The Biden administration published a fact sheet on February 2 detailing new measures to prevent fraud in the program. This disclosure covers each of the 4.9 million PPP loans that have been made. Pape and Jung used more than $3600 from the fraud scheme to pay for a stay at a resort in San Antonio, Texas, according to the Justice Department. And if theyre not interested in prosecuting, for whatever reason, we dont further pursue it at that time., Many of the cases are moving quickly, despite their complexity. 107 of the cases, accused individuals allegedly falsified payroll documentation to justify either getting a loan or getting a bigger loan than they were eligible for; 93 of the cases, accused individuals allegedly created fake tax documents used for verifying details in loan applications; 41 of the cases, accused individuals allegedly created bogus companies to get loans; 28 of the cases, accused individuals allegedly used defunct companies to get loans; 20 of the cases, accused individuals used stolen identities or aliases while applying for loans; 12 of the cases, accused individuals allegedly falsified ownership of existing legitimate businesses; 28 of the cases, accused individuals also obtained Economic Injury Disaster loans (some of these individuals have been accused of fraudulently obtaining these loans. Two weeks ago, the IRS handed down guidance indicating that business expenses paid using PPP loans cant be used as deductions for tax purposes. The SBA disputes those findings, but its own inspector general has estimated that at least 70,000 loans are potentially fraudulent. Buried within the court filing are allegations that Greenberg bribed an unnamed Small Business Administration insider to fraudulently obtain nearly $433,000 in Economic Injury Disaster loans. Some of these qui tam lawsuits are traditional whistleblower cases, but others involve individuals who are slicing and dicing the data that has been made available about loans, according to Grossman. The release comes as Congress is debating whether to pass another round of federal stimulus and whether that would mean another round of the Paycheck Protection Program. SBA reveals full list of recipients of PPP loans. Johnstown Magazine is a positive and forward-thinking monthly publication for the people of our region. To support his loan applications, Kindambu claimed that Papillon Holdings had $150,000 in monthly payroll expenses and that Papillon Air had over $850,000 in monthly payroll expenses. For much of 2020, the agency also issued grants of up to $10,000 under the program that do not have to be repaid by eligible recipients. Under a federal judge's order, the SBA recently released loan-level data that covers lending through mid-November. They often involve obtaining and then piecing together often-complex financial, payroll, and tax records for individuals and companies, and sifting through other evidence. Rabbitt noted the unparalleled speed with which these cases have been investigated and prosecuted.. Banks issued billions of dollars in fraudulently-obtained SBA-backed loans, and the DOJ and the U.S. Department of the Treasury quickly realized that they would need to take an aggressive approach to preventing fraudulent forgiveness requests and recovering as many fraudulent-obtained loans as possible. Partner The Small Business Administration distributed 5.8 million advance grants worth $20 billion last year (despite the name, these are not loans that have to be repaid). With over 18 million Paycheck Protection Program loans and pandemic-related Economic Injury Disaster loans and advance grants approved over the last year, there is a sea of data on these programs. The PPP loans helped struggling independent restaurants, as well as regional chains affiliated with national brand names, said John Longstreet, president and CEO of the Pennsylvania Restaurant and Lodging Association. The Small Business Administration has said victims of identity theft will not have to repay the loans fraudulently obtained in their name, but some individuals have told media outlets the agency has not promptly resolved their cases. Brian Grossman, the Small Business Administrations assistant inspector general for investigations, told POGO that as of March 10, 2021, the watchdog office had 91 active Paycheck Protection Program investigations and 121 active Economic Injury Disaster loan investigations. Buried within the court filing are allegations that Greenberg bribed an unnamed Small Business Administration insider to fraudulently obtain nearly $433,000 in Economic Injury Disaster loans. Applicants fraudulently obtained at least $16 million, per the Justice Department. The alleged scam involved submitting false information about the applicants businesses as well as fraudulent tax returns that were identical for each of the defendants companies. Report it to the Small Business Administrations with just a few clicks. The average loan amount. Part 1 training plans. U.S. Small Business Administration 409 3rd St, SW. Washington DC 20416 (Eligible companies and nonprofit organizations can apply for and receive both Paycheck Protection Program and Economic Injury Disaster loans.). He said that lenders have been extremely cooperative during investigations and their suspicious activity reports have been very useful.. You have permission to edit this article. In email and text exchanges, defendants acknowledged that a number of the companies did no legitimate business, disqualifying them from receiving the loans. National Law Review, Volume XI, Number 91, Public Services, Infrastructure, Transportation, The Benefits of Donating Cryptocurrency and Digital Assets. In other words, lenders and the Small Business Administration did not prevent the alleged fraud in these instances before taxpayer dollars went out the door. The Trial Attorneys in the MIMF Unit prosecute cases involving, government procurement fraud, bank fraud, mortgage fraud, and . John Finnerty is based in Harrisburg and covers state government and politics. Meant to help small businesses keep workers on the payroll, the Paycheck Protection Program offers loans of up to $10 million that can be forgiven in full if recipients meet certain employee retention requirements. POGOs analysis of the first full years worth of Paycheck Protection Program fraud cases found that in at least: Some of these cases involve