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Small business lending fraud experienced a significant surge in 2023, with a 13.6% increase compared to the previous year, according to the 2024 Small Business Lending Fraud study by LexisNexis Risk Solutions. The study, which surveyed 135 lenders, paints a concerning picture of the current state of fraud in the SMB lending sector. One of the most striking findings is that 64% of respondents expect fraud to continue growing over the next 12 months. This projection highlights the ongoing challenges faced by the industry in combating fraudulent activities. Read the rest of the story https://www.funderintel.com/post/13-6-surge-in-small-business-lending-scams

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Former SBA Employee Charged with Wire and Bank Fraud in Connection with Filing False Applications for PPP and EIDL Loans and Covid-19 Rental Assistance Malaina Chapman, 37, of Hialeah, Fla. has been charged with conspiracy to commit wire fraud, wire fraud and bank fraud.  She had her initial appearance in Miami federal court today. According to allegations in the criminal complaint, Chapman was employed as a Disaster Relief Specialist with the Small Business Administration (SBA) from Sept. 28, 2020, through her resignation on March 18, 2021. While employed by the SBA, Chapman became involved in multiple schemes to defraud the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program, as well as to defraud local credit unions and local and state programs designed to assist those affected by the Covid-19 pandemic pay their rent.  “Disaster relief was intended for people in need, namely functioning businesses, corporate forms, and sole proprietorships facing uphill prospects during the pandemic, not for those who sought to pad their pockets and defraud the government by making up entities or overstating their payroll and revenues to qualify for the relief," stated U.S. Attorney Markenzy Lapointe for the Southern District of Florida. “We will continue to hold anyone accountable who exploits and defrauds financial institutions and the government’s pandemic response to enrich themselves at the expense of struggling businesses, employees, and local tenants. While the COVID-19 relief programs have ended, our commitment to identifying and prosecuting those who defrauded them has not.” “Today’s charges highlight our unwavering commitment to protecting the integrity of SBA programs,” said SBA OIG’s Eastern Region Special Agent in Charge Amaleka McCall-Braithwaite. “Exploiting relief efforts for personal gain undermines public trust and deprives legitimate businesses of essential assistance. I want to thank the U.S. Attorney’s office and our law enforcement partners for their support and dedication to ensuring that those who engage in fraudulent schemes are held accountable to the fullest extent of the law.” On Feb. 10, 2021, Chapman, while employed by the SBA, submitted, via interstate wire communication, a loan application in the name of Upscale Credit Lounge to Lender 3.  In support of her application, Chapman submitted a purported tax year 2020 Schedule C form that reported gross revenues of $103,674 and a tentative profit of $81,860. Lender 3 relied upon the representations in Chapman’s application and on Feb. 11, 2021, approved a loan in the amount of $17,052.50.  Further investigation revealed that the Schedule C, attached to Chapman’s application was false and fraudulent.  On Feb. 19, 2021, Chapman, again while still employed by the SBA, submitted, via interstate wire communication, a PPP loan application with Lender 3 on behalf of DA TRAP. In her application, Chapman claimed that she had four employees and an average monthly payroll of $14,191. In support of her application, Chapman submitted four IRS Employers Quarterly Tax Return forms (Form 941), which purportedly documented the wages paid by DA TRAP. Lender 3 relied upon the representations in the application and on Feb. 26, 2021, approved a loan in the amount of $35,477.50. Further investigation revealed that the multiple IRS Forms 941 attached to Chapman’s application were false and fraudulent. Chapman also conspired with others to submit false and fraudulent PPP loan applications on their behalf. Six defendants were charged in Case No. 24-CR-20079 and in that case defendant Raisha Kelly was the alleged ringleader of the conspiracy and prepared and caused the preparation of numerous false and fraudulent loan applications to be submitted to SBA-approved PPP lenders.  Chapman aided and abetted this conspiracy by creating false and fraudulent IRS documents and sending them to Kelly, who in turn used them to submit false and fraudulent applications for PPP loans. Read full story https://www.justice.gov/usao-sdfl/pr/former-sba-employee-charged-wire-and-bank-fraud-connection-filing-false-applications

