COVID Feature: No Rest for the Fraudulent

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Young woman using a cash machine

The coronavirus pandemic has significantly impacted the country’s economy and left many unable to financially support themselves and their families. Fraudsters have made the circumstances worse by taking advantage of the vulnerable state of the nation and the programs Congress approved to help alleviate financial strain.

One San Diego woman recently pleaded guilty to charges related to fraudulently obtaining Paycheck Protection Program (PPP) loans. Nikole Edwards owned and operated Social Savvy Marketing (SSM) which specializes in social media management and development. (She wasn’t savvy enough to get away with submitting fake tax records and payroll information on her loan applications.)

Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March. The CARES act allocated billions of dollars in forgivable loans to be distributed through the Small Business Administration (SBA) to companies struggling financially.

Businesses must fill out an application noting its average monthly payroll expenses and number of employees along with supporting documentation. This allows the SBA to calculate the need of the company and the amount of funds they are eligible to receive. The conditions of receiving these loans are that the money goes towards payroll costs, interest on mortgages, rent and utilities. (Being selfish and manipulative definitely aren’t part of the criteria.)  

Edwards applied for tens of thousands of PPP loans in April and May. Edwards claimed on her applications that SSM needed the money to retain two employees who earned annual salaries of $75,000 and $50,000. She went as far as providing fake addresses, Social Security numbers, and fraudulent W-2 forms for the fictional employees. (Edwards’ vivid imagination and marketing mind were useful in conducting her scheme.)  

SSM was initially rejected for a PPP loan until Edwards allegedly begged and claimed that she would be unable to retain her employees or survive as a business without it. She was ultimately able to obtain a $19,583 loan. (I didn’t think the federal government was in the business of giving into tantrums.)

The loan was transferred to a secondary bank account controlled by Edwards and was not put towards business expenses or her non-existent employees. (Big surprise.) As part of a plea agreement, Edwards will be required to repay the sum total of her loan. She still faces up to two years in federal prison and a potential $5,000 fine. (Not to mention that her reputation and business are also collateral damage.)  

Report suspected COVID-19 fraud through the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or submit the NCDF Web Complaint Form.

Today’s Fraud of the Day comes from an article, “San Diego woman pleads guilty to CARES Act fraud charges,” published by Fox 5 on September 1, 2020.

SAN DIEGO – A woman has pleaded guilty to fraud charges after prosecutors say she created fake employees to swindle CARES Act funds.

The U.S. Attorney’s Office said Nikole L. Edwards, 40, is founder of Social Savvy Marketing. She reportedly admitted to submitting fake tax records and payroll information in order to secure a loan under the Paycheck Protection Program, known as PPP.

 

 

 

 

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.