You can search the SBA's entire PPP loan data below. They determined that a lot of the folks that they have as subjects of their investigations in HHS OIG [for Medicare and Medicaid fraud], were also committing PPP and EIDL fraud, Grossman said. Just more than 25% of the businesses that got loans of less than $150,000 in Pennsylvania listed zero or didnt submit an answer to explain how many jobs the loans were supposedly helping to save. In addition to automated checks against existing government databases, lenders could have conducted online searches or called businesses neighboring a loan applicant to help establish whether the company seeking the loan is real or is the size it claims to be. The SBA initially refused to release the names of businesses that obtained loans of less than $150,000. Both Christopher and Erin Mazzei pleaded not guilty and are scheduled for trial on August 9, 2022. The Justice Department has brought criminal charges against at least 209 individuals in 119 cases related to Paycheck Protection Program (PPP) fraud since banks and other lenders began processing loan applications on behalf of the Small Business Administration on April 3, 2020. The oversight failures of the last year have become increasingly clear, eventually leading to changes. He said that lenders have been extremely cooperative during investigations and their suspicious activity reports have been very useful.. Our federal defense lawyers are representing companies nationwide in PPP loan fraud audits and investigations during the COVID-19 crisis. Arnold & Porter represents borrowers, lenders, and other service providers in all manner of issues arising under the PPP and other CARES Act programs. Follow him on Twitter @CNHIPA. According to Grossman, the Small Business Administration watchdog official, all of our ongoing investigations involve individual borrowers rather than lenders. These programs have placed lenders and borrowers at significant risk for criminal and civil liability, including risk under the False Claims Act. Normally, our agents work a contract or procurement fraud case those can take several years to investigate, Grossman said. In the chart below, Arnold & Porter tracks criminal and civil cases that DOJ has brought to address CARES Act-related fraud. Notably, while the DOJ is pursuing criminal charges in the substantial majority of its PPP loan fraud cases (including those discussed above), civil charges are a possibility as well. In one of the most complex cases to emerge since POGOs original analysis, at least seven individuals were indicted in a scheme that allegedly involved over 80 applications seeking a total of $30 million in Paycheck Protection Program loans. A picture from that stay shows Pape and Jung celebrating over sparkling wine. Jungs attorney declined to comment, and Papes attorney did not respond to a request for comment. Grossman said his office has shared data with the Department of Health and Human Services Office of Inspector General, which identified some repeat offenders. This program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. As some of its recent cases show, the DOJ is targeting individuals as well as businesses, and it is targeting loans well below the Treasurys $2 million audit threshold: Former Mayoral Candidate Charged with Obtaining Fraudulent $323,000 PPP Loan In March 2021, the DOJ charged a former mayoral candidate in Georgia with fraudulently obtaining in excess of $323,000 under the PPP. The New Americans: How San Diego grapples with educating refugees. It Got a PPP Loan. Applicants fraudulently obtained at least $16 million, per the Justice Department. Legislative Package Includes Bills to Advance Biofuels Research, PTO to Begin Issuing Electronic Patent Grants, OSHA to Expand the Use of Instance-by-Instance Penalties. The nonprofit MITRE Corporation found more than 85% of Paycheck Protection Program loan recipients did not indicate their race or ethnicity in their loan applications, Earlier this year, the Biden administration revamped the Paycheck Protection Program loan application to encourage self-reporting of demographic data and better illustrate the impact the PPP is having across various population segments. But the Small Business Administration acknowledged, as of late March, there is still limited demographic data on PPP borrowers.. However, the DOJ alleges that the nonprofit in fact had not paid any wages in the prior year, and it further alleges that the former candidate used the PPP funds to pay for a swimming pool and cover other personal expenses. Partner The program provided those loans to 146,000 state businesses, an average of just under $35,000 per business. SBA reveals full list of recipients