Womply PPP Loans Investigation

Womply PPP Loans Investigation

You used Womply because it was everywhere. Millions of small businesses. Easy application. “PPP Fast Lane” – the name promised speed. You thought a company that big, that visible, that integrated into the banking system had to be legitimate. Here’s what nobody explains: Womply processed over 1 million PPP loans. Their own lending partners – the banks that actually funded the loans – called Womply’s fraud prevention system “put together with duct tape and gum.” Over 60% of Womply applications never resulted in funding. The CEO leading their fraud prevention efforts had a prior conviction for insider trading. Womply collected $2 billion in processing fees and spent almost nothing making sure applications were accurate. Your application went through a system that wasn’t designed to catch fraud. It was designed to process volume.

Welcome to the Spodek Law Group resource on what happens when you used a PPP processor that the government has officially determined facilitated “rampant fraud.” Our goal is to show you exactly why Womply’s $26 million FTC settlement doesn’t protect you – and why your exposure might actually be worse than Blueacorn users who are getting all the attention. You might think: “Blueacorn’s founders got 10 years in federal prison. Womply just paid a fine. I’m clearly in the safer position.” The law sees it differently. Blueacorn’s convicted founders are cooperating with prosecutors, naming clients, providing evidence. Womply settled civilly and walked away. There’s no cooperation happening. There’s no one between you and your application.

That’s the reality Todd Spodek and the Spodek Law Group team explain to clients who come in after reading about the Womply investigation. The initial reaction is always the same: “But Womply wasn’t even criminally charged – how can I be in trouble?” The problem is that the FTC settlement resolved claims about Womply’s marketing and customer service practices. It didn’t resolve liability for the individual applications that contained false information. Your application. Your signature. Your certification that the information was accurate. The settlement protected Womply. It didn’t protect you.

You Think Civil Settlement Means Safety – That’s the Trap

Heres the paradox that defines your situation. Blueacorn’s founders are serving 10-year federal sentences. Womply’s executives paid a fine and moved on. You assume that means Womply users are safer. The opposite is true.

Think about what happens when a company’s founders are criminally prosecuted. They cooperate. They provide information. They name clients. The investigation flows through them. Investigators focus on the network the founders reveal. There’s a structure to the prosecution.

Now think about what happens when a company settles civilly. The executives pay money and walk away. No cooperation. No naming clients. No information flowing to prosecutors. The company’s files just sit there – available to investigators, but not being actively processed through a cooperation agreement.

Heres what that means for you. Blueacorn clients might be exposed because founders are cooperating. But that cooperation also means investigators are focused on specific applications the founders identify. Womply clients face a different problem. There’s no roadmap. There’s no cooperation deal directing investigators. There’s just your application, in government files, waiting to be reviewed whenever an investigator gets to it.

The Womply settlement closed one investigation. It didn’t close yours.

$2 Billion in Fees, Zero Fraud Prevention

Lenders paid Womply over $2 billion in processing fees for its “PPP Fast Lane” service. Two billion dollars. The service was supposed to screen applications for fraud and eligibility before they reached the banks.

How much actual fraud prevention did that $2 billion buy? According to Womply’s own lending partners, almost none.

Dreamspring, Lendistry, Fountainhead, Benworth – multiple banks that worked directly with Womply described there fraud prevention systems as “put together with duct tape and gum.” These arnt critics or outsiders. These are the financial institutions that partnered with Womply and saw the system from the inside.

They accused Womply of allowing “rampant fraud” to infiltrate the PPP. Rampant. Not occasional. Not some slippage at the margins. Rampant fraud going directly through a system that was supposed to stop it.

The $2 billion in fees wasnt buying fraud prevention. It was buying processing speed. Volume. More applications pushed through faster, with minimal review. The banks paid for protection and got paperwork processing instead.

Your application went through this system. Whatever review Womply claimed to perform basicly didnt happen. If there were problems with your application – inflated payroll, questionable employee counts, revenue that didnt match your tax returns – Womply wasnt catching it. They were pushing it through to collect there fee.

“Put Together with Duct Tape and Gum”

That quote deserves its own section because it tells you everything you need to know about how your application was handled.

A congressional investigation in December 2022 revealed exactly how Womply operated. The House Select Subcommittee on the Coronavirus Crisis examined fintech companies and there role in PPP fraud. Womply was one of the primary targets.

The subcommittee found that Womply rebranded itself from a simple referral service to a “technology service provider” that supposedly handled eligibility and fraud verification for over a million PPP loans. In the first round of PPP, Womply made $3 million from referrals. After the rebrand, they collected over $2 billion.

Heres the problem. The “fraud verification” was largely fictional. Multiple lending partners told investigators that Womply’s systems were inadequate. The “duct tape and gum” description came directly from banks that saw what was happening.

