SAN JOSE, Calif. (KGO) -- The coronavirus pandemic has had a terrible impact on small businesses. 110,000 have already closed across the country, and 7 million more are at risk for the same fate.
To address that, the Small Business Administration is handing out billions of dollars in loans to help companies pay their employees, but the SBA tells the ABC7 I-Team they are investigating many reports of possible fraud.
The SBA needed to get this money out fast to help companies stay afloat, and they admit their oversight could have been more stringent. Tonight, we ask -- did one South Bay man get millions of dollars he did not deserve?
It's been only four months since President Trump signed the CARES Act.
"I wanted it to be a nice signature," Trump said.
That set up the Paycheck Protection Program, and 5 million small businesses have already received more than half-a-trillion-dollars ($518 billion) in low-interest loans that may be forgiven.
Miryam Barajas from the SBS's Region 9 tells the I-Team, "The PPP program is meant to be able to keep employees on payroll, while the businesses are impacted by COVID-19."
Dan Noyes: "So, it's our tax dollars."
Miryam Barajas: "This is our tax dollars. PPP is our tax dollars."
The Small Business Administration tells us, so much money went out the door so quickly, that provided an opportunity for possible fraud.
Some ABC7 viewers checked the list of businesses who received PPP loans, and contacted I-Team reporter Dan Noyes with questions about an applicant from the South Bay who used "88" in his company names:
- 88 Cloud Computing
- 88 Enterprise Services
- 88 Investment Empire
- 88 Venture Capital
The owner claimed to have 48 employees, and he received between $350,000 and a million dollars for each of those businesses.
We ran the company names through the Secretary of State's Office and they all come back to 39-year-old Lebnitz Tran; we found his picture on Linkedin.
The I-Team's Dan Noyes reached him by telephone, and Tran told us his businesses are real. When asked for an on-camera interview, he said he'd have to check with his secretary.
He insisted he has 48 employees, but when we asked to see his operation, he hung up.
The I-Team ran the address Tran listed as the headquarters for those businesses, and turns out it's his mother's house in Campbell.
Dan Noyes stopped by there several times and never found anyone home, and repeatedly texted and called Tran.
The I-Team also went to the home he owns in San Jose and found people lounging on a couch in his open garage.
Dan Noyes: "Does he own this house?"
Person in garage: "Yes."
Dan Noyes: "Is he here?"
Person in garage: "No."
And we walked up the driveway at Tran's Saratoga home, and spoke with a man there, but did not find Tran.
Man: "Who are you?"
Dan Noyes: "I work at Channel 7. I'm Dan Noyes."
Man: "And why you need him?"
Dan Noyes: "I'm doing a story on him."
We never heard back from Lebnitz Tran.
The Small Business Administration also has questions for him. Records showed he formed those four companies in the last couple of months, well after the pandemic started, and that would violate the PPP guidelines.
Miryam Barajas said, "The PPP program was for businesses that were already in business before COVID-19."
Barajas explains the SBA guarantees the loans, but it's up to banks and lending institutions to process the applications and review a business' financials. Three of the online lenders Lebnitz Tran used - Fundbox, Harvest and Lendistry - did not return our phone calls and emails for comment.
"Obviously SBA takes this very seriously," Miryam Barajas said. "And any type of report about fraud or abuse will be investigated and will not be tolerated."
The FBI has formed a PPP Fraud Working Group with the Small Business Administration; they've opened nearly 100 investigations with more than $42 million in potential fraud identified, so far.
The SBA tells us Lebnitz Tran was already on their radar before we called. We'll keep track of how this turns out.
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