PPP Loan Investigations and Prosecutions are on the Rise 

March, 2024 - Dinsmore & Shohl LLP

In recent months, a number of agencies, including the Federal Bureau of Investigation (“FBI”), have been working diligently to identify businesses and individuals who committed alleged fraud through the Paycheck Protection Program (“PPP”). The PPP was a key component of the CARES Act, which approved $2.2 trillion in economic relief in response to the COVID-19 pandemic. The PPP aimed to help businesses navigate the pandemic by providing financial assistance to employers.

PPP loans required 60% of the loan amount cover payroll expenses, while the remaining 40% could be used for other related business expenses. It has become abundantly clear that some recipients of PPP loans took advantage of the available funds and used the loans for non-business purposes.

The U.S. Small Business Administration (“SBA”) is auditing all companies that received PPP loans of $2 million or greater, while the Department of Justice (“DOJ”) and other federal agencies are ramping up the number of investigations and prosecutions of PPP loan fraud. The scrutiny of investigating PPP loans falls on the fact that the SBA Inspector General estimates there was over $64 billion in fraud from the PPP alone. This is in light of the SBA processing 11.8 million PPP loan applications, totaling $800 billion.

The SBA Inspector General estimates that 17% of PPP loans were distributed to businesses and individuals who committed fraud. Thousands of investigations have been opened across the country targeting COVID-19 related fraud. The DOJ has brought criminal charges against hundreds of individuals, and many more criminal cases are coming.

The SBA Inspector General estimates thousands of investigations will ensue for years to come. Still, the end is nowhere in sight for recipients of PPP loans, because Congress increased the statute of limitations for prosecution of PPP fraud to 10 years. Finally, the government has indicated that it will even look to investigate instances of fraud regarding PPP loans that have already been forgiven.

If you or your company is the recipient of a target letter or indictment from the government, or are questioned by federal authorities in regard to PPP loan fraud, Dinsmore’s experienced team of white collar criminal attorneys are ready to protect your liberties and livelihood in your time of need.


Link to article


WSG Member: Please login to add your comment.