One lender – Fountainhead – eventualy had to get a temporary restraining order against Womply to prevent document destruction. The SBA Office of Inspector General made repeated requests for information. Womply refused to cooperate. A bank had to go to court to stop Womply from destroying PPP loan records.

Thats the company that processed your application. A company that was so uncooperative with federal investigators that banks had to sue them to preserve documents.

The CEO Had Already Been Convicted

Heres the hidden connection that should make you understand exactly who was running this operation. Womply’s CEO Toby Scammell was the person leading the companys fraud prevention efforts. Before running Womply, Toby Scammell had been convicted of insider trading.

Think about that. The person in charge of making sure PPP applications were legitimate – the person responsible for the systems that were supposed to catch fraud – had already been convicted of financial crimes.

This isnt speculation or accusation. Its public record. The CEO of the company that processed your PPP application, that collected $2 billion in fees to verify eligibility, that was supposed to be the gatekeeper between fraudulent applications and federal funds – that person had a prior conviction for insider trading.

The oversight was non-existent because the person in charge had no credibility to provide it.

When banks described Womply’s fraud prevention as “duct tape and gum,” they were describing a system run by someone who had already demonstrated a willingness to break financial rules. The lack of rigor wasnt accidental. It was the predictable result of putting someone with that history in charge of compliance.

60% of Applications Never Resulted in Funding

Heres a number that tells you everything about the quality of applications flowing through Womply’s system. According to the FTC, more than 60% of Womply applications never resulted in funding.

Sixty percent. Six out of every ten applications failed.

Some of those failures were technical issues. Womply advertised automated processes and good customer service, but applicants “regularly faced significant issues that slowed down or fully hindered there applications.” The company deactivated its phone-based customer service after just one month and over 4,800 support requests.

But many of those failures were substantive. Applications that couldnt be verified. Businesses that didnt exist. Payroll numbers that didnt match records. In other words, applications that showed signs of fraud.

If 60% of applications failed, what does that tell you about the 40% that succeeded? Some of them were legitimate. Some of them were fraudulent applications that slipped through a system that was barely checking anything.

Your application was in that 40%. It went through a system with a 60% failure rate. It passed “verification” by a company whose own partners said was allowing “rampant fraud.” The fact that your application got funded dosent mean it was reviewed carefully. It might mean the opposite – that it passed through a system that wasnt designed to catch problems.

They Had to Get a Court Order to Stop Document Destruction

When the SBA Office of Inspector General began investigating Womply for potential fraudulent loan activity, they made multiple requests for information. Reasonable requests. Standard investigative procedure.

Womply refused to cooperate.

One of Womply’s lending partners – Fountainhead – made similar requests. They wanted information about applications they had funded through Womply’s platform. Information they needed to assess there own exposure.

Womply refused them too.

Fountainhead eventualy had to get a temporary restraining order against Womply. A court order. Not a polite request – a legal mandate preventing Womply from destroying “these PPP loan documents.”

Let that sink in. A bank that partnered with Womply believed Womply was prepared to destroy PPP loan records. The bank went to court to stop it. A federal judge had to intervene to preserve documents related to over a million PPP applications.

What does it tell you about a company when there own business partner has to sue them to prevent document destruction? What does it tell you about how that company viewed its legal exposure?

Womply knew those documents were damaging. They knew investigators wanted them. They refused to hand them over voluntarily. Only a court order forced compliance.

Those documents – including your application – are now in government hands.

The $26 Million Settlement Doesn’t Protect You

In March 2024, Womply and CEO Toby Scammell agreed to pay $26 million to settle FTC charges. Twenty-six million dollars sounds significant. Heres why it actualy dosent help you at all.

First, the math. Womply had net revenue of over $2 billion in 2021 alone. The settlement is 1.3% of one years revenue. The settlement wasnt punitive. It was a rounding error.

Second, what the settlement covered. The FTC charged that Womply and Scammell “preyed on small businesses in desperate need of PPP funding.” They “widely advertised that small businesses could successfully get PPP funding when they applied through Womply” while more than 60% never got funded. They promised “automated processes and good customer service” that didnt exist.

Notice what those charges are about. Marketing. Advertising. Customer service. The settlement resolved claims about how Womply presented itself to applicants.

Notice what those charges are NOT about. Your application. The information on your application. Whether you provided false statements. Whether you were eligible. Whether you committed fraud.

The FTC settlement protected Womply from liability for its deceptive marketing practices. It didnt do anything – anything at all – to resolve liability for individual applications that contained false information.

You cant point to the settlement and say “Womply was responsible.” The settlement was about how Womply sold its services. Its not about whether your application was legitimate.

Where Is Your Data Now?

In May 2022, Womply updated its privacy policy. The update gave Womply the right to transfer sensitive personal and financial data to its owners’ new business – Solo Global, Inc.

