The firms getting maximum loans are likely just a tip of the iceberg: Statistics released last week by the U.S. Small Business Administration showed that 4,400 of the approved loans exceeded $5 million. The Justice Department has accused numerous defendants of using Paycheck Protection Program loans for unlawful purposes, such as purchasing private planes, sports cars, and taking pricey trips to Las Vegas casinos. US Executive Branch Update March 2, 2023. Michigan PFAS Challenge Arguments Briefed For The Court. Kindambu applied for two Paycheck Protection Program loans representing Papillon Holdings, Inc. and Papillon Air, Inc., according to court documents. The federal Paycheck Protection Program (PPP) established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided a total of $934 billion in funding to companies impacted by the COVID-19 pandemic. If faced with a DOJ investigation alleging PPP fraud, business owners and other individuals must carefully assess their risk and build a defense that is tailored to the specific circumstances and allegations at hand. This site is not affiliated with the SBA or any other governmental body. The case was brought in Honolulu, Hawaii. The Small Business Administration generally defines small businesses as those with 500 employees or fewer. Associate The Future of Stablecoins, Crypto Staking and Custody of Digital White House Climate and Environmental Justice Screening Tool. This site uses cookies to enhance functionality and performance. are moving. Suspicious activity reports for small business loan fraud continued at levels far higher than normal through the end of 2020, according to POGOs review of federal data. Find out how you can get involved and stay up to date with our work. The involvement of a Small Business Administration employee in a pandemic loan fraud case raises questions about the agencys vetting of employees. In order to avoid repaying their loans, PPP recipients must certify to compliance with the terms of the program. Loans; Make a payment to SBA; COVID-19 relief options; 7(a) loans; 504 loans; Microloans; Lender Match; Investment capital; Disaster assistance; Physical damage loans; Mitigation assistance; Economic Injury Disaster Loans; Military reservist loan; . According to the DOJ, the man, obtained nearly $2 million in Paycheck Protection Program (PPP) loans from seven different lenders by, among other things, submitting multiple loan applications in the names of three different businesses while falsely claiming to have numerous employees earning wages.. Horowitz, the Justice Departments inspector general, recently testified to a House panel examining COVID-19 loan fraud that a legislative reform could help address the problem of fraud in smaller dollar amounts. Normally, our agents work a contract or procurement fraud case those can take several years to investigate, Grossman said. If a company is eligible for a loan and submits certifications in good faith, that company will have nothing to fear from the Civil Division. Dirty Steel-Toe Boots, Episode 16: Investigations and the OSH Acts DOE Issues FOA for Carbon Capture Large-Scale Pilots and Carbon A Forward Look at IRAs Sweeping Impact on the EV Sector [PODCAST]. In November, U.S. District Court Judge James Boasberg agreed, saying there was significant public interest in shedding light on who got the Paycheck Protection Program loans. Visas for F and M Students Can Now Be Issued 365 Days Ahead of Program Start Date, Supreme Court Clarifies the Meaning Salary Basis Under Federal Overtime Law. Too often those who fraudulently divert tax dollars in amounts below what is typically accepted by prosecutors are not fully held accountable, impacting agency programs and leaving the taxpayer footing the bill, he wrote. Specialized Freight (except Used Goods) Trucking, Local, Offices of All Other Miscellaneous Health Practitioners, Offices of Physicians (except Mental Health Specialists), Plumbing, Heating, and Air-Conditioning Contractors, Outpatient Mental Health and Substance Abuse Centers, Other Activities Related to Credit Intermediation, Nursing Care Facilities (Skilled Nursing Facilities), Internet Publishing and Broadcasting and Web Search Portals, Other Support Activities for Air Transportation, All Other Professional, Scientific, and Technical Services, Other Aircraft Parts and Auxiliary Equipment Manufacturing, Dry, Condensed, and Evaporated Dairy Product Manufacturing. The average loan amount. Search. Theres a lot of red flags that they look at in the data to help us determine if its something we need to look at deeper.. The Justice Department has brought criminal charges against at least 209 individuals in 119 cases related to Paycheck Protection Program (PPP) fraud since banks and other lenders began processing loan applications on behalf of the Small Business Administration on April 3, 2020. If you were to default, the lender would have the right to recover what is owed through the sale of the collateral, which could include your primary residence, business assets, or even your car. 7334. . In a case that garnered national attention, the U.S. Secret Service seized over $8.4 million in Paycheck Protection Program funds from a seemingly bogus ministry in Orlando, Florida that had no apparent operations at its physical location and a website filled with generic language taken from other religious organizations. The data contains all original variables and new variables added with minimally, consistently, and confidently normalized character strings. In remarks before the U.S. Chamber of Commerce, an influential business lobbying group, last June before the SBA released partial data identifying Paycheck Protection Program recipients of loans above $150,000, then-Principal Deputy Assistant Attorney General Ethan P. Davis said that with the administrations decision to release that information, some have predicted more qui tams as a result., Davis