of PPP loans. California has a total of 1,270,615 businesses that received Paycheck Protection Program (PPP) loans from the Small Business Administration. General Litigation. We dont have the capacity to work everything that comes in, Grossman told POGO. Too often those who fraudulently divert tax dollars in amounts below what is typically accepted by prosecutors are not fully held accountable, impacting agency programs and leaving the taxpayer footing the bill, he wrote. According to the National Priorities Project, thats enough money to pay for both coronavirus vaccine doses for every American and 1.1 million full-time jobs at $15 an hour for an entire year. An attorney for Aqeel, Tommy T. Mingledorff, told POGO by email that these allegations are denied. They often involve obtaining and then piecing together often-complex financial, payroll, and tax records for individuals and companies, and sifting through other evidence. Rabbitt noted the unparalleled speed with which these cases have been investigated and prosecuted.. Civil settlement is a possibility in some cases as well. Congress also authorized the Small Business Administrations existing Economic Injury Disaster Loan (EIDL) program to lend in response to the pandemic, and nearly $202 billion in loans through that program have been approved as of April 1. Horowitz, the Justice Departments inspector general, recently testified to a House panel examining COVID-19 loan fraud that a legislative reform could help address the problem of fraud in smaller dollar amounts. HARRISBURG Data released by the Small Business Administration Tuesday reveal which Pennsylvania businesses and groups shared $5 billion in loans of under $150,000, provided through the federal Paycheck Protection Program. provided fully guaranteed SBA loans for certain eligible small businesses, individuals, and . On applications for loans for two companies, Greenberg Media Group and DG3 Network, Greenberg allegedly lied about not being under indictment despite having been arrested by federal agents and charged just days earlierwith the indictment a matter of public record. The release comes as Congress is debating whether to pass another round of federal stimulus and whether that would mean another round of the Paycheck Protection Program. Officials from the Treasury Department and the Small Business Administration (SBA) have argued the program primarily benefited smaller businesses because a vast majority of the loans more. Using a telemarketing scheme called My Buddy Loans, the telemarketing scheme exploited those seeking assistance during the COVID pandemic, including many who were over the age of 55, according to a Small Business Administration inspector general agent quoted in a Justice Department press release. Part 1 training plans. While the Small Business Administration could be doing more with data on the Economic Injury Disaster Loan program, the agencys independent watchdog has embraced this work. The original allocation of $349 billion was depleted in just 13 days. The PPP / Cares Act that was put in place to help business affected by Covid-19. Gaetz has denied the allegations and Greenberg has pleaded not guilty, although Greenbergs attorney and a prosecutor have said in court that he may be striking a plea deal soon. H-2B Cap for Fiscal Year 2023 Is Met: A Supplemental Cap Increase As COVID-19 Emergency Waivers End, DEA Proposes to Expand Tele- How Employers Need to Prepare for the End of the COVID Public Health USPTO To Transition To Electronically Granted Patents In April 2023, Reductions in Force: Some High-Level Issues To Consider, CMS Streamlines Stark Law Self-Referral Disclosure Protocol (SRDP), The Alice Eligibility Two-Step Dance Continues, FTC is Talking Trash and Zeroing-in on Recyclable Claims, FTC Hosts Forum on Proposed Rule to Ban Noncompete Clauses. Brian Grossman, the Small Business Administrations assistant inspector general for investigations, told POGO that as of March 10, 2021, the watchdog office had 91 active Paycheck Protection Program investigations and 121 active Economic Injury Disaster loan investigations. 9 AVG COMPANY SIZE. The addresses listed for the two companies, according to SBA loan data, also do not match the addresses in the states corporation recordsyet another sign of potential fraud. These bipartisan bills, signed into law in August 2022, establish a 10-year statute of limitations for all forms of PPP loan fraud and all COVID EIDL loan fraud. It's important to note that SBA loans are secured loans that require you to list collateral in the loan agreement. The primary federal agencies that are currently conducting PPP loan fraud investigations are: 1. Representative James Clyburn (D-SