Articles by deBanked Staff

Former MBE Capital Partners, LLC CEO Sentenced to 4.5 Years in Prison

Rafael Martinez, the former CEO of MBE Capital Partners, LLC, is going to prison. The company was a PPP lender during covid but it was alleged it should not have been!

In March 2022, the DOJ said that “Martinez used false representations and documents to fraudulently obtain the approval of the SBA for his company, MBE Capital Partners, LLC, to be a non-bank lender through the PPP. Martinez then used that approval to obtain approximately $932 million in capital to issue PPP loans and earn over approximately $71 million in lender fees.”

Martinez then spent those funds on himself, purchasing a villa in the Dominican Republic, a Ferrari, and private jets.

He pled guilty to conspiracy to commit wire fraud exactly a year later. Last week he was sentenced to four and a half years in prison.

Amex: Organic Growth of Small Businesses Has Slowed

“…when we look at small business, I think the biggest thing there from a small business perspective is really the organic growth. I think organic growth has slowed,” said Amex CEO Steve Squeri in the company’s Q2 earnings call. Squeri said that this wasn’t just something that Amex was seeing but more of an industry phenomenon.

“…what you saw through the pandemic, is you saw small businesses continue to add and add and add, and you got to remember small businesses use a card to run their entire business,” Squeri said, “and so, there was a lot of buying ahead from a goods and services perspective, from an inventory perspective.”

Delinquencies have been flat at Amex, however, and still remain below pre-covid levels, a feat attributed to the company having made proper adjustments from a risk management perspective.

Squeri said he believes the organic growth will eventually rebound.

“…after the slowdown comes the recovery,” he said.

Business Blueprint, the rebrand of the Kabbage business it acquired, was not mentioned by name in the company’s earnings presentation or 10-Q.

Celsius Founder Alex Mashinsky is Charged by DOJ, SEC, CFTC

Crypto platform Celsius founder Alex Mashinsky has been charged by multiple agencies including the US Attorney’s Office for the Southern District for his role in a multibillion dollar fraud and market manipulation schemes. Although he has been referred to as a “crypto lender,” some of the most unusual stories surrounding the alleged fraud have to do with the customers. For instance, in the Celsius bankrupty proceeding, one customer pleaded for their funds back on the basis that they had yolo’d their entire EIDL funds into it.

“I placed my entire EIDL loan, $525,000 in Celsius to earn an APY to help pay back the 3.9% interest on the loan while I was in the process of deciding on if I would keep the EIDL or use it on my business,” the customer wrote. “I deposited these funds a few weeks after the Celsius rules changed on their ‘Earn’ accounts which required a user to be an Accredited Investor, which I was not.”

That victim’s story was publicized 12 months ago. At its peak, Celsius managed $25 billion of customer funds. The company declared bankruptcy in July 2022. Federal charges allege that much of the Celsius business was just a fraud run by Alex Mashinsky and another co-defendant.

The SEC and CFTC have also filed civil charges against Mashinsky.

Loan Scammers Play With Email Dots

Did you know if you send an email to myname@gmail.com or my.name@gmail.com or myna.me@gmail.com, they would all go to the same place? Scammers do. In a recent bombshell report published by the SBA and OIG, $200 billion in PPP/EIDL fraud was accomplished through a number of common techniques, one of which appears to be through the manipulation of email addresses.

Some mail servers, including Gmail’s for example, ignore the dots, a feature likely built in because periods are commonly used as concatenation operators to join two strings in programming. Reader’s Digest recently called this “The Gmail Trick That’s Been Around for 15 Years—But Few People Know About It.”

“Any combination of your e-mail address and those little dots is sent to the exact same inbox. You own all dotted versions of your address,” RD wrote.

The implications of this, however, are that scammers can potentially bypass systems that rely on e-mail addresses as a primary form of verification or identity. Both scammer@gmail.com and scam.mer@gmail.com could have separate accounts in one system even though it’s the same email address. This method is useful to scammers because they do not have to register additional gmail accounts, which could potentially trigger additional unnecessary verifications or reviews from Google for suspicious activity. Instead, they can rely on the single account.

Furthermore, the SBA report said that aliases or email forwarding or disposable email addresses are also used in fraud and are a fraud indicator.

“Using an alias technique to add an extension to an existing email address through use of a dash (-) or plus (+) that resolve to the same email (e.g., username-123@gmail.com or username+bob@gmail.com both resolve to username@gmail.com)” was something that the SBA analyzed in its fraud investigation. “Using a disposable email service to remain anonymous by receiving emails at a temporary address that may self-destruct after a certain time elapses” is another technique that was examined.

Is your system checking for dots in gmail addresses? If they weren’t before, they should now!