Thursday, April 8, 2021
The U.S. Department of Justice (DOJ) recently announced that it has entered into the first civil settlement arising out of fraud allegations under the federal Paycheck Protection Program (PPP). The case involved SlideBelts Inc. and its CEO, Brigham Taylor. SlideBelts Inc. had obtained a $350,000 loan under the PPP.
The DOJ’s decision to enter into a civil settlement represents a sound and reasoned approach to resolving many PPP loan fraud investigations. While some cases of fraud under the PPP undoubtedly warrant criminal prosecution, it is equally clear that many do not. In many cases, companies and their executives unknowingly violated the hastily-drafted and difficult-to-interpret terms of the PPP. Additionally many companies, including SlideBelts Inc., have cooperated with the DOJ and returned their PPP loan funds upon facing investigations, and resolving these types of cases through civil settlement allows for an efficient resolution with ap
PPP Fraud: How a Californian AUSA Created a Smart and Efficient Precedent to Combat Inadvertent Loan Fraud Monday, April 5, 2021
If there is a lesson from the cases involving business owners experiencing bank freezes or encouners with law enforcement so far, it is the impression that banks and Justice Department officials have tried to apply standard law enforcement protocols irrespective of the nature of the allegations or the size of the fraud.
It failed; it consumes vast government resources while risking over-criminalization. Not every hard-working but struggling business owner should face asset freezes and criminal prosecution just because, for example, they made a simple accounting error. To be clear, the vast majority of clients did not buy a new boat or a luxury car from loan money; they simply miscalculated the correct loan amount at a time when even their own CPA was understandably unfamiliar with the qualifying requirements.
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The Department of Justice (DOJ) under President Joe Biden is widely expected to increase its focus on white collar enforcement actions against individuals and financial institutions. We anticipate that we will see, as we did in the Obama years, an uptick in actions relying on the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). It has already been employed to address misconduct in connection with the government’s Paycheck Protection Program (PPP): In January 2021, the DOJ announced a civil settlement with the borrower of a PPP loan for violations of FIRREA and the False Claims Act based on false statements made on loan applications.
DOJ Targeting PPP Fraud natlawreview.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from natlawreview.com Daily Mail and Mail on Sunday newspapers.
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After the Department of Justice charged more than 100 people last year with fraudulently seeking over $360 million in CARES Act emergency loans and other payments, the federal government has taken additional steps this year to combat fraud in federal COVID relief programs. These new efforts include expanding investigations and charging more criminal cases, initiating civil enforcement and forfeiture actions to recoup money to the Treasury, and hiring dedicated personnel to prosecute CARES Act fraud.
In passing the CARES (Coronavirus Aid, Relief, and Economic Security) Act and related legislation last year, Congress provided for several different types of emergency pandemic relief to be administered by the Small Business Association and other federal agencies. These include PPP (the Paycheck Protection Program), EIDL (Economic Injury Disaster Loans), PUA (Pandemic Unemployment Assistance), FPUC (Federal Pandemic Unemplo