Finance
Feds Net Another Guilty Plea Related To Covid-Related Financial Fraud
In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide emergency financial assistance during the pandemic. The CARES Act included funding in the form of loans to eligible businesses—intended to be used to help keep the lights on. Unfortunately, these loans also proved to be magnets for fraud. Since then, officials have been working to identify and prosecute those who took advantage of the program.
Guilty Plea
Last week, Arashio Harris, a Corrections Sergeant with the Miami-Dade Corrections and Rehabilitation Department, pleaded guilty to wire fraud in connection with his fraudulent applications for two Paycheck Protection Program (PPP) loans, two Economic Injury Disaster Loans (EIDL), and an EIDL advance. Harris entered his guilty plea in Miami, Florida, before Chief U.S. District Judge Cecilia M. Altonaga.
EIDL
The EIDL program was created to support small businesses as they recovered from the pandemic.
- EIDL loan funds were intended to be used for working capital and other standard operating expenses. The loans were not forgivable and were required to be repaid.
- EIDL Advance funds were awarded to existing COVID-19 EIDL applicants who meet certain criteria. The advances were like grants, but without the typical U.S. government grant requirements. Most importantly, EIDL Advances did not need to be repaid.
PPP
The PPP was an SBA-backed loan that helped businesses keep employees working during the pandemic.
There were two draws available, depending on timing and the criteria. The loans qualified for full loan forgiveness if, during the covered period following the loan disbursement, the business maintained employee and compensation levels, and the loan proceeds were spent on payroll costs and other eligible expenses. At least 60% of the proceeds must have been spent on payroll costs.
Facts
According to the facts admitted at the change of plea, Harris was the owner and president of two companies, The Good Family Property Solutions Inc. and Flying Lions LLC. On April 3, 2020, working with an associate, Harris submitted a fraudulent application in the name of Good Family, seeking an EIDL and an EIDL advance. Harris falsely claimed that for the 12-months before Jan. 31, 2020, Good Family had gross revenues of approximately $130,000 and nine employees. As a result, Good Family obtained a $9,000 EIDL advance that did not need to be repaid and $14,500 in EIDL loan proceeds.
On June 30, 2020, Harris submitted a fraudulent EIDL application to the SBA for Flying Lions, claiming that Flying Lions had gross revenues of over $480,000 and 10 employees during that same period. As a result, Flying Lions obtained approximately $150,000 in EIDL proceeds.
Harris also admitted that (again, with assistance), he fraudulently obtained two PPP loans in the name of Good Family.
On July 9, 2020, Harris submitted a PPP loan application falsely claiming that Good Family had ten employees and a monthly payroll of approximately $51,710. To support his application, Harris submitted a 2019 Form 1120—corporate return—falsely claiming that Good Family had over $1,050,000 in income and had paid wages and salaries that year of over $768,000, as well as a 2019 Form 944—payroll tax return—showing over $620,500 in wage and salary payments. The application also included false IRS Forms W-2 and payroll records. As a result of this false and fraudulent application, Harris was given a $129,275 PPP loan.
On Feb. 26, 2021, Harris applied for a second-draw PPP loan for Good Family. The second-draw application again relied on false income and payroll numbers. As a result, Good Family was granted a second-draw PPP loan of $129,276.
Sentencing
Harris is scheduled for sentencing on October 27 before Chief U.S. District Judge Altonaga in Miami, Fla. He faces a sentence of up to 20 years in prison.
Focus On Fraud
The FBI’s Miami Area Corruption Task Force, which includes task force officers from the MDC-OIG, working in conjunction with IRS-CI Miami and SBA-OIG Investigations Division’s Eastern Region, investigated the case. It’s part of the COVID-19 Fraud Enforcement Task Force, intended to enhance efforts to combat and prevent pandemic-related fraud.
If you have information about attempted pandemic-related fraud, you can call the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or make a complaint online using the NCDF Web Complaint Form.
Expect to read about more investigations and arrests. According to its website, “The Department of Justice remains vigilant in detecting, investigating, and prosecuting wrongdoing related to the crisis.”
Finance
Investors eye PCE, Costco shares under pressure: Yahoo Finance
Wall Street is digesting this morning’s release of the latest Personal Consumption Expenditures (PCE) data, the Federal Reserve’s preferred measure of inflation. Meanwhile, Costco (COST) shares are under pressure following the wholesale retail giant’s latest quarterly results. Despite recent increases in membership fees, the company fell short of sales expectations. Yahoo Finance’s trending tickers include BlackBerry Limited (BB), SuperMicro Computer (SMCI), and Coinbase (COIN).
