Billions in low-dollar stimulus loans may never be scrutinized

Alison Greene said she created this website for Olivia Ware's 2021 mayoral campaign. When the pandemic hit, she said, Ware asked her to collaborate on social programs, but Greene said she eventually became wary about Ware's operation. (Alyssa Pointer / Alyssa.Pointer@ajc.com)

Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com

Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com

Only PPP loans above $2 million face automatic audits, while Congress mulls forgiving loans of $150K or less

Olivia Ware touts her nonprofit as a major homeless outreach in the suburbs east of Atlanta that she had operated quietly for years. Now, she says, “Praise God, I’m glad that I’m talking."

She and her dozens of employees also work on the front lines in the battle against COVID-19, she says, operating a shelter for domestic violence victims, negotiating with landlords to stop evictions and training unemployed moms to work as contact tracers.

So when the federal government offered low-interest forgivable loans to help small businesses and nonprofits survive the pandemic, Ware went to Bank OZK and obtained CARES Act funds to save 54 jobs, according to a federal loan database.

Trouble is, there’s little evidence that Let’s Talk About the Family, based in her Newton County home, runs such programs of the scale Ware describes, and it’s unclear how many people she employs. Shelter directors and area law enforcement officials said they’ve never heard of her operation. Her nonprofit isn’t registered as tax-exempt with the IRS. Ware, a candidate for mayor of Conyers, didn’t explain her company’s sources of revenue, other than what she said was a $100,000 stimulus loan in May.

Olivia Ware, a candidate for mayor of Conyers, says she obtained $100,000 from the federal Paycheck Protection Program for her nonprofit that employs about two dozen people. (Special)

Two people who worked for her earlier this year say Let’s Talk About the Family is just that — talk.

“It didn’t exist,” said Alison Greene, who until early this month was listed on the organization’s website as its medical director.

The way the $659 billion Paycheck Protection Program is going, it may not matter.

Ware’s nonprofit is among millions of loan recipients that may never have to answer questions from regulators about how they spent their PPP money and could even see their loans summarily forgiven under a bipartisan bill gaining traction in Congress. And Bank OZK may be among thousands of lenders that will never have to explain why they handed large sums of cash to some applicants with few questions asked — in this case, a woman whose filing for bankruptcy protection was repeatedly dismissed because she failed to make required plan payments.

ExploreComplete coverage of COVID-19 in Georgia

That’s because Congress and the Trump Administration, trying to quickly infuse capital into a sinking economy, set up PPP as a pay-and-chase model, allowing tens of billions of dollars to go flying out the door, then tracking down bad actors after the fact. Now that the chase phase has begun, experts say enforcement could end up focusing on borrowers who walked off with millions of dollars, with investigators lacking the resources to chase the typical recipients who got far less.

Banks meanwhile are pushing for legislation that would clear them of having to re-examine the Paycheck Protection Program’s smaller loans, arguing that the government should spare those businesses the time and expense of assembling paperwork showing how they spent the money.

The lending industry and other business interests have lined up behind the proposed Paycheck Protection Small Business Forgiveness Act, which would allow companies that received $150,000 or less to have the loans forgiven by submitting one-page forms swearing they kept their workers on the payroll or used the money for wages, rent, mortgage interest or utilities.

More than 85% of all PPP loans were for $150,000 or less.

ExploreCOVID-19 relief program exposed billions of taxpayer dollars to fraud

“This bipartisan legislation would ensure our nation’s small business owners can focus their time, energy, and resources back into their business and communities instead of allocating significant time and resources into completing complex forgiveness forms,” said a July 9 letter to the House and Senate Small Business committees, signed by 141 business groups and lending associations including the American Bankers Association, the National Bankers Association and the U.S. Chamber of Commerce.

Georgia senators David Perdue and Kelly Loeffler are among the bill’s co-sponsors, and U.S. Reps. Rick Allen, Drew Ferguson, Barry Loudermilk and Austin Scott are co-sponsors of the House version.

