Cares Act, PPP Fraud, Small Business Administration Fraud
The Covid-19 pandemic was an unprecedented period in human history characterized by extreme unemployment, the closure of many small businesses, and an undeniable sense of uncertainty. Millions of people across the globe didn’t know if they were going to get sick or lose their livelihoods, causing an immense blanket of fear that affected the millions of people stuck inside their homes. As we began to emerge from our quarantines, it was obvious someone needed to step in and help the starving businesses and industries that tried to survive throughout the pandemic, prompting the federal government to enact the CARES Act.
The Coronavirus Aid, Relief, and Economic Security Act (CARES ACT or Act) was designed to offer financial support to those whose livelihoods were affected by the pandemic. Fraud involving the ACT has focused on the Paycheck Protection Program (PPP), which is a loan program that provides small businesses with eight weeks of financial assistance, which has allowed struggling businesses to pay their employees and keep their doors open with fewer customers in their store. The program is managed by the Small Business Administration (SBA), and in conjunction with numerous financial institutions, hundreds of billions of dollars were distributed to tens of thousands of struggling businesses. Both borrowers and lenders under the Act have engaged in Fraud and now have the attention of the United States Department of Justice (DOJ).
The SBA has limited resources, thus there was very little oversight over the application process for the loans and the disbursement of funds to the businesses. Hence the $953 billion in loans made that went to over 4.5 million recipients, had few real controls to prevent fraud. And when you consider the Association of Certified Fraud Examiners estimates that fraud against the government is usually within the range of 5-7%, then that means close to $1 billion worth of the loans were fraudulent.
Further, the financial institutions profited enormously off issuing the loans. In fact, there is credible evidence that some of the institutions knowingly overlooked red flags when processing the applications and disbursing monies, because for every loan disbursed, the financial entity earned a processing fee that ranged from 5-1%, depending on the size of the loan. Thus, there was a significant incentive to process as many loans as possible by the financial institutions. The DOJ is very interested in pursuing those entities that knowing disbursed funds where they knew the small business were not qualified under the Act.
Together, We Can Fight Against CARES ACT Fraud
Together, we can fight against CARES ACT fraud. If you have knowledge and evidence of fraud involving the ACT and want to do the right thing and possibly obtain a monetary award, then you can contact us for a free consultation. Below are examples of fraud involving the Act:
Borrower
- Submitting false information, such as your identity, income reports, or other fraudulent information to the government to obtain a PPP loan
- Receiving multiple PPP loans from different lenders, otherwise known as stacking
- Using PPP funding for purposes outside of the business
- Falsely claiming loan forgiveness
- Misrepresenting employee counts or payroll reports to gain more funding
Lender
- Knowingly processing and disbursing loans to non-qualified applicants
- Knowingly disbursing more than one loan to an applicant
- Failing to properly verify the identity of new customers
- Failing to collect and properly calculate employee wages
Contact Our Whistleblower Group Today
If you have evidence of PPP or Small Business Administration fraud occurring at your workplace or any other organization, our whistleblower attorneys are ready for your first consultation. We stand with whistleblowers everywhere, every step of the way.