Per her plea deal, she has pleaded guilty to seven charges, including wire and securities fraud. She has also agreed to pay restitution of an amount to be determined by the courts. That's according to Ellison's plea agreement with prosecutors in the Southern District of New York, dated December 18. Ellison faces seven charges that collectively carry a maximum prison sentence of 110 years. These include conspiracy to commit wire fraud, securities fraud, and commodities fraud. She also faces a charge of conspiracy to commit money laundering. Ellison has agreed to waive any defenses to the charges. Per her deal with prosecutors, she also agreed to pay restitution, the amount of which the courts will determine.

https://drive.google.com/file/d/1t4hjacybSeTH4Glf3qjYiOOuk37b2vh3/view?usp=sharing

UPDATE: In a hearing on Monday, June 3rd, the court has denied release for Kris Roglieri because he is 'a danger to the community'. The Defense also waives the preliminary hearing at this time. A public defender now represents Mr. Roglieri since he doesn't have the financial capability to pay attorneys. https://www.funderintel.com/post/kris-roglieri-arrested-by-fbi-for-wire-fraud-faces-20-years-in-prison

From Techloy Dec 9th The financial technology (fintech) sector continues to reshape industries, offering unprecedented opportunities for both consumers and businesses. One area where fintech has proven to be a game-changer is in direct lending, where technology-driven solutions are bridging gaps and providing greater accessibility. As we look ahead to 2024-25, key trends highlight how fintech is poised to dominate the direct lending landscape. The Rise of Automation in Direct Lending Automation has revolutionized the lending process by eliminating traditional bottlenecks. Direct loan lenders are leveraging artificial intelligence (AI) and machine learning (ML) to evaluate applications faster and more accurately. These tools analyze a borrower’s creditworthiness in seconds, offering decisions in real-time—a stark contrast to the days or weeks required by conventional banks. Beyond approvals, automation also enhances repayment processes, ensuring seamless and timely collections while reducing defaults. As technology advances, expect automated solutions to become even more sophisticated, enabling hyper-personalized lending experiences. The Growing Role of Artificial Intelligence in Lending Artificial Intelligence (AI) is redefining how direct loans are processed and managed. Advanced AI algorithms are now being used to assess risk with greater accuracy, enabling lenders to offer more competitive rates and terms. AI-powered chatbots enhance customer service, providing instant support for borrowers during application and repayment stages.  Additionally, predictive analytics powered by AI help lenders anticipate market changes, refine their offerings, and improve decision-making. This growing reliance on AI ensures faster approvals, streamlined processes, and a more personalized lending experience, making it an indispensable tool in the evolution of fintech-driven direct lending. Enhanced User Experiences Through Digital Platforms Fintech companies prioritize user experience (UX), recognizing that convenience is a top consumer demand. With intuitive apps and websites, online direct loan lenders enable borrowers to access funds anytime, anywhere. These platforms also provide greater transparency, presenting loan terms and repayment schedules upfront to avoid surprises. By embedding features like voice-enabled technologies and chatbots, fintech-driven lending platforms are expected to become even more user-centric by 2025. Mobile-First Lending: Meeting Consumers Where They Are The shift toward mobile-first solutions is revolutionizing the direct lending industry. With smartphones becoming the primary device for accessing financial services, fintech companies are prioritizing mobile-friendly platforms to reach borrowers more effectively.  Features such as instant loan applications, digital document uploads, and real-time status updates ensure a seamless borrowing experience. Mobile platforms also enhance accessibility, allowing underserved populations to access funds without needing traditional banking infrastructure.  As mobile penetration continues to grow, especially in emerging markets, mobile-first lending is set to play a pivotal role in expanding financial inclusion and making direct lending more convenient than ever before. Sustainability in Direct Lending: The Green Future As sustainability becomes a global priority, fintech companies are aligning their operations with Environmental, Social, and Governance (ESG) criteria. Direct lenders are incorporating green practices into their models, such as offering better terms for environmentally friendly projects or prioritizing funding for renewable energy initiatives. This focus on sustainability not only caters to eco-conscious borrowers but also positions lenders as socially responsible entities.  By 2025, this trend is expected to grow, driven by increasing consumer demand and regulatory pressures for ethical business practices. Fintech is thus setting the stage for greener, more sustainable financial solutions in the direct lending industry. The Push for Financial Inclusion One of fintech’s most significant impacts is its ability to expand financial inclusion. Direct loan lenders are using technology to reach underserved populations who may lack access to traditional banking services. For example, alternative credit scoring models leverage data points like utility payments or mobile phone usage to assess creditworthiness, allowing more individuals to qualify for loans. In developing regions, mobile lending platforms are enabling small-scale borrowers to access funds for emergencies or growth opportunities, contributing to economic empowerment. By 2025, fintech-driven inclusion initiatives are expected to expand further, addressing even broader demographics. Data-Driven Decision Making The integration of big data analytics into direct lending is transforming how loans are underwritten. Lenders can now process vast datasets to predict borrower behavior, assess risk, and offer tailored loan products. This data-driven approach minimizes default risks while ensuring that borrowers receive terms that align with their financial capacities. Moreover, advanced predictive analytics help lenders identify trends, enabling them to adapt quickly to market changes and consumer needs. Full story below https://www.techloy.com/why-fintech-is-the-future-of-direct-lending-key-trends-for-2024-25-3/

