NEWEST DEVELOPMENTS – PPP Loan Fraud

PPP Loan Fraud -NEWEST DEVELOPMENTS

As we continue to see in the news, many cases are being charged by the Department of Justice for PPP (Payroll Protection Program) issues.  There continues to be a lot of confusion out there over the Paycheck Protection Program (PPP). Understandable since information continues to change about how to apply, whether to apply for forgiveness, and the second round of PPP loans being rolled out.  Due to the rules and the program itself changing frequently, it is important to not fall under scrutiny by the DOJ.

The Department of Justice (DOJ) has already charged and convicted many cases of PPP loan fraud.  But, the purpose of this post is that, recently, the DOJ announced the first (publicized) civil settlement resolving PPP loan fraud allegations against a company and its owner.   The owner and SlideBelts, Inc  was required to pay a $100k civil penalty per FIRREA civil penalty provision 12 USC 1833a and the False Claims Act (FCA) 31 USC 3729 in the Eastern District of California.  The DOJ continues to be aggressive and swift in bringing criminal charges, but, this is the first public civil settlement.  Please see  https://www.justice.gov/usao-edca/press-release/file/1352931/download to read it in its entirety.

The SlideBelts loan application for $350k was misleading as to whether or not the company was in bankruptcy.  This means that each and every box checked/information provided was scrutinized.  The bank reviewed the application and still paid the loan but then the DOJ argued that the PPP loan application was false and misleading.  In this case, SlideBelts worked with law enforcement and the bankruptcy court to acknowledge the issue and worked to settle the case without criminal charges.

Claims made by PPP loan borrowers can and will continue to be scrutinized by the DOJ.  And even in the absence of clear false statements, it is becoming increasingly clear that the DOJ is investigating and auditing PPP Loan cases.  SBA continues to audit applications, especially those over $2 million.