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Paycheck Protection Program Fraud Is Rampant. Here’s What You Need to Know.

November 18, 2020
Legal News

Multiple Agencies Fear Widespread PPP Abuse

The Paycheck Protection Program (PPP), signed into law as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, was designed to help small businesses severely impacted by the COVID-19 pandemic keep their workforce employed. Unfortunately, almost since its inception, the program has been rife with allegations of fraud and abuse.

Several news media outlets and regulatory agencies are reporting rampant misuse of PPP funds as money was released quickly with little oversight. The government relies heavily on individuals who have intimate knowledge of fraud and are willing to come forward. If you have information about the misuse or fraudulent obtaining of PPP funds, you could help the government pursue justice against these wrongdoers.

The Problem

Officials fear that the Paycheck Protection Program has been plagued with fraudulent activity. It is estimated that some businesses received millions in ill-gotten PPP loans. 

There are several ways that companies have abused the system, including:

  • Businesses that were created after the start of the pandemic and applied for funds
  • Companies that exceeded 500 employees obtaining PPP loans
  • Companies receiving PPP loans even though they were listed in a “Do Not Pay” database due to owing money to taxpayers
  • Funds being used for lavish personal items instead of payroll expenses (Recording artist Diamond Blue Smith was accused of this very thing. See our blog about PPP fraud allegations against the Pretty Ricky rapper to learn more).

The Impact

It is believed that an “open door design” and the push to get money out quickly to struggling businesses may have enabled widespread abuse and fraud. The program lacked significant safeguards or vetting, which would have prevented some of the misuses.

Ultimately, millions of dollars may have been given to unqualified businesses at the expense of those who truly needed the funds to remain operational. It is reported that the Small Business Administration approved over 500,000 loans in a single day at the height of the pandemic. The companies receiving the loans were self-certified instead of vetted by a government agency.

Looking Forward

While the Paycheck Protection Program closed on August 8, 2020, the future is likely tied up in litigation. Dozens of individuals have already been indicted on federal fraud charges, and investigations into abuse continue. It is unclear how extensive the problem is, but early estimations by federal watchdogs believe that “tens of thousands of companies” may have received funds despite being ineligible.

What You Can Do

The Department of Justice and Office of the Inspector General continue to investigate allegations of PPP fraud and misuse of COVID-related relief funds. The government often relies on whistleblower testimony to pursue justice against these individuals. If you have knowledge of PPP abuse or fraud, contact the attorneys at Mase Mebane. 

Our attorneys provide legal representation for individuals who report allegations of fraud. Whistleblower protections are afforded under state and federal law, which enable you to come forward without fear of retaliation from your employers. Depending on the circumstances, you might be entitled to a portion of the government’s recovery for your information. Contact our office today at (844) 627-3529 to discuss your legal options. 

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