"Wilmington-based Live Oak Bank, announced Monday that it was the most active lender of SBA 7(a) loans for the sixth consecutive year, according to the U.S. Small Business Administration. A 7(a) loan is the SBA’s primary business loan program. It can be used by small businesses for refinancing, acquiring or improving real estate buildings and can be short- or long-term working capital. Live Oak Bank was the top lender by dollar amount during the SBA’s fiscal year, which ended Sept. 30. This means Live Oak lent the most money to small businesses through the SBA 7(a) loan program. Live Oak lent $1.8 billion, almost $50 million more than the runner-up, Huntington National Bank in Ohio, which lent $1.37 billion. Live Oak approved 1,215 SBA 7(a) loans nationwide this fiscal year. The bank did not have the most loans nor the largest average loan size of the group, according to the SBA." READ MORE https://www.wilmingtonbiz.com/banking_and_finance/2023/11/20/live_oak_bank_tops_small_business_lending_list_again/25043

Meeting customer needs is an imperative for financial institutions aiming to stay competitive. But innovations often run into the elephant in the room: outdated and incompatible banking tech stacks. Offering financial and payment solutions such as blockchain and stablecoin services isn’t as simple as flipping a switch; it requires a reimagined back end capable of delivering speed, security and scalability. “Going back into my career, the challenges we saw between FinTech companies creating new products and the natural friction with bank partners inspired us to build a bank from the ground up that caters to FinTech and blockchain,” Miles Paschini, CEO at FV Bank, told PYMNTS. “FV Bank was really founded out of necessity,” he added, noting that the FV, which stands for “FinTech Ventures,” reflects this mission. As the demand for blockchain-based services grows, driven by client interest in cryptocurrency custody, tokenized assets, and real-time settlement, banks are under pressure to revamp their core infrastructure. Stablecoins in particular have emerged as one way for banks to stand up the crypto and FinTech innovations their customers desire. However, incorporating stablecoins into banking operations is not without its challenges. Banks require robust infrastructure to ensure seamless, secure and compliant stablecoin integrations. “This isn’t about replacing existing systems. It’s about providing an additional option. Where stablecoins offer superior benefits, customers will naturally gravitate toward them,” Paschini said, noting that he views stablecoins as complementary to traditional payment rails like ACH, Fedwire, and Swift. https://www.pymnts.com/blockchain/2025/this-bank-ceo-says-stablecoins-are-the-newest-payment-rail/