Financial technology firms abdicated their responsibility to screen out fraud in applications for a federal program designed to help small businesses stay open and keep workers employed during the pandemic, a report by a House investigations panel said Thursday. The report also names a woman who worked as a news anchor in Phoenix as being the co-founder of one of the companies involved.
The former news anchor, who used to work at ABC affiliate KNXV-TV, is accused of enabling fraud and profiting off money meant to help small businesses during the pandemic. The former anchor's husband was also accused.
The report said two start-ups, Blueacorn PPP and Womply Inc. — which reviewed one in every three funded PPP loans in 2021 — were connected to significant percentages of PPP loan applications with indicators of fraud. Womply referred 128,813 PPP applicants to lenders in 2020, and 2,584,420 applicants to lenders in 2021.
Clyburn said the committee’s findings were sent to the Justice Department and the Small Business Administration.that while agencies were able to distribute COVID-19 relief funds quickly, "the tradeoff was that they did not have systems in place to prevent and identify payment errors and fraud" due in part to "financial management weaknesses."
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