PPP Loan Fraud Investigations—What Do Small Business Owners Need to Know?
Federal Authorities are Targeting Small Business Owners in Paycheck Protection Program (“PPP”) Loan Fraud Investigations
Since the start of the COVID-19 crisis, the federal government has provided more than $2 trillion to individuals, businesses, and state and local government entities to help ease the financial burdens and uncertainty caused by the pandemic. Among all of the various programs established in response to the crisis, the Paycheck Protection Program (“PPP”) established under the Coronavirus Aid, Recovery, and Economic Security Act (“CARES Act”) and administered by the Small Business Administration (“SBA”) has proven to be the most problematic for recipients by far.
The PPP provided financial relief to businesses that had been negatively affected by the COVID-19 crisis. Under the program, businesses could receive federally-backed loans ranging from $10,000 to well over $1 million, and these loans were eligible for complete forgiveness provided that recipients used the proceeds for eligible purposes. However, as time has shown, the PPP loan application and forgiveness certification processes were both highly susceptible to fraud. As a result, the SBA and federal authorities including the FBI, DOJ, IRS, and Secret Service have undertaken extensive and aggressive efforts to identify and prosecute individuals and companies that fraudulently obtained funds under the PPP. …
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