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It’s been over a year since the first round of lockdowns cascaded across the U.S. in response to the now-ubiquitous novel coronavirus. It’s also been well over a year since the first round of the wildly popular Paycheck Protection Program went out to U.S. business owners. To date, nearly $800 billion of the program has been disbursed, and more than 10 million PPP loans have been approved.
Like the COVID-19 disease itself, the public is still discovering things about the program meant to keep workers on the nation’s payrolls. Layer after layer has been peeled back from the federal government’s strategy of investigating and prosecuting PPP fraud, and we continue to get a clearer picture of what investigators are targeting.
Cares Act Fraud
The Department of Justice has been open about seeking legal talent to join its Fraud Section. Recently, the DOJ began courting experienced trial attorneys to help prosecute fraud related to the CARES (Coronavirus Aid, Relief, and Economic Security) Act, which encompasses the PPP. The specific job posting sought three hires to its 45-person Market Integrity and Major Frauds (MIMF) Unit. Perhaps the most telling component of the job posting is the two-year renewable commitment.
Treasury vs. DOJ Investigations
In the early days of the PPP, the (somewhat understandable) hastiness of the program’s rollout meant that federal agencies, like the U.S. Treasury Department, were essentially forced to go after the more egregious violations. These violations typically involved loans of at least $2 million. Recent charges, though, show a more aggressive approach by the DOJ to investigate smaller loans.
For instance, a former mayoral candidate in Georgia is alleged to have fraudulently obtained $323,000 in PPP funds in 2020. The Georgian used her company to obtain PPP funds for employees who didn’t work at the company or even exist. The alleged fraudster used the money for home improvement and vanity projects.
South Florida residents might have read about a Miami tax preparer who allegedly submitted more than 100 fraudulent loan applications for himself and accomplices. He sought more than $2 million, but only received a little less than $1 million. Despite the relatively light price tag, though, the DOJ aggressively investigated and prosecuted this case. While hundreds of thousands of dollars is not insignificant, it doesn’t quite grab headlines like the fraudsters who received millions of PPP loans and spent it on luxury cars and extravagant vacations.
If Not Criminal, Then Civil
Also gone are the days of only prosecuting willfully fraudulent PPP-related actions. Negligent actions on behalf of PPP borrowers could lead to civil penalties under the False Claims Act. With an early, aggressive strategy by competent legal counsel, defendants could avoid criminal charges and settle matters in civil court. That means you must act quickly if federal investigators have contacted you about potential PPP fraud or if you believe charges are imminent.
Weisberg Kainen Mark has spent several decades defending clients charged with all manner of white-collar crimes. We understand the stress involved with these types of charges, and our team is prepared to protect your rights. Call us at (305) 374-5544 to discuss your options.
Weisberg Kainen Mark, PL
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