Local seniors report Social Security payments garnished for alleged fraudulent loans

(WKBN) – Some Ohio seniors say they are getting their Social Security payments garnished for COVID-19 Small Business Administration (SBA) loans they say they did not take out.

Congressman Michael Rulli, R-6th District, is looking into the problem since he has learned of at least four cases of this happening to seniors in his district. His team said they are looking into these individual cases and have an issue with the SBA putting the burden of proof on seniors instead of the SBA, who Rulli accuses of having a “lackluster handling” of identity theft with the program.

Rulli said one message to his office involved a constituent who said that two SBA loans were fraudulently taken out in their name in 2021. That person said they provided SBA with the documents they requested, such as a police report and identification, in August 2024 and has yet to receive a response.

In the meantime, the constituent says their Social Security is being garnished for the loans totaling $41,666.

“Please help me. I am a retired Veteran on a fixed income, and these garnishments are causing a financial hardship to me,” the constituent wrote.

A representative from Rulli’s office said the review process could take up to four weeks and that SBA could require more information which could drag that timeline out more.

Rulli wrote a letter to the SBA Administrator Casillas Guzman about the complaints in his district and called on Guzman to take action.

Rulli references a 2023 report by the Office of the Inspector General (OIG) about SBA’s identity theft problem with the COVID-19 Economic Injury Disaster Loan Program (EIDL).

The report said that OIG received over 250,000 hotline complaints, which included allegations of COVID-19 EIDL identity theft, and over 3,000 requests for investigative support from other law enforcement agencies investigating fraud, including requests related to alleged identity theft.

The OIG investigation found SBA had insufficient processes in place to:

• Maintain and track identity theft complaints
• Provide status updates to each complainant alleging identity theft
• Restore identity theft victims to their condition prior to the fraud
• Charge off fraudulent loans and remove the Uniform Commercial Code (UCC) filing fees for loans associated with identity theft without affecting the victim’s credit standing.

Rulli said that while corrective action was taken by SBA in response to the above allegations, he is not confident the agency is following through. His office is requesting SBA provide answers to the following by Nov. 11, 2024:

1. Does the SBA know the total number of individuals who have filed an identity theft complaint? If so, how many identity theft complaints exist? How many complaints of identity theft are still outstanding?
2. What is the overall rate of identity theft and fraud among pandemic-era EIDL programs?
3. What is the average amount of time the SBA’s “effective process” takes to review identity theft complaints and send complainants letters notifying them of an outcome? Please provide an example resolution letter.
4. When the SBA resolves a complaint of identity theft, what is the average amount of time it takes to restore the victims to the financial condition they were in prior to the fraud?
5. How long until garnishments are stopped or recalled once an identity theft complaint is resolved?
6. After the SBA’s campaign to obtain updated mailing addresses for returned loan statements, how many of the 150,000 returned statements are still outstanding?
7. One finding stated “Additional potential identity theft victims could be unaware of fraudulent loans in their names.” How many individuals were made aware their identity was stolen only when their Social Security benefits were garnished?
8. Are garnishments paused once a complaint of identity theft is received and while it is being processed? If not, has this been considered? If not, why not? Page 2Page 3
9. We are a nation where you are innocent until proven guilty. Why does the SBA assume senior citizens’ guilt and penalize them by garnishing their benefits until they prove their innocence?

Rulli’s team said anyone who believes they are a victim of identity and are fraudulently tied to a COVID-19 SBA loan to call his office: Washington, D.C. 202-225-5705; Canfield Office 330-967-7312; Marietta Office 740-885-4860.

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