Feds Charge 57 With Fraud Involving Paycheck Protection Program: DOJ

September 10, 2020 Updated: September 10, 2020

Federal authorities have charged 57 individuals for allegedly attempting to steal over $175 million from a program aimed at helping small businesses during the pandemic known as the payment protection program (PPP), the Justice Department announced.

Acting Assistant Attorney General Brian Rabbitt said during a press conference on Thursday that the cases of fraud had resulted in over $70 million in actual losses to the federal government. He said that the Justice Department has been combating fraud and, to date, has been able to recover or freeze over $30 million.

Rabbitt said individuals who have been accused of defrauding the federal government fall into two categories—individuals or small groups lying about having legitimate businesses or making false representations about their businesses, and coordinated criminal rings.

He noted that some individuals in the first category allegedly would make misrepresentations about the nature of their business in applications and in some cases use fake documents, like falsified tax records, dummy payroll to obtain the loan. Meanwhile, other individuals have allegedly used the PPP funds for entirely illegitimate purposes.

“We allege that many of these defendants took the relief money offered by the PPP and spent it on things having absolutely nothing to do with relief—often on luxury items for themselves, their families, and their friends such as cars, jewelry, travel, and other personal expenses,” Rabbitt said.

In late July, the Justice Department charged a Miami man for fraudulently obtaining almost $4 million in PPP funds and using them, in part, to buy a $320,000 Lamborghini sports car.

“PPP funds were intended to help keep American businesses afloat,” Rabbitt said. “I can assure you they were not intended to help support fraudsters’ dreams of owning Lamborghinis, Rolls Royces, Range Rovers, or diamond jewelry.”

The $670 billion PPP was created by Congress in March to provide pandemic relief to small businesses with 500 or fewer employees. These loans are forgivable if the businesses use funds for payroll costs and expenses such as interest on mortgages, rent, and utilities. The program stopped accepting applications in early August.

Over 5.2 million loans have been granted, totaling more than $525 billion, according to the Small Business Administration (SBA).

This week, JPMorgan Chase & Co, which dished out nearly $30 billion PPP loans, said it was working with law enforcement after identifying cases of customers “misusing” the funds.

Sen. Marco Rubio (R-Fla.), chair of the Senate’s small business committee, on Thursday wrote a letter (pdf) to JPMorgan CEO Jamie Dimon about recent reports that employees of the banks were involved in potential misuse of the funds.

Reuters contributed to this report.

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