then said, Let me be clear. | As of September 2020, Congress had already identified billions of dollars in suspect loans issued under the PPP; and, in the months since, the U.S. Department of Justice (DOJ) has continued to pursue fraud investigations targeting PPP loan recipients across the country. Some investigations begin with complaints received through the watchdogs hotline, and others come from referrals by federal agencies or state and local law enforcement. Even if the Justice Department declines to join a case, the whistleblower and their private counsel can continue to pursue it. What happens when the watchdog tasked with overseeing the most powerful law enforcement agency in the country doesnt do its job? When Cops Are Fired: How one attorney forces police chiefs to rehire dismissed officers. Associate That story of corruption inside SBA has been overshadowed by other criminal allegations against Greenberg, notably child sex trafficking charges, and a scandal that might bring down a member of Congress. And there is a lot of gray area in the Paycheck Protection Program, partly because the Small Business Administrations rules for the program changed repeatedly and were unclear, and because Congress created loose criteria for loan eligibility and allowed applicants to self-certify their information. He also opened bank accounts and lines of credit at financial institutions and credit card companies in the names of his elderly victims, according to the Justice Department. While not all of these new reports can be attributed to the government relief effort, they are a sizeable share of the increase., Similarly, a February report by the Pandemic Response Accountability Committee stated that Identity theft is on the rise and has been exploited by bad actors to obtain pandemic response funds, such as unemployment insurance benefits, PPP loans, and EIDLs., Grossman told POGO, There are also PPP and EIDL cases were aware of that are being investigated by state and local authorities, because my agents out in the field get calls from state police and local police departments, where they have received complaints from citizens on identity theft, for example.. Qui tam complaints are filed under seal the SBA and Treasury Secretary Steven Mnuchin started accepting loan recipients applications just a week later on April 3, 2020. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor. NIOSH Announces Publication of Article on the Results of 2019 Survey of Ogletree, Deakins, Nash, Smoak & Stewart, P.C. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. The CARES Act precluded the agency from exercising one important check on fraud in the Economic Injury Disaster Loan program. The Justice Department has brought charges in at least 56 cases for alleged Paycheck Protection Program fraud, according to a POGO review detailing trends in these first cases. Irvine, CA: Irvine, CA. The release states that, In exchange for a fee, My Buddy Loans took personal identifying information from victims and promised to file an application for an agricultural grant, which they said was available to those who owned a few acres of land. Instead, the defendants Clifton Pape, 45, and Sally Jung, 58, both of Cleveland, Texas, actually filed fraudulent EIDL applications with the SBA that contained the victims personal identification information.. The SBA Employee would and did use her access to the SBAs computer systems and her access to EIDLs to manipulate the status of EIDLs to trigger the system to extend funding for EIDLs submitted for the benefit for Joel Micah Greenberg, the indictment alleges. According to an indictment, Sah submitted at least 15 fraudulent applications on behalf of at least 10 companies. However, all of the DOJs PPP fraud investigations to date have shared a common thread: The agency has moved quickly in seeking to file charges, and it has shown little sympathy for those accused of unlawfully taking advantage of the PPP. (Eligible companies and nonprofit organizations can apply for and receive both Paycheck Protection Program and Economic Injury Disaster loans.). Dr. Nick Oberheiden focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation. [More than half of small-business loans went to larger businesses, new SBA data shows] This searchable list shows information for businesses that received loans of more than $150,000, as reported . Justice and Commerce Departments Announce Creation of Disruptive United States Department of Justice (DOJ), Biden Executive Order 14091 Strengthens Equity for Federal Agencies. The PPP / Cares Act that was put in place to help business affected by Covid-19. One case involved applications for hundreds of allegedly fraudulent Economic Injury Disaster loans and at least a $1.3 million loss to the federal government. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. On March 29, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. Funds can also be used to pay interest on mortgages, rent, and utilities. Even if the debt is cleared, the loans can end up wreaking havoc on individuals and businesses credit scores. 