Under SBA rules, individual businesses were only supposed to receive one PPP loan during the first phase of the program. The agency told CNN that while there were no measures to screen out fraud during the approval process for the first draw because of how quickly the money needed to be distributed, the agency has implemented more than 80 fraud checks this time around.
Polzin, who has gone by a number of different first names, applied for some of the loans under similar business names and addresses and sought funding from a variety of banks. One of his companies, which was also specifically cited by an Arizona judge as operating unlawfully months earlier, received multiple loans despite using the exact same name on the applications. This company, Transparen CPAs, is now listed as inactive in state business filings.
Earlier data showed two more loans Polzin’s companies had been approved for, worth at least $ 350,000, but those loans no longer appear as active. The SBA said these loans could have been canceled, but could not comment on why. It is also unclear whether Polzin has made repayments on any of the loans.
Each of Polzin’s six active loans were for around $ 200,000. Under SBA rules, monthly payroll for these companies combined would need to be at least $ 480,000 un mese, o quasi $ 5.8 million annually. It is unclear if his businesses currently have any physical operations or employees, and despite listing most as different companies, Polzin reported the exact same number of employees, 16, for all of the entities that received loans and claimed to have a combined monthly payroll of more than $ 1 milioni.
In reviews online and accounts shared with CNN, former clients said Polzin never actually filed their taxes or filed them incorrectly and then disappeared after they paid him hundreds of dollars for his services — only to later receive alarming letters from tax authorities and large bills, including penalties and unpaid taxes.
One former customer said she was never able to track him down after being told she owed thousands of dollars in back taxes, penalties and interest, and a man from Germany said his wife’s naturalization is now in jeopardy because of the three years’ worth of back taxes and late fees they ended up owing. Più di 100 people currently belong to a private Facebook group called “Victims of Ted/James Polzin at Transparen CPAs” where they have shared horror stories and attempted to help each other track Polzin down.
After determining that Polzin was breaking the law by posing as a CPA, the Arizona State Board of Accountancy convinced a judge to issue a permanent injunction in January 2020 that barred Polzin from using any title indicating that he or his firms are authorized to practice as CPAs.
Polzin did not respond to multiple requests for comment. A CNN reporter visited the Arizona addresses listed for his various businesses, and several were apartment buildings or houses where no one appeared to be home. At one apartment, someone answered the door but said Polzin was not there and he didn’t know when he would be back. Another address was located in a basement of a building among a row of offices that were all closed and locked — though there was a sign for Transparen CPAs on the door.
The SBA told CNN it could not comment on individual borrowers and that it is up to lenders who are actually giving out the money to confirm an applicant’s need and eligibility to receive PPP loans, and the agency regularly checks employer identification numbers to make sure the same entity hasn’t applied for multiple loans.
The agency also said a review of all loans approved during the first round of funding resulted in more than 200,000 loans, o quasi 4%, being flagged — though the affected loans have not been publicly disclosed. These borrowers will not be eligible for more funding this round or for loan forgiveness unless they address the issues identified, and they could be referred for criminal investigations if necessary.
Former New Jersey Attorney General Christopher Porrino said that identical or similar-sounding entities receiving multiple large loans should attract the attention of the federal government. He also said that if Polzin is engaging in illegal activity, such as unlawfully posing as a CPA, receiving PPP money may be in violation of SBA regulations.
“This is something that we would have taken a good hard look at, and I suspect if the federal regulators are advised of it, they will want to make inquiries,” said Porrino, who now represents businesses facing civil and criminal charges involving banking and consumer fraud.
The fake CPA
The website for Polzin’s accounting firm
, which has been taken down
, claimed that Transparen Certified Public Accountants offered
, simple and affordable tax filing for US expats.
” Ancora, he is not listed by the IRS as an authorized tax preparer
, according to agency dati
, and the Arizona State Board of Accountancy said in a legal filing against him that it investigated him after being contacted by Chad Mangum
, a tax preparer who had been hired by a former Polzin client to review a tax return prepared by Polzin
“The tax return was a mess,” Mangum told the board, secondo la denuncia, saying Polzin told his client the IRS wouldn’t care about the irregularities on the return. “I am highly concerned about the misrepresentation of the CPA designation used by Ted/James/Thomas, as well as his competence and legal practices performed for any individuals he is in contact with. He seems to have an incorrect understanding of accounting practices and tax knowledge.”
When contacted by CNN, Mangum described how he first became alarmed about Polzin when he saw him marketing himself to a large American expat community on Facebook and appeared to be giving them tax advice that ran afoul of the law, based on his conversations with some of Polzin’s clients. He said he places some of the blame on Arizona business regulators for allowing Polzin to register multiple businesses with CPA in the name despite not having the necessary licenses to use that title.