Nick Simpson, spokesman for the Consumer Bankers Association, which also signed the letter, said fraud in the program is believed to be relatively small, so it makes more sense to spare the smallest businesses billions of dollars in collective resources when they’re still struggling to survive. “Nothing in the bill prevents (the U.S. Small Business Administration) from going back and auditing any of these loans," he said.

ExploreGeorgia businesses from every corner of economy get relief loans

Having a loan erased would be as easy as obtaining the money in the first place, when Congress set up the program without key safeguards, and the government encouraged banks to approve many of the loans within a two-week period, trusting applicants' word that they qualified.

If any loan recipients lied on their forgiveness forms, lenders would be held harmless.

Banks received up to 5% of the loan amount for processing applications for less than $350,000, with smaller percentages for larger loans.

Scott Cammarn is a partner at Cadwalader, Wickersham & Taft and co-chairs Cadwalader’s financial services group. (Special)

Credit: Special

Credit: Special

Tim Stretton, a policy analyst for the Project on Government Oversight, pointed out that organizations receiving $150,000 or less have yet to be publicly identified, with their names withheld in the database released by SBA and the U.S. Treasury.

“It reduces the burden on the banks, at the expense of the taxpayer,” Stretton said. “It’s going to make the work of investigators and auditors much more difficult to verify where the money went to, and if it went to the purposes it was intended.”

Advantages for small fish

Bad actors who didn’t take a whole lot may have another reason to breathe easy. Under Treasury Secretary Steven Mnuchin’s plan to hunt down fraud, any loan can be audited, but only entities that received more than $2 million will be audited automatically. That saddles SBA with poring over nearly 30,000 loans.

“It seems unlikely that the SBA would have the manpower to review loans of less than $150,000,” said attorney Scott Cammarn, who is co-chair of the financial services group for the law firm Cadwalader and advises banks on regulatory compliance. “But if the (loan forgiveness) bill is adopted, then lenders wouldn’t even need to request supporting documentation. They wouldn’t even have to show that they used it for payroll purposes.”

So far, the Department of Justice has accused at least 57 people across the country of PPP fraud, most of the cases involving sums of $500,000 or more.

One case pending out of the Northern District of Georgia involves loans totaling $4.1 million. Two cases involve loans of $300,000 each.

Court documents speak to the relative ease of walking away with money by falsifying payroll numbers in SBA application forms and handing over false bank records. But the charges also show the feds pinpointing irregularities when answers on IRS forms submitted with applications didn’t match actual tax records.

In one case, Stanley Dorceus has pleaded guilty to illegally taking a $300,000 loan through Celtic Bank Corporation. According to the charges, he stated on the IRS form that his company, based at a Marietta residential address, had 16 employees and paid $358,819 in wages, tips and compensation during the first quarter of 2019. In reality, the government says, the company didn’t make any quarterly tax filings in 2019.

Atlanta attorney Vic Hartman, author of "The Honest Truth About Fraud - A Former FBI Agent Tells All,” said most of the fraud in the Paycheck Protection Program may never be detected, since investigators have limited resources and big-city prosecutors tend to go after the high-dollar schemes. (Special)

Credit: Special

Credit: Special

Vic Hartman, an Atlanta attorney and former FBI agent specializing in white collar crime, said that in some jurisdictions U.S. Attorney’s offices have dollar amount thresholds for what they’ll dedicate resources to prosecuting. Typically, the bigger the city, the higher the threshold, he said.

“I would say that the lion’s share of the fraud will never be detected or prosecuted," Hartman said. "I think it’s so rampant that the federal government’s just going to have limited resources of what to go after.”

Evolving explanations

Let’s Talk About the Family appears in the SBA database as receiving an amount in the range of $150,000 to $350,000, rather than the $100,000 Ware described. The database has been known to contain errors, but Bank OZK declined to provide the correct amount or answer questions about the loan, saying information about specific transactions is confidential.

