June 24, 2021 23:22

Feds Probe Hundreds of Paycheck Protection Frauds

The federal government is swamped with reports of potential fraud in the Paycheck Protection Program, the Wall Street Journal reports. Congress and the Trump administration designed the PPP to give small businesses fast, easy access to taxpayer funds. Some $525 billion in loans went to 5.2 million companies between April 3 and Aug. 8. Evidence is growing that many others took advantage of the program’s open-door design. Banks and the government allowed companies to self-certify that they needed the funds. The Small Business Administration’s inspector general said there were “strong indicators of widespread potential abuse and fraud in the PPP.” The watchdog counted tens of thousands of companies receiving PPP loans for which they may have been ineligible, such as those created after the pandemic began, businesses exceeding workforce size limits or those in a federal “Do Not Pay” database because they owe money to taxpayers.

Tens of thousands appear to have received more money than they should have based on their headcounts and compensation rates. The Treasury Department in September received 2,495 suspicious activity-reports involving business loans from banks and similar institutions, more than for any year since 2014. Several hundred PPP-related investigations have been opened, involving nearly 500 suspects and hundreds of millions of loan dollars, the FBI says. The Justice Department has charged 73 defendants in PPP-related fraud cases. Many other loans fall into a gray area in which businesses received one despite seeing revenue increase during the pandemic. Prosecutors face hurdles in proving business owners lied when they said they needed money in the pandemic’s chaotic early days, even if profits kept coming in later. “They don’t charge mistakes. They charge intentional lies,” said Tarek Helou, a former federal prosecutor. Given the limited criteria Congress set, he said, “The scandal is what’s legal, not what’s illegal.”

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