Accountancy Board documents show how one of Polzin’s relatives told investigators that Polzin had been using the relative’s expired CPA license number from another state as his own and that he had asked Polzin to stop using his credentials. “I have communicated directly with Ted and he is apologetic for his mistakes…(lui) assured me that he would not do that again,” the relative also wrote in a message to Mangum cited by the investigation.
Officials have been unable to serve Polzin with the injunction, in one case visiting his office last year only to find that the business was closed — with someone in the same complex saying that the office is almost never open. This was the same office that was closed when CNN attempted to find him. Once Polzin is officially notified of the injunction, he could face fines and other penalties, including criminal charges, if he continued to use the CPA designation.
PPP fraud was inevitable
Ethan Smith, an attorney who has specialized in SBA lending and compliance for the last two decades, said that while he could not speculate about a specific borrower, some level of fraud within the program was inevitable. Both the SBA and lenders, Egli ha detto, were under incredible pressure to get a massive amount of money out within a matter of weeks when the pandemic first hit.
“There was no way to put the controls in to ferret out [fraudsters] without punishing people who weren’t committing fraud,” Egli ha detto. “At a certain point, it was an emergency. It wasn’t the perfect solution, but it was the best solution we could come up with at the time.”
The Department of Justice has already filed a string of criminal actions against borrowers it says illegally gamed the system
, such as a 29-year-old Florida man who allegedly purchased a Lamborghini with some of his
$ 3.9 million in PPP loan money
. In un altro caso, the DOJ alleges that a group of seven individuals raked in about
$ 16 million in PPP funds through more than
80 fraudulent loan applications
The SBA referred
91 cases to federal prosecutors for criminal prosecution in the
2020 fiscal year
— un aumento di oltre 700% from only
11 referrals the prior year
, according to data from Syracuse University’s Transactional Records Access Clearinghouse
. The TRAC data shows that prosecutors already declined to press charges in some of these cases
, while others remained under review
Smith said it’s hard to know just how much fraud remains under the radar, e quello, in definitiva, it is the federal government that will be on the hook if ineligible borrowers abscond with the funds. He said lenders were told by the SBA to rely on a borrower’s self-certification to move as quickly as possible. Di conseguenza, the typical backgrounding done for traditional SBA loans did not apply to the PPP program.
Banche, Smith ha detto, were in a difficult situation of not knowing how much due diligence they should do.
The SBA’s updated online loan application and servicing system will help the agency detect red flags in real time, before a loan is approved. “It’s going to be harder for the fraudsters to make it through the net,” ha detto Smith.
While it is more likely to catch loan applications from the same address or under the same name during this second round of funding, it is unclear whether it would automatically uncover more obscure warning signs such as injunctions.
Smith cautioned that fraudsters have also had time to prepare more sophisticated schemes to attempt to evade detection and said he wouldn’t be surprised if fraud investigations were still being launched years after the PPP program ends.
Betsy Livecchi, a former client of Polzin’s, was livid when she saw his name in an online search of PPP loans. She said she moved from the United States to Europe in 2018 when her husband took a teaching position there, and the couple hired Polzin because their taxes had become more complicated. She paid him $ 400 and thought everything had been handled until she heard from the IRS.
“Upon receiving a letter that we owed over $ 19,000 in back taxes, penalties and interest we attempted to contact the man who supposedly prepared them,” lei disse, providing CNN with the letter from the IRS, a Facebook Messenger exchange with Polzin, an invoice and correspondence with the state accounting board. “Ovviamente, we have been unable.”
Livecchi then began researching Polzin herself, setting up a whiteboard where she mapped out his sprawling web of businesses and associates. She then found the injunction from the state court in Arizona, and finally stumbled upon the multiple PPP loans he had obtained — saying she couldn’t believe that someone with his record qualified for a single government-backed loan, let alone six. Livecchi said she filed a complaint with Arizona officials and the SBA inspector general.
Another former client, Peer Gopfrich, hired Polzin after moving back to Germany from the United States. He said his German tax returns were never filed, even though Polzin charged him for them and sent him copies of the returns he claimed to have submitted, showing that Gopfrich didn’t owe any additional taxes.
But when his wife applied for naturalization in Germany, the government informed them that they owed three years’ worth of back taxes and late fees to the German government, and his wife’s application had been placed into jeopardy because of their delinquent status. He said the decision to hire Polzin ended up costing them an extra $ 3,000 (or roughly 2500 euros) — including the amount they paid him to file the taxes that were never submitted, the late fees and interest they were later hit with and the cost of refiling.
On top of all that, they also owed more than $ 6,000 (or around 5,500 euros) in taxes, his records show.
“Hearing that the person who has cheated us out of our money, potentially jeopardized my wife’s ability to remain in Germany and has a permanent injunction against him in Arizona received over one million dollars in government help is quite infuriating,” Gopfrich said.