The loan database also shows the organization has 54 employees, though Ware told the AJC it has around two dozen. At one point , she told the AJC she had a monthly payroll of $35,000, though at another point she portrayed the workers as unpaid volunteers.

“We have always run this program from mother to mother, from child to child,” Ware said. “And what I mean by mother to mother, when you get healthy, when you go get your job, you come back and volunteer. We call it recycling money.”

Ware declined to provide payroll records, but she later gave the AJC a list of people who altogether were shown as being paid just over $100,000. The list had the first names and last name initials of 40 people, with phone numbers for 24. Public records indicated about half of the phone numbers are connected to Ware family members.

The AJC was able to reach eight people on the list. Four confirmed they are paid employees, while two said they have never been Let’s Talk About the Family employees.

An Alison G. and a Vanessa A. listed without phone numbers apparently are two women who said they worked for Ware early this year and she failed to pay them what she promised.

Alison Greene and her husband, Christopher, said they initially agreed to partner with Olivia Ware's Let's Talk About the Family Inc., to train contact tracers and health care workers amid the pandemic. The Greenes have since severed ties with Ware. (Alyssa Pointer / Alyssa.Pointer@ajc.com)

Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com

Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com

Alison Greene, the former medical director, said she started out working for Ware’s mayoral campaign, then when the pandemic hit, Ware asked her to collaborate on social programs. She said she spent more than four months drawing up a curriculum to train contact tracers and health care workers.

Greene said Ware paid her only about $800 for her months of work, even though they had agreed to a pay rate of $30 per hour. Ware said she paid Greene about $3,000, but declined to provide proof.

Vanessa Adams, who is listed on the nonprofit’s website as its production coordinator, said she spent two weeks in June trying to help Ware film a TV show, using Ware’s home as a studio. She said she walked away when Ware failed to pay her.

”None of it was adding up," Adams said.

The two former workers said there was never a mention of the organization running a domestic violence shelter.

Ware initially said the shelter housed 12 families. When a reporter asked to tour it, it turned out to be her home, with two women and four children staying in two spare bedrooms.

Elizabeth Perez, listed as Let’s Talk About the Family’s program director, gave the tour and said she’s been working for Ware for two years and that Ware helped her and her children through hard times when she moved to Georgia from New Jersey. Perez said she’s a paid employee, currently working with more than 140 families facing eviction.

The website for Let's Talk About the Family Inc. says the nonprofit offers a wide array of services, including fatherhood programs, a GED/literacy program, therapeutic counseling and after-school programs. (Special)

Credit: Special

Credit: Special

“What I just know is that Let’s Talk About the Family does get a funding, and they do help out the families," Perez said.

But Vickie Stevenson, who retired in February after 18 years as director of the Project ReNeWal domestic violence shelter in Conyers, said the operation Ware describes would likely involve a budget of hundreds of thousands of dollars per year.

“How could she be running a domestic violence shelter with 12 families," Stevenson said, “and the domestic violence shelter for Rockdale, Newton and Walton have never heard of it?”

PPP by the numbers

The true scope of fraud within the federal Paycheck Protection Program remains unknown. But those advocating blanket forgiveness for smaller loans point to early indicators that the proportion of fraud is small. Here are the statistics so far:

5.2 million — Total loans approved

$525 billion — Total amount in loans approved

$134 billion — PPP funds unspent

Over $1 billion — Loans to companies that received more than one loan, in violation of program rules, according to an analysis by the House Select Subcommittee on the Coronavirus Crisis

Over $96 million — Loans to companies that were ineligible to receive PPP funds because they had been barred from doing business with the government, according to the subcommittee report

$195 million — Loans to government contractors that had been flagged for performance or integrity issues, according to the subcommittee report

57 — Persons charged with PPP fraud in cases pursued by federal prosecutors

$175 million — Total amount those 57 people allegedly tried to steal

Source: U.S. Department of Justice, House Select Subcommittee on the Coronavirus Crisis

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