Key guests include:
9:05 a.m. ET : Tiffany Wilding, PIMCO Managing Director and Economist
9:30 a.m. ET Angelo Kourkafas, Edward Jones Senior Investment Strategist
10:15 a.m. ET Rich Lesser, BCG Global Chair
10:45 a.m. ET Stuart Kaiser, Citi Head of U.S. Equity Trading Strategy
11:30 a.m. ET Ed Hallen, Klaviyo Chief Product Officer & Co-Founder
Finance
Biodiversity still a low consideration in international finance: Report
Biodiversity-related projects have seen an increase in international funding in recent years, but remain a low priority compared to other development initiatives, according to a new report from the Organisation for Economic Co-operation and Development (OECD).
The report found total official development finance (ODF) for such projects grew from $7.3 billion in 2015 to $15.4 billion in 2022. That’s still less than what the nearly 200 governments that signed the Kunming-Montreal Global Biodiversity Framework (GBF) in December 2022 agreed would be needed to halt biodiversity loss: at least $20 billion annually by 2025, and $30 billion annually by 2030.
Government funding made up the bulk of the ODF for biodiversity-related projects in the OECD report, which is welcome news, Campaign for Nature (CfN), a U.S.-based advocacy group, said in a statement.
“We welcome the increase in international biodiversity finance reported in 2022 but that good news is tempered by a range of concerns,” Mark Opel, finance lead at CfN, told Mongabay.
One concern, CfN notes, is that funding specifically for biodiversity as a principal objective declined from $4.6 billion in 2015 to $3.8 billion in 2022. CfN reviewed hundreds of projects from 2022, which formed the source for the OECD’s report, and found that many either had vague descriptions or focused on other policies like agriculture but were counted toward protecting or restoring nature.
“We need to see more emphasis on funding with a primary focus on biodiversity,” Opel said. “So-called ‘principal’ funding that has biodiversity as its primary goal continues to be down since its 2015 peak. Increases in this type of funding are essential to meet the goals of the GBF … These goals cannot be met through funding with biodiversity as only a ‘significant’ goal that mainstreams biodiversity into projects with other primary goals like humanitarian aid or agriculture.”
The report also found that funding for biodiversity-related activities represent just 2-7% of the total ODF portfolio.
“It is concerning that biodiversity considerations still represent a relatively low share of the total official development assistance,” Markus Knigge, executive director of Germany-based nonprofit foundation Blue Action Fund, told Mongabay. He added it was also problematic that most funding came via loans, which have to be repaid, rather than grants, which are often more appropriate for conservation finance.
CfN says grants are preferable to loans because they don’t add to the debt burden of low-income recipient countries.
At the same time, development funding from major donors such as Germany, France, EU institutions, the U.S. and Japan have been cut in recent years.
“We have seen minimal announcements of new international biodiversity finance since [the GBF signing],” Opel said. “We estimate that only the equivalent of $162 million annually has been pledged since [then], which doesn’t come close to filling the $4.6 billion gap between the $15.4 billion in 2022 and the $20 billion commitment in 2025.”
Banner image: Javan lutung by Rhett A. Butler/Mongabay.
Finance
30-year mortgage rate hits 2-year low
The average rate on a 30-year fixed-rate mortgage was nearly unchanged this week but reached its lowest level in two years.
Thirty-year mortgage rates averaged 6.08% as of Thursday, down from 6.09% a week earlier, according to Freddie Mac data.
Average 15-year mortgage rates rose one basis point to 5.16%.
As mortgage rates hover around 6%, potential buyers are tiptoeing back into the market, and some homeowners who bought when interest rates topped 7% are weighing refinancing. Mortgage applications jumped to the highest level in more than two years last week, driven largely by refinancing volumes.
“Given the downward trajectory of rates, refinance activity continues to pick up, creating opportunities for many homeowners to trim their monthly mortgage payment,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Meanwhile, many looking to purchase a home are playing the waiting game to see if rates decrease further as additional economic data is released over the next several weeks.”
Thirty-year mortgage rates have dropped more than a percentage point since May.
Read more: Mortgage and refinance rates today, September 26, 2024: Rates finally decrease
The Pending Home Sales Index, a measure of housing contract activity, rose 0.6% to 70.6 in August, improving slightly from July’s record-low reading, according to the National Association of Realtors. A level of 100 is equal to the amount of contract activity seen in 2001.
“Buyers are finally getting more comfortable with the rate,” said Selma Hepp, chief economist at real estate data provider CoreLogic. “I don’t think that’s going to mean a big boost for home sales this year given how low they’ve been so far, but still, it’s a little bit of improvement.”
Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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