to collection agencies. That is what is hitting people now, including Tim Thompson in High Falls.
“Shocking that it could happen”
It’s it’s it’s frustrating. It’s terrifying. It’s it’s kind of shocking that it could even happen,” Thompson said in our first story Monday. “I’m starting over to defend myself for something I didn’t do.”
His credit score dropped 100 points last Friday. But less than 24 hours after Brean’s story with him Monday, he got a letter from the SBA. It “accepts” his ID was stolen and will “recall” the fraudulent loan from collections.
“Yeah, it feels great. I just hope anyone else, and I know there are others facing this situation and similar situations, that they’re able to get a resolution so swiftly,” Thompson said.
Why is it always $20,833?
The $20,833 amount was the maximum loan for a business with one employee — the owner. It required the least amount of documentation, so it was the biggest target for fraud. The government estimates there are hundreds of thousands of them.
News10NBC emailed the Small Business Administration multiple times asking how many fraudulent COVID loans are there, how many are from ID theft, and how long it will take to fix this problem. The SBA has never answered.
News10NBC Investigates: Fraudulent $20,833 COVID loans sent to collections are crushing credit scores of people who never applied WHEC.com.
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