According to the policy, Womply was giving itself the right to transfer “over 2 million tax documents, over 1.5 million bank accounts from applicants” to this new entity.

Think about what that means. The company that processed your PPP application – the company that has your tax returns, your bank records, your business information, your signed certification – wants to move all of that data to a different company.

Where is your information right now? Who has access to it? What are they doing with it? Nobody knows.

The company that was already being investigated for facilitating fraud decided to transfer millions of sensitive financial documents to a new entity. That dosent sound like a company protecting its clients’ interests. That sounds like a company restructuring to limit exposure while maintaining access to valueable data.

Your application went through Womply. Your data went through Womply. Whether its still with Womply, with Solo Global, with investigators, or all three – you have no idea. The company that was supposed to verify your eligibility cant even tell you where your information is.

Womply Couldn’t Even Certify Its Own Eligibility

Heres the irony that should tell you everything about this companys credibility. Womply had net revenue of over $2 billion in 2021. A nearly 90% profit margin. They were printing money from processing fees.

And yet, Womply received over $5 million in PPP loans for itself.

The company that processed over a million PPP applications for other businesses – the company that was supposed to verify eligibility, catch fraud, screen applications – couldnt accurately assess its own eligibility.

The SBA later determined that Womply was INELIGIBLE to receive those loans. The company making billions in profit got PPP money it wasnt entitled to.

If Womply couldnt correctly certify that its own business qualified for PPP – if the company making $2 billion couldnt honestly assess wheather it needed emergency funds – what does that tell you about how carefully they reviewed your application?

They got there own eligibility wrong. Why would you trust that they got yours right?

Your Application Is in Government Files

By December 2022, the SBA announced it had suspended both Blueacorn and Womply “from working with the SBA in any capacity.” The agency also launched “a full investigation” and said it would be “investigating appropriate action against there management, owners, and successor companies.”

That investigation happened. FTC charges were filed. Settlements were reached. But the investigation of Womply the company is just one track.

The other track is the investigation of individual applications. Every application that contained false information. Every certification that was inaccurate. Every loan that went to someone who wasnt eligible.

Your application is in those files. Whether Womply verified it properly or not. Whether the system was “duct tape and gum” or not. Your name is on the application. Your signature certified the information. You recieved the funds.

Federal investigators have access to over a million Womply applications. They have tax records to compare them against. They have bank records showing where the money went. They have all the time in the world to work through the files.

The Womply settlement resolved Womply’s liability. It didnt resolve yours.

The Timeline That’s Working Against You

Heres the timeline that most Womply users dont understand. The congressional investigation began in May 2021. It expanded to include Womply in November 2021. The House report was released in December 2022. The SBA suspended Womply that same month. The FTC settlement came in March 2024.

Thats years of investigation. Years of document collection. Years of analysis. During all that time, federal investigators have been building files, comparing records, identifying patterns.

The statute of limitations for PPP fraud is 10 years. Your 2020 or 2021 application is prosecutable until 2030 or 2031. Investigators have time. They arnt rushing. Theyre working systematicaly through files, building cases, prioritizing based on dollar amounts and evidence quality.

The FTC settlement in 2024 closed one chapter. It didnt close the investigation of individual applications. If anything, it freed up resources that were focused on the company to focus on the clients instead.

Your application has been in government hands for years. The question isnt wheather theyve seen it. The question is when they finish reviewing it.

What to Do If You Used Womply

At Spodek Law Group, Todd Spodek and the federal defense team handle exactly this situation. Clients contact us after reading about the Womply investigation wondering wheather there exposed. Heres the advice we give.

First, understand that using Womply dosent automatically mean your in trouble – but it does mean your application went through a system with almost no fraud controls. If your application was accurate, you may be fine. If there were any discrepancies, those discrepancies are sitting in government files waiting to be found.

Second, review your own records. Find your PPP application if you have a copy. Compare the numbers to your tax returns. Check wheather the payroll you claimed matches what you reported to the IRS. You need to know wheather there are problems before investigators find them.

Third, dont destroy anything. If you have documents related to your Womply application – emails, confirmations, any communications – keep them. Destroying evidence after knowing about an investigation is obstruction, which often carries worse penalties then the underlying fraud.

Fourth, consult an attorney before contact comes. The worst position is waiting to find out if your a target. The best position is understanding your exposure and having a strategy before investigators reach your name.

If you used Womply for your PPP application and your concerned about your exposure, call Spodek Law Group at 212-300-5196. The consultation is confidential. We can help you understand wheather your application is likely to be flagged, what investigators look for when they review Womply files, and what options you have to address the situation before it escalates.

The Womply settlement dosent protect you. It protected Womply. Your application is still in government files. Your liability is still open. The question is wheather you address it proactively or wait for investigators to reach your name on the list.