Paycheck Protection Program (“PPP”) fraud is one of most active—if not the most active—area of Department of Justice scrutiny right now. This article will discuss some recent cases and “red flag” issues the government focuses on.
Recent DOJ Enforcement of SBA Fraud
Throughout 2021, the DOJ across the country has ramped up its enforcement efforts of Small Business Administration (“SBA”) fraud arising out of the COVID-19 relief programs. While DOJ has adopted an across-the-board aggressive approach, there are a few clear takeaways:
- First, the more money you received, the higher the likelihood your loan or grant will be scrutinized. Recently, the DOJ charged seventeen more defendants as part of a major takedown in alleged PPP fraud involving $11 million. If you received more than $1 million, your paperwork will be subject to scrutiny. This scrutiny may lead to possible referral for prosecution if discrepancies are identified and investigators suspect fraud.
- Second, if you submitted more than one application, you are likely subject to increased scrutiny. The Atlanta U.S. Attorney’s Office charged a $27 million PPP case. In this case, the DOJ alleged that the single defendant submitted 27 bank loan applications to four banks between April and June 2020 on behalf of eight companies. Submission of applications for multiple loans or grants is likely to draw the government’s attention.
- Third, the DOJ, SBA, and other law enforcement agencies will cross-check representations made by companies against other government documents, such as tax returns or other submissions made by you, to identify false statements or fake documents. For example, in one case, the government focused on the fact that the defendant represented that each of his companies had 100 employees and average monthly payroll of $400,000, even though he knew that the companies did not have any employees or payroll expenses. That defendant also submitted fabricated IRS documents falsely stating that each of the companies had an annual payroll of $4,800,000. Submitting multiple applications—particularly when each company has the same number of employees and revenue and it is inconsistent with past filings—is an easy way to draw the government’s attention that something is amiss.
Our partner, Tom Clarkson, is a former federal prosecutor who investigated and prosecuted some of the earliest PPP and Small Business Administration COVID-19 fraud cases in the country. Tom leads our SBA Fraud practice group.
If you think you improperly received PPP or other COVID-19 relief aid, you should consult an attorney promptly to discuss your options and develop a strategy to guide you to the best outcome possible. All the partners at Griffin Durham Tanner & Clarkson LLC are former federal prosecutors who represent those under investigation in connection with DOJ investigations. Please contact us today.