Emergency COVID-19 relief legislation called the CARES Act has allocated trillions of dollars in financial aid to businesses, individuals, non-profits and governments affected by the pandemic and shutdown of the national economy. Two of the major financial relief programs are administered through the Small Business Administration (SBA) and are the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan Program (EIDL). The Treasury Department through the CARES Act will also be administering loans and loan guarantees for mid-sized and large businesses, states and municipalities.

The government expects that there will be many instances of fraud against the various programs.   The SBA and Treasury programs have oversight through their Inspectors General offices, the SBA OIG and CARES Act-created Special Inspector for Pandemic Recovery (SIGPR) for Treasury. Upon referrals from the OIG offices, other federal law enforcement agents, such as the FBI, will also be involved in investigating potential crimes from these programs.

Borrowers under the PPP and EIDL program had to make true statements, of course, during the loan application process and have to use the loans granted in certain ways. Any fraud in that process could be prosecuted under any number of federal statutes including the Small Business Act, False Claims Act and other more generic criminal statutes such as wire fraud or bank fraud.

For example, if a business claims to have employees in order to receive PPP funds, but in fact has fewer or no employees, the applicants can be prosecuted for fraud. This was the case earlier this week when the Justice Department announced bank fraud charges against two Rhode Island men who allegedly did just that.

SIGPR was modeled after a similar program created to investigate fraud following the Troubled Asset Relief Program (TARP) in 2008. SIGPR is expected to refer to the Justice Department cases involving bank fraud, securities fraud, money laundering and other offenses for matters resulting from fraud and abuse of the lending done through Treasury.

If you or someone you know is contacted by an OIG agent or federal law enforcement officer concerning funds distributed through these programs, please contact Willey & Chamberlain. We specialize in handling criminal investigations and prosecutions of those accused of defrauding government programs.

Press Release DOJ