COVID stimulus bill OK'd 378 loans totaling $7 million ... mostly to fake farms
Brad Polumbo 7:30 a.m.
We accrued roughly $42,000 in new debt per federal taxpayer thanks to Congress's multi-trillion-dollar COVID "stimulus" efforts. The least one could hope for is that the money was well spent. But a new ProPublica exposé reveals that one of the biggest stimulus programs sent taxpayer dollars to hundreds of fake farms.
In Ocean County, New Jersey, the landscape is dominated by vacation homes, beaches, and ice cream shops--not farming. But ProPublica investigators found that large stimulus loans went to multiple "farms" in the area, such as "Ritter Wheat Club," "Deely Nuts," "Tomato Cramber," and "Seaweed Bleiman."
The problem? None of them actually exist.
"There's no farming here: We're a sandbar, for Christ's sake," said the Mayor of Long Beach Township, whose address was fraudulently used as the supposed location of a "farm" that received a stimulus loan.
In all, ProPublica "found 378 small loans totaling $7 million to fake business entities, all of which were structured as single-person operations and received close to the largest loan for which such micro-businesses were eligible. The overwhelming majority of them are categorized as farms, even in the unlikeliest of locales, from potato fields in Palm Beach to orange groves in Minnesota."
The report just scrutinized one online lending platform, but its findings of runaway fraud are just one piece of a much broader trend. The federal loan program for struggling small businesses is the most expensive part of the entire stimulus effort, yet scammers and fraudsters have had a field day with it.
"The... pattern is only one slice of a sprawling fraud problem that has suffused the Paycheck Protection Program from its creation in March 2020 as an attempt to keep small businesses on life support while they were forced to shut down," ProPublica's report continues. "With speed as its strongest imperative, the effort run by the federal Small Business Administration initially lacked even the most basic safeguards to prevent opportunists from submitting fabricated documentation."
This exposé only adds to previous investigative reports that similarly deemed the $828 billion+ stimulus loan program rife with fraud.
"The federal government is swamped with reports of potential fraud in the Paycheck Protection Program," the Wall Street Journal reported. "Evidence is growing that many others took advantage of the program's open-door design. Banks and the government allowed companies to self-certify that they needed the funds, with little vetting."
A federal watchdog within the Small Business Administration said there were "strong indicators of widespread potential abuse and fraud in the [loan program]."
"The watchdog counted tens of thousands of companies that received [stimulus] loans for which they appear to have been ineligible," the Journal continued. "[And] tens of thousands of organizations also appear to have received more money than they should have based on their headcounts and compensation rates."
The fact that the federal government sent millions of dollars to fake farms with silly names in absurdly unrealistic locations is almost funny. But when one remembers that federal taxpayers are all on the hook for $42,000 in new debt each, there's nothing humorous about it all.
Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Policy Correspondent at the Foundation for Economic Education.
This article first appeared in the Foundation for Economic Education website at fee.org