DALLAS (CBSDFW.COM) – Legitimate North Texas businesses are being swept up in a federal crackdown on pandemic relief fraud, the CBS 11 I-Team has found.

Several small business owners and independent contractors have had their bank accounts frozen after receiving federal Covid-19 relief funding.

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“All of my money has been frozen,” said Justin Garrett, a home health care worker in Dallas. “Without my money, I’m unable to pay any of my bills. I’ve actually even had to pawn my watch just to buy gas. It’s terrible. It really is.”

As an independent contract who saw business slump during the pandemic, Garrett applied for a Paycheck Protection Program loan.

After his application and tax documents were reviewed, he was approved for a $20,000 relief loan.

However, when the money was deposited into his Capital One Bank account, the bank froze his account without explanation.

Garrett is not alone.

Mo Nilforoushan, the owner of a small IT company in Plano, said his bank account was also frozen by Capital One Bank after he deposited his approved Covid-19 economic disaster loan into his business account.

“I asked them what did I do wrong? They didn’t say. I am totally in the dark. I absolutely have no idea what I did wrong.” Nilforoushan said.

Capital One Bank told the CBS 11 I-Team it could not comment on any particular case but a bank spokesperson did provide some insight on what’s behind all this.

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Capital One Bank said the Small Business Administration and federal law enforcement have called on financial institutions to be on the lookout for ‘red flags’ that could indicate fraud.

For example, the bank spokesperson said the SBA has encouraged financial institutions to examine PPP and EIDL loans deposited into personal accounts not known to be associated with a business.

It is not illegal to deposit federal relief loans into personal accounts.

Capital One Bank said it will only flag accounts for potential fraud when multiple risk factors have been identified.

PPP loan fraud has been a massive problem.

The CBS 11 I-Team has highlighted multiple cases of fake companies receiving millions in government funds and then using it to buy luxury homes and fancy cars.

Capital One Bank said a large portion of the accounts that are frozen are later confirmed as incidences of fraud.

But not all of them.

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A bank spokesperson said Capital One is in the process of implementing new ways to lessen the impact of these fraud inquiries on customers.