23-Year-Old Charged with Submitting Fraudulent PPP Loan Applications In February 2021, the DOJ filed charges against a 23-year-old New York resident who is accused of submitting multiple fraudulent PPP loan applications on behalf of a single company. Both the outgoing Trump administration and the Biden administration appear to have learned lessons from the fraud that occurred in 2020. The Small Business Administration has released a list of businesses that have received emergency pandemic loans. Although the PPP was intended as a short-term relief program and many businesses have already exhausted their SBA-backed funds, the DOJ is continuing to target loan recipients suspected of fraud. He has defended clients in PPP Loan Fraud cases and COVID-19 investigations. The National Law Review is a free to use, no-log in database of legal and business articles. Law enforcement assisting in the investigation included the Small Business Administration OIG office, the FBI, FDIC and others. Another large identity theft case led to charges against Jeremie Saintvil of Delray Beach, Florida in March. An October inspector general report states that SBA has fired employees and contractors who were involved in approving loans to themselves or who inappropriately influenced loan approval. The Small Business Administration did not respond to questions, but a spokesperson for the agencys inspector general told POGO that we are aware of one employee and two contractors who have been fired for these reasons. In addition to allegedly submitting a fraudulent PPP loan application for a fictious [sic] business in his own name, Saintvil also allegedly stole the identities of eight elderly individualsseven of whom were residents of senior living facilities and one who was related to him, according to a Justice Department press release. A picture from that stay shows Pape and Jung celebrating over sparkling wine. Jungs attorney declined to comment, and Papes attorney did not respond to a request for comment. Winds light and variable.. Mostly clear. a different set of 19 loan recipients traced back to an office park about 30 minutes . And this is not the only case. NIOSH Announces Publication of Article on the Results of 2019 Survey How to Donate Cryptocurrency and Other Digital Assets to Charity. There is abundant evidence that there was too little upfront vetting of loan applications in both the Paycheck Protection Program and Economic Injury Disaster Loan program. Business groups have been lobbying to get Congress to quickly pass legislation to reverse the IRS guidance, he said. And these cases are just the beginning. California. Created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Paycheck Protection Program has lent out $755 billion to businesses as of April 11. The data release includes . A Washington state tech executive was sentenced today in the Western District of Washington to two years in prison for perpetrating a scheme to fraudulently obtain COVID-19 disaster relief loans guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) under The Small Business Administration has sent 1.34 million referrals related to Economic Injury Disaster loans to its office of inspector general, which is tackling these and Paycheck Protection Program fraud cases in coordination with a host of other law enforcement agencies. POGO has sought additional data from the Small Business Administration, and to improve data collection. Since last October, when POGO published a report examining trends in Paycheck Protection Program loan fraud at the programs six-month mark, several eye-popping cases of alleged fraud have emerged. Leaders of statewide business groups said they think the first round of PPP loans were vitally important to help businesses survive the pandemic economic slowdown and said another round of loans are needed now. Given the DOJs efforts to target PPP loan recipients as well as the substantial risks of criminal prosecution in these cases, what do PPP loan recipients need to know? Ryan Summers They often involve obtaining and then piecing together often-complex financial, payroll, and tax records for individuals and companies, and sifting through other evidence. Rabbitt noted the unparalleled speed with which these cases have been investigated and prosecuted.. The National Law Review - National Law Forum LLC 3 Grant Square #141 Hinsdale, IL 60521 Telephone (708) 357-3317 ortollfree(877)357-3317. The SBA now also conducts manual loan reviews for the largest loans in the PPP portfolio and a random sampling of other loans. Underscoring the tension between fraud prevention and disbursing assistance quickly, the added checks to verify information submitted by applicants have somewhat slowed the processing of loan applications. April 15, 2021. As some of its recent cases show, the DOJ is targeting individuals as well as businesses, and it is targeting loans well below the Treasurys $2 million audit threshold: Former Mayoral Candidate Charged with Obtaining Fraudulent $323,000 PPP Loan In March 2021, the DOJ charged a former mayoral candidate in Georgia with fraudulently obtaining in excess of $323,000 under the PPP. The Biden administration published a fact sheet on February 2 detailing new measures to prevent fraud in the program. We also have compiled state-by-state files for download. Data analysts at the inspector generals office have been combing through Paycheck Protection Program and Economic Injury Disaster loan data to look for markers of potential fraud, such as repeat loan applicants from the same physical addresses, Grossman told POGO. Investigating Power is a history of breakthrough investigations that revealed news and changed the national narrative on many major topics since the 1950s, from war to health to civil rights. On applications for loans for two companies, Greenberg Media Group and DG3 Network, Greenberg allegedly lied about not being under indictment despite having been arrested by federal agents and charged just days earlierwith the indictment a matter of public record. If you do nothing, you are giving implied consent to the use of cookies on this website. We are concerned only with actionable fraud. He added that, in selecting enforcement targets, we will follow the law, and we will not pursue companies that access CARES Act programs in good faith and in compliance with the rules.. In a nod to changes that have improved oversight, William Shear, the Government Accountability Offices director of financial markets and community investment, testified on March 25 that, Although SBA has taken some steps to mitigate fraud risks to PPP and EIDL, such as conducting PPP loan reviews and implementing new EIDL controls, the agency has not yet conducted a formal fraud risk assessment for either program. The Small Business Administration last month agreed to conduct such a risk assessment. After months of litigation, the SBA released the dataset Tuesday night on every small business that received a Paycheck Protection Program (PPP) or Economic Injury Disaster (EIDL) loan. Investigative Reporting Workshop Some of these qui tam lawsuits are traditional whistleblower cases, but others involve individuals who are slicing and dicing the data that has been made available about loans, according to Grossman. 