Fake emails, foreign web connections revealed in Hennepin County grant program shut down over fraud

Fake emails, foreign web connections revealed in Hennepin County grant program shut down over fraud Ryan Raiche KSTP Fraudulent grant applications exposed Applications linked to fake email addresses and internet connections routed through foreign countries flooded a Hennepin County small-business grant program before officials shut it down over potential fraud. A 5 INVESTIGATES review of more than 1,000 applications submitted to the county’s Small Business Recovery Fund found what appear to be organized attempts to obtain taxpayer-funded grants intended for businesses affected by Operation Metro Surge. The county shut down the program after distributing about $500,000 of a planned $2 million in grant funding and referred the matter to law enforcement. The applications, obtained through a public records request, provide a rare look at the scale and sophistication of fraud attempts targeting a local government grant program. The fraud attempts 5 INVESTIGATES found multiple small businesses in Minneapolis that had no idea someone used their names to try to win a government grant. “That is my first and last name, that’s right,” said Nate Broadbridge, co-founder of SK Coffee in Minneapolis, as 5 INVESTIGATES showed him a grant application under his name. “But that is not my email address.” County data shows that fraudsters used SK Coffee’s business name, the founder’s name, and wrote a fake narrative to try to steal grant money. “I mean, it sucks that that’s kind of where the world is heading,” Broadbridge said. “But I’m really glad to hear that Hennepin County has humans looking at it and validating.” Another application was submitted in the name of Street Wheat, a small bakery formerly operated by Nikhil Saxena. The fake narrative written by the fraudster said Street Wheat is “designed to be accessible, quick and consistent, providing quality food.” “Which is pretty much the opposite of what the business was,” Saxena said after reviewing the submission. “We were very inaccessible, open one day a week and you only showed up if you knew your neighbor went there or you saw one of my TikToks online.” Once again, the fraudster used Saxena’s real name and address but supplied a different phone number and email address. Program shutdown County officials and the nonprofit administering the program identified irregularities early and shut down the program before distributing all available funding. The 82 approved applications went through several layers of verification, including a final step of in-person visits, according to internal documents. In a memo to county board members, the head of the Housing and Redevelopment Authority said that within the first few weeks of reviewing documentation, the nonprofit running the program flagged suspicious signatures, voided checks with mismatched information, businesses that could not be located and people who refused to provide identification. The county paid out half a million of the $2 million allocated for the program before it was suspended. The digital trail A 5 INVESTIGATES review of the raw application data revealed additional warning signs. For instance, the same IP address was used in the fraudulent applications for SK Coffee and Street Wheat and multiple other businesses. In the most egregious case, 5 INVESTIGATES found the same IP address was used to generate 18 grant applications on behalf of different businesses. Several of the actual business owners said they were unaware of the grant program. The applications also shared common characteristics. Many used similar narratives describing business hardships while listing different phone numbers and email addresses. Adam Claude of OAC Technology in New Hope reviewed the application data and found about 10% of the applications submitted used a virtual connection to mask their location. “You can use a VPN to hide the source address on the internet to make it look like you’re actually originating from somewhere else,” Claude said. He also found applications submitted from all over the country and globe, including Liberia, Kenya and Somalia. Claude said applications submitted overseas do not prove fraud but raise additional questions about what’s supposed to be local businesses applying for public money. “These programs are always going to have bad actors making fraudulent applications,” Saxena said.