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Beyond PPP Fraud: Lessons from an Equipment Finance Scheme

equipment finance

While news of individuals exploiting the Economic Injury Disaster Loans (EIDLs) and Paycheck Protection Program (PPP) during the pandemic garnered significant headlines, a Maryland man's recent guilty plea to defrauding both programs sheds light on a lesser-known but persistent issue: equipment financing fraud.

Andra Shirone Thompson, 47, of Silver Spring, admitted to his role in a scheme that defrauded commercial equipment financing companies of an estimated $813,362.  He faces a maximum of 5 years in prison for each of two counts of conspiracy to commit wire fraud. No sentencing date has been set. This case serves as a valuable reminder for equipment financing professionals and lenders to stay vigilant against such fraudulent activity.

According to a press release by the DOJ, Thompson and his co-conspirators created a web of deceit.  They fabricated invoices for substantial quantities of computer servers and related equipment that were never actually sold.  These invoices were then presented by borrowers to secure loans, with the loan proceeds ultimately ending up in accounts controlled by Thompson and his associates.  In some instances, Thompson allegedly offered kickbacks to borrowers who participated in the scheme.

Thompson spent some of the ill-gotten gains on home renovations and a 2014 Lamborghini Aventador, because of course he did.

Thompson's case highlights a critical point: equipment financing fraud happens with a frequency similar to overall commercial finance fraud, yet it often flies under the radar. This lack of public awareness underscores the importance of implementing strong internal controls within equipment financing companies and lending institutions.

Here are some key takeaways for industry professionals:

  • Scrutinize Invoices:  Verify the legitimacy of invoices with the supposed vendor directly.

  • Maintain Strong Borrower Relationships:  Regular communication can help identify potential red flags.

  • Implement Risk Management Protocols:  Establish clear procedures for reviewing loan applications and monitoring borrower activity.

By staying informed and proactive, equipment financing professionals and lenders can play a vital role in mitigating the impact of fraudulent schemes like the one orchestrated by Andra Shirone Thompson.



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