1,270,615 TOTAL PPP LOANS. During the programs first round, the Small Business Administration issued 5.2 million loans between April and August 2020. to give the federal government time to investigate and evaluate the complaint before it becomes public. Banks issued billions of dollars in fraudulently-obtained SBA-backed loans, and the DOJ and the U.S. Department of the Treasury quickly realized that they would need to take an aggressive approach to preventing fraudulent forgiveness requests and recovering as many fraudulent-obtained loans as possible. The program began issuing loans again in January 2021, and some businesses are eligible for a second loan. The addresses listed for the two companies, according to SBA loan data, also do not match the addresses in the states corporation recordsyet another sign of potential fraud. The names and addresses of businesses receiving PPP loans greater than $150,000 were released in a public dataset. In addition to making false statements about the companys employees and payroll, the defendant also allegedly submitted falsified federal tax documents and payroll records to three different PPP lenders. Free Speech Shines Bright, Illuminates Patent Owners Right to Allege California Supreme Court to Address Rounding of Employee Time. Whether bad faith was involved is another matter. Representative James Clyburn (D-SC), chair of the House Select Subcommittee on the Coronavirus Crisis, said in the March 25 hearing that the Trump administration ignored flags of potential fraud in the Economic Injury Disaster Loan program, and approved loans in batches with little to no vetting and abandoned a rule that required two SBA employees to approve each loan application., The Trump administration ignored flags of potential fraud, While a year has passed since the CARES Act became law and there are more checks now, government watchdogs say the Small Business Administrations oversight of the lending programs is still inadequate. The National Law Review is not a law firm nor is www.NatLawReview.com intended to be a referral service for attorneys and/or other professionals. The release comes as Congress is debating whether to pass another round of federal stimulus and whether that would mean another round of the Paycheck Protection Program. If convicted, the defendants could face several years in prison and hundreds of thousands of dollars in criminal finesas well as responsibility for repaying the fraudulently-obtained PPP loans. Applicants fraudulently obtained at least $16 million, per the Justice Department. Since March 2020, the Department of Justice has publicly announced charges in numerous . Expanding Regulatory Reach over Intermediaries That May Constitute How to Value Digital Assets for Donation to Charity. The program provided loans of up to $10 million for small businesses to help them recover from the government-ordered shutdowns and revenue losses caused by the virus. The Act originally authorized up to $349 billion in forgivable loans to small businesses through the Paycheck Protection Program (PPP), and Congress later authorized $321 billion in additional PPP funding. Does something look fishy to you? (In late March, the Justice Department told Congress that it had charged $446.8 million in losses related to PPP. Some of these cases may still be under seal and charges are routinely being unsealed.) But, he added, the CARES Act removed that control, calling it a pivotal change.. Our federal defense lawyers are representing companies nationwide in PPP loan fraud audits and investigations during the COVID-19 crisis. All data in this search comes directly from the publicly available EIDL data on the SBA website. In the chart below, Arnold & Porter tracks criminal and civil cases that DOJ has brought to address CARES Act-related fraud. In certified submissions to the federal government, the familys ministry claimed a substantial operation with 486 employees, a monthly payroll of over $2.76 million, and revenue exceeding $51 million in 2019. For much of 2020, the agency also issued grants of up to $10,000 under the program that do not have to be repaid by eligible recipients. However, the DOJ alleges that the nonprofit in fact had not paid any wages in the prior year, and it further alleges that the former candidate used the PPP funds to pay for a swimming pool and cover other personal expenses. Locking Tik Tok? A total of 30,100 businesses indicated that the loan was saving one job. Data last refreshed on 1/31/2022. Under the False Claims Act (FCA) as well as the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), either the government or whistleblowers with non-public information can initiate civil enforcement actions. Acknowledging PPP loan applicants' compliance burdens (and the limited information that was initially made available to applicants), the U.S. Small Business Administration ( SBA) offered a grace period within which companies could return improperly obtained PPP loans without penalty. Other government agencies also submit referrals of potential fraud to the office of inspector general, and suspicious activity reports come in through the financial industry by way of the Treasury Department. According to court records, Amir Aqeel and several others in the Houston area allegedly created fake tax and payroll documentation in exchange for large kickbacks for referring others into the scheme that involved 12 corporate entities.