In 2020, the government launched an unprecedented response to the global COVID-19 pandemic. With the expansion and creation of government assistances programs also comes a new area of government enforcement. Individuals and businesses who received federal assistance, including support through the Paycheck Protection Program (“PPP”), Economic Injury Disaster Loan (“EIDL”), or any other program could be in the crosshairs of a government investigation if investigators believe you obtained money improperly or a subsequent audit identifies any discrepancies.
With this massive influx of federal support, the Department of Justice (“DOJ”) has dedicated substantial resources to investigating and prosecuting those who they believe have fraudulently obtained money through one of these federal programs.
What is the Paycheck Protection Program?
The Paycheck Protection Program is a federally-funded program that provides loans to help businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. Administered by the SBA, the PPP has funded over $900 billion to American companies since the start of the crisis. Not everyone, however, is eligible for support. The PPP programs offers loan to companies who meet certain conditions. For those who receive funding, a company must use the loan for specific purposes and meet certain conditions to have that loan forgiven.
What are Economic Injury Disaster Loans?
Economic Injury Disaster Loans are separate from PPP loans and are intended to meet financial obligations and operating expenses that could have been met had the disaster not occurred. Like the PPP Program, only certain companies are eligible and the proceeds can only be used for certain expenses.
DOJ Enforcement Priorities?
Like any other government program involving billions of dollars, DOJ and partner agencies investigate recipients of the funding if there is an allegation of fraud. Prosecutions have started to emerge across the country, with cases led by U.S. Attorneys and Washington-based prosecutors.
The government focuses on three main issues:
- Were any representations made to obtain the funds fraudulent?
- Even if there was no fraud in obtaining the funds, were the funds used for legitimate purposes?
- If there was no fraud in obtaining the funds and they were used legitimately, did the company meet the requirements to be eligible for forgiveness?
DOJ has dedicated significant resources to investigate and prosecute pandemic-related fraud. Thus far, the vast majority of DOJ activity has been building criminal cases involving wire fraud, mail fraud, or fraud in connection with major disaster or emergency benefits. All these charges carry the risk for significant prison time. Every U.S. Attorney’s office has a designated “COVID Fraud Coordinator” who leads the office’s efforts to prosecute any COVID-19 fraud schemes. Resources from “Main Justice” components, such as Consumer Protection Branch and the Criminal Division, also have played significant roles.
The attorneys at Griffin Durham Tanner & Clarkson are former federal prosecutors who represent clients in connection with DOJ investigations and are experienced in COVID-19 related fraud prosecutions. If you need assistance with such a matter, please contact us today.