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The CARES Act and Paycheck Protection Program (PPP) Fraud

The CARES Act was designed to help people and businesses survive through the Covid-19 pandemic. With it came the PPP, or Paycheck Protection Program. This specific item was created to provide financial support to small businesses based on their monthly expenses, number of employees, etc.

We know that a program like PPP can be easy for some small business owners to abuse as seen with the TARP (Troubled Asset Relief Program) of 2008. People abused TARP, and we are starting to see PPP fraud pop up.

Two New England businessmen attempted to get more than $545,000 in PPP loans. However, their businesses were not operating before the COVID-19 pandemic. Another businessman in Texas sought to receive more than $5 million for his 400 employees, the vast majority of which were not real and had names created by an online name generator. Patricia Hines, head of corporate banking at Calent, a research and advisory firm, said to Banking Dive, “…it’s very difficult to validate employees … The credit bureaus validate lots of things about the information on loans, but we’ve never had a way of measuring, for instance, payroll amounts or the number of people on the payroll.”

While these circumstances make it a lot easier for people to commit fraud in order to receive a higher loan, business owners are getting caught for their actions. These cases are going to become much more relevant and common in the courts. After all, the likelihood of only three people in the United States exploiting this system is fairly unlikely. Assistant U.S. Attorney General Brian Benczkowski told Bloomberg earlier this month that 15 to 20 of the largest loan processors have been contacted and have seen proof of applicants exaggerating payroll costs or employee counts. We know that millions of dollars were awarded right here in Greenville, and our courts may not be exempt from PPP fraud cases. As a firm with dedicated lawyers, [nap_names id=”FIRM-NAME-1″] is available to discuss your case.

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