January 25, 2022

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Woodlands pain doctor pays half million dollars for fraudulent PPP and billing allegations

12 min read
A 49-year-old local physician has agreed to pay $523,331 to settle allegations he submitted false claims for the placement of electro-acupuncture devices and for making false statements when applying for a loan from the Paycheck Protection Program (PPP)

Read full article at: https://www.justice.gov November 15, 2021
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    What GAO Found Economic Injury Disaster Loan (EIDL) applicants and recipients varied in terms of business size, years in operation, and industry, based on GAO's analysis of Small Business Administration (SBA) data from March 2020 through February 2021: Business size. A majority of EIDL applicants (about 81 percent) and EIDL recipients (about 86 percent) were smaller businesses (10 or fewer employees). Years in operation. A majority of EIDL applicants (about 63 percent) had been in operation for less than 5 years. However, businesses in operation for more than 5 years received the majority of total EIDL loan dollars and had higher approval rates compared to newer businesses. Industry. Businesses in the personal services and transportation industries made up the largest share of applicants, while those in the legal services and lodging industries were approved for loans at the highest rates (see figure). Top Loan Applicants and Approval Rates by Business Industry In addition, small businesses in counties with higher median household income, better internet access, and more diverse populations generally received more loans per 1,000 businesses and larger loans. EIDL applicants have faced a number of challenges, according to applicants and other business stakeholders GAO interviewed between August 2020 and February 2021. For example, applicants from five discussion groups and several stakeholders cited lack of information and uncertainty about application status as major concerns. In addition, until February 2021, SBA did not provide important information to potential applicants, such as limits on loan amounts and definitions of certain program terms. Lack of important program information and application status put pressure on SBA's resources and negatively affected applicants' experience. 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For example, as GAO reported in January 2021, SBA had approved at least 3,000 loans totaling about $156 million to businesses that SBA policies state were ineligible for the EIDL program, such as real estate developers and multilevel marketers, as of September 30, 2020. In addition, GAO found that between May and October 2020, over 900 U.S. financial institutions filed more than 20,000 suspicious activity reports related to the EIDL program with the Financial Crimes Enforcement Network. Further, GAO's analysis of 51 Department of Justice cases involving fraud charges for EIDL loans as of March 2021 found that these cases involved identity theft, false attestation, fictitious or inflated employee counts, and misuse of proceeds. Over the course of its COVID-19 response, SBA has made some changes to address these risks. For example, beginning in June 2020, SBA took actions to improve loan officers' ability to withhold funding for applicants suspected of fraud. However, SBA has not yet implemented recommendations GAO has previously made to address EIDL program risks. In January 2021, GAO recommended that SBA conduct data analytics across the EIDL portfolio to detect potentially ineligible and fraudulent applications (GAO-21-265). SBA did not agree or disagree with this recommendation. However, in May 2021, SBA officials stated the agency was in the process of developing analysis to apply certain fraud indicators to all application data.   In March 2021, GAO recommended that SBA (1) implement a comprehensive oversight plan to identify and respond to risks in the EIDL program, (2) conduct and document a fraud risk assessment, and (3)  develop a strategy to address the program’s assessed fraud risks on a continuous basis (GAO-21-387). SBA agreed with all three recommendations. In May 2021, SBA officials stated that the agency had started to assess fraud risk for the program. Fully implementing these recommendations would help SBA to safeguard billions of dollars of taxpayer funds and improve the operation of the EIDL program. Why GAO Did This Study Between March 2020 and February 2021, SBA provided about 3.8 million low-interest EIDL loans and 5.8 million grants (called advances) totaling $224 billion to help small businesses adversely affected by COVID-19. Borrowers can use these low-interest loans and advances to pay for operating and other expenses. The CARES Act includes a provision for GAO to monitor funds provided for the COVID-19 pandemic. This report examines, among other objectives, the characteristics of program applicants and recipients; the challenges EIDL applicants experienced and the extent to which SBA has addressed them; and the steps SBA has taken to address risks of fraud and provision of funds to ineligible applicants. GAO reviewed documents from SBA, an EIDL contractor, and two of its subcontractors. In addition, GAO analyzed loan application data, conducted five discussion groups with applicants, and interviewed staff from SBA, six Small Business Development Centers, and six business associations. GAO also analyzed socioeconomic, demographic, and geographic data on EIDL program participants.
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    What GAO Found The Navy has a process for proposing and implementing homeport changes that considers a range of factors. The first key step in this process involves the Navy developing and updating an annual plan, known as the Strategic Laydown and Dispersal Plan, that guides the Navy's positioning of operating forces worldwide. Based on the plan, fleet commanders then identify requirements for any changes to homeports and submit requests to schedule a homeport change. Throughout the process, Navy leadership and a working group of stakeholders from across the Navy provide input and analysis. Among other things , the working group develops and assesses proposed changes among the possible aircraft carrier homeports based on their expertise and evaluates various homeport installation factors, such as maintenance dry docks (see figure) or ship power and maintenance facilities. The Navy also considers local factors including crew support and quality of life, such as schools and morale, and possible impacts to the natural and physical environment. The Navy has strengthened its process by implementing prior GAO recommendations, and has other planned actions underway to further improve and update its guidance. Recent Navy Aircraft Carrier Homeport Locations and Dry Dock at Puget Sound Naval Shipyard The Navy made 15 aircraft carrier homeport changes in fiscal years 2011 through 2020 among the five available homeports. The driving factor for all 15 changes was maintenance. For example, 10 of the 15 changes involved ships moving to or returning from shipyards in Bremerton or Norfolk for planned dry-dock maintenance or midlife refueling. In 2015 and 2019, the Navy decided to homeport aircraft carriers in Bremerton and San Diego because Everett lacked nuclear maintenance facilities, which were available at the Navy's other aircraft carrier homeport locations. Previously, carriers homeported in Everett received regularly scheduled maintenance at the shipyard in Bremerton but did not conduct an official homeport change. The Navy reported that during these maintenance periods that lasted 6 months or more, the crew commuted 3 to 4 hours daily, which negatively affected maintenance and crew morale. As a result, the Navy decided not to return an aircraft carrier to Everett. According to Navy officials, factors in addition to maintenance needs also informed the changes, including a long-held plan to homeport three aircraft carriers in San Diego. Why GAO Did This Study The Navy relies on 11 aircraft carriers homeported on the East and West Coasts and in Japan to support U.S. defense strategic objectives and operations. These nuclear-powered ships require complex infrastructure, technology, and maintenance, some of which may not be available near their homeport. Changing an aircraft carrier's homeport means moving the ship's approximately 3,200 sailors, a fluctuation of 5,000 or more people depending on the number of family members involved. In House Report 116-120, accompanying a bill for the National Defense Authorization Act for Fiscal Year 2020, the House Armed Services Committee noted that the Navy reversed previous plans to homeport an aircraft carrier at Naval Station Everett, Washington. The House Report also included a provision for GAO to review the Navy's process to assign aircraft carriers' homeports. This report examines, for Navy aircraft carriers, (1) the extent to which the Navy has a process for making homeport changes, and considers local installation and other factors in the homeporting process, and (2) homeport changes from fiscal years 2011 through 2020 and the reasons for them. GAO analyzed Navy instructions and related policies, laws, and regulations; homeport plans and maintenance schedules; and fiscal years 2011–2020 documentation of homeport changes. GAO also interviewed Navy officials, including from relevant commands and homeports. For more information, contact Diana Maurer at (202) 512-9627 or MaurerD@gao.gov.
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