05/19/2020

WHAT DEFENSES ARE THERE TO CHARGES OF FRAUD IN CONNECTION WITH THE PPP PROGRAM

Yahoo Finance

Dallas, TX , May 17, 2020 (GLOBE NEWSWIRE) -- The Paycheck Protection Program (“PPP”) is part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES”).  It is designed to help small businesses continue pay employees despite the massive economic disruption from the novel Coronavirus that causes COVID-19.  
PPP is a $669 billion program.  It provides loans to eligible small businesses on favorable terms that may, in the future, be forgiven.  The amount of the loan is about 2.5 times the business’ average monthly payroll costs. 

WHAT KINDS OF PPP FRAUD ARE POSSIBLE?
As with any large government benefit program, there is a substantial potential for fraud by loan applicants.  Broadly speaking, the possibilities for applicant fraud fall into three categories:  (1) eligibility; (2) loan amount; and (3) necessity.  

Eligibility:  The PPP has a number of eligibility criteria.  They include, among other things:
            -Being in business as of February 15, 2020;
            -Not having so many employees or so much net worth that the business is not a “small      business”;
            -Not being owned, in whole or in part, by an undocumented alien;
            -No owner of 20% or more of the business may be incarcerated, on probation, on parole, subject to a criminal charge, or convicted of a felony in the last five years.

A person who falsely certifies in the application that the business meets a criterion that it does not meet can be subject to federal criminal charges.  For example, if the business was created in order to take advantage of the loan program and did not exist before February 15, 2020, but an owner certifies that it was, this type of false statement could result in criminal prosecution.

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