On Sept. 9. the U.S. Department of Justice (DOJ) announced it has criminally charged more than 50 people who allegedly committed fraud to obtain money from the Paycheck Protection Program (PPP).
“The PPP represented critical help at a critical time,” said Acting Assistant Attorney General Brian Rabbitt at the PPP Criminal Fraud Enforcement Action Press Conference. “Unfortunately, almost every crisis brings out not only those who seek to help others, but also those who try to exploit the situation for their own unlawful purposes and financial gain.”
The cases charged involve attempts to steal over $175 million from PPP with actual losses to the federal government of over $70 million. The cases are diverse in both size and scope, ranging from fraudulent loan requests for $30,000 to over $24 million and span 19 federal judicial districts across the country.
Rabbitt said banks and other lenders assisted the DOJ in identifying potentially fraudulent loans. “Many financial institutions have been strong partners in assisting us in detecting and investigating potentially fraudulent activity in connection with the PPP and other government aid programs and safeguarding taxpayer dollars by spotting fraud and freezing funds or accounts,” he explained.
Rabbitt’s remarks at the press conference place the DOJ’s PPP fraud cases into two broad categories:
1) Cases where individuals – or small groups – who lied about having legitimate businesses, or who claimed they needed PPP money for things like paying their workers, but instead used it to buy splashy luxury items for themselves.
2) Coordinated criminal rings that have engaged in systematic, organized conduct to loot the PPP.
Rabbitt commended the DOJ Criminal Division’s Fraud Section for moving quickly to combat fraud connected to PPP, setting up a dedicated team and beginning investigations immediately. The first cases of PPP fraud were brought within months of the program being announced, while loans were still being made.
“We did this not only to protect the integrity of the PPP and the taxpayer funds it was disbursing, but also to send a message of deterrence to would-be fraudsters – while loans were still being made – that the Department was standing watch and would move aggressively to prosecute those who defrauded this critical program,” said Rabbitt.
Given the overall scope of PPP—5.2 million loans approved for a total of over $525 billion—the cases brought by the DOJ account for just 0.03% of funds disbursed. But for the individuals and businesses affected, every dollar counts.