Top executives from two small start-ups that reaped billions of dollars in fees for facilitating Paycheck Protection Program loans turned a blind eye to extensive fraud among their applicants and appear to have themselves collected large relief loans for which they were ineligible, according to a report released by Democratic lawmakers on December 1.
The 130-page report, the product of an 18-month investigation by the House Select Subcommittee on the Coronavirus Crisis, is packed with startling details about how negligible government oversight and a rush to get cash out the door to help devastated businesses created conditions ripe for fraud. Some non-bank financial technology companies, known as fintechs, exploited those gaps to collect outsize profits — which they maximized by ignoring typical lending safeguards and, at times, by outright flouting the government aid program’s rules, the report said.
The report is particularly critical of two companies: Womply, a San Francisco marketing software maker, and Blueacorn, a Scottsdale, Arizona, venture created in a hurry specifically to help companies obtain PPP loans. Both set up systems to help lenders process applications from tiny companies at a huge scale, and spent lavishly on marketing. For their work, Womply collected fees exceeding $2 billion and Blueacorn took in $1 billion.