Feds pursue fraud claims against PPP recipients

To help struggling businesses needing immediate access to cash during the COVID-19 pandemic, Congress introduced the Paycheck Protection Program (PPP) as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. Some companies, however, didn’t use the PPP loan funds as Congress intended. Because of a broad range of associated fraud, the Small Business Administration (SBA) and other government agencies have been investigating PPP loan cases. As of late March 2021, the U.S. Department of Justice (DOJ) has publicly charged 474 parties with criminal offenses based on pandemic fraud schemes, totaling $569 million in claims, and the investigations continue.

Just how many fraud reports are there?

In 2020, banks filed more than 21,000 suspicious activity reports (SARs) based solely on potential PPP loan fraud. By early 2021, the SBA had received 150,000 whistleblower reports about PPP loan fraud. Out of $202 billion in loans issued, at least $341 million were involved in alleged fraud schemes.

PPP loan fraud comes in all shapes and sizes, from inflated payroll expenses to the fabrication of entire businesses with no operations. Reports suggest bad actors have claimed thousands of fake employees for coverage while allegedly using the funds to buy luxury vehicles, mansions, and diamonds as well as for back payment of child support and other fraudulent purposes.