multiple defendants. The case involved charges against a company and its CEO that obtained a $350,000 PPP loan after submitting false information to multiple PPP lenders. The Small Business Administration has released new details on more than 11.7 million Paycheck Protection Program loans, shedding light on this year's list of recipients. The DOJ is prosecuting PPP loan recipients who are accused of both intentionally and unintentionally committing fraud under the PPP. Law enforcement insiders say many more pandemic loan fraud cases will be brought in the months and years ahead. The number of potentially questionable loans approved through these programs is vast, as will be the task of determining how many of those loans were fraudulent or otherwise improper. project, POGO has been examining equitable access to government loans, grants, and contracts. Data is available, but its reliability for the purpose of assessing whether Paycheck Protection Program loans are reaching the underserved communities that Congress wanted prioritized is limited because the demographic data is incomplete. Many believe a high percentage of these grants were stolen, but some federal prosecutors with heavy caseloads may find it hard to justify If you have any compliance- or enforcement-related concerns, the contacts below are available to answer questions and provide guidance. The Government alleged that Christopher and Erin Mazzei submitted fraudulent loan applications and obtained over $1.3 million in COVID-19 relief funds. Loans through that program were directly processed by the Small Business Administration, while in the Paycheck Protection Program, loans were primarily processed by banks and other lenders. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials. 23-Year-Old Charged with Submitting Fraudulent PPP Loan Applications In February 2021, the DOJ filed charges against a 23-year-old New York resident who is accused of submitting multiple fraudulent PPP loan applications on behalf of a single company. PHOTO GALLERY | Windber girls pull away from Tu, PHOTO GALLERY | Berlin Brothersvalley girls lea, Heavy snow hits Northeast as storm cleanup begi, Penn State wrestling | Seven Nittany Lions reac, READ LISTS: Emergency PPP loans reach numerous local small businesses, Grub Shack set to open in April in downtown Johnstown, Bedford studio destroyed, nearby buildings damaged by fire, 19 wrestlers from area crowned Keystone State Central champions, Renovations unveiled, memories relived at Windber's Grand Ballroom, Sheetz set to replace Galliker's products at more stores in March, PHOTO GALLERY | Crossman's big night leads Penn Cambria girls to District 6-4A gold, Conemaugh Valley standouts Chase, Davison announce college intentions, Superior Court denies appeal from inmate convicted in fatal wrong-way DUI crash, PHOTO GALLERY | Defense leads Greater Johnstown past Central in 4A title game. About 72% of the loans under $150,000 went to businesses that said the loans saved 25 or fewer jobs. The data contains all original variables and new variables added with minimally, consistently, and confidently normalized character strings. In addition to making false statements about the companys employees and payroll, the defendant also allegedly submitted falsified federal tax documents and payroll records to three different PPP lenders. The Federal Trade Commission wrote in February that, Last year, we received 99,650 reports of fraud involving business or personal loans, compared with 43,920 reports in 2019, before the pandemic began. Supreme Court Clarifies the Meaning Salary Basis Under Federal OIRA Calls for Feedback on Recommendations to Encourage More FTCs One-Two Punch on Data Tracking and Health Privacy. POGO was unable to reach Edwards before publication. In remarks before the U.S. Chamber of Commerce, an influential business lobbying group, last June before the SBA released partial data identifying Paycheck Protection Program recipients of loans above $150,000, then-Principal Deputy Assistant Attorney General Ethan P. Davis said that with the administrations decision to release that information, some have predicted more qui tams as a result., Davis then said, Let me be clear. Government and federal taxpayers writ large arent the only victims of fraud in the pandemic lending programs. In order to avoid repaying their loans, PPP recipients must certify to compliance with the terms of the program. Low 33F. Its the first public case of fraud in these pandemic loan programs attributed to corruption within the agencys own ranks. Find out how you can get involved and stay up to date with our work. The content and links on www.NatLawReview.comare intended for general information purposes only. Leaders of statewide business groups said they think the first round of PPP loans were vitally important to help businesses survive the pandemic economic slowdown and said another round of loans are needed now. It's important to note that SBA loans are secured loans that require you to list collateral in the loan agreement. Small Business Paycheck Protection Program The Paycheck Protection Program established by the CARES Act, is implemented by the Small Business Administration with support from the Department of the Treasury. These bipartisan bills, signed into law in August 2022, establish a 10-year statute of limitations for all forms of PPP loan fraud and all COVID EIDL loan fraud. Joshua Edwards, the supposed vice president of ASLAN International Ministry, is accused of submitting fake payroll, tax, and financial documentation in support of the loan application. However, the DOJ alleges that the nonprofit in fact had not paid any wages in the prior year, and it further alleges that the former candidate used the PPP funds to pay for a swimming pool and cover other personal expenses. Both laws have provisions allowing whistleblowers to receive a reward for successful recoveries obtained for the U.S. government. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. If you were to default, the lender would have the right to recover what is owed through the sale of the collateral, which could include your primary residence, business assets, or even your car. The Act originally authorized up to $349 billion in forgivable loans to small businesses through the Paycheck Protection Program (PPP), and Congress later authorized $321 billion in additional PPP funding.