COVID-19 Relief Law - First PPP Loan Fraud Indictments
The Coronavirus Aid, Relief, and Economic Security Act's ( ‘‘CARES Act") Payroll Protection Provision program ("PPP") was designed to aid US based small businesses. However, as with many honor-system based relief applications, there are those who inadvertently or intentionally attempt to take advantage the relief program system.
Two New England entrepreneurs are among the first federal indictments in connection to the PPP loan program. The charges the two face include:
- conspiracy to make a false statement to influence the SBA to obtain a loan (in violation of 18 USC § 371);
- conspiracy to commit bank fraud (in violation of 18 USC § 1349);
- aggravated identity theft (in violation of 18 USC § 1028A); and
- bank fraud (in violation of 18 USC § 1344).
The charges arise from alleged conduct ranging from reporting of fraudulent entities for loan applications, to conspiring to produce fraudulent returns for existing or defunct former business interests of the two men. No further comments have been made by the parties or the Department of Justice Agencies to date. These first cases serve as an important reminder and deterrent to those who wish to exploit the programs of the harsh sanctions that may follow. Further, to anyone who potentially received PPP loan proceeds, which in hindsight may not have been qualifying, to consider their options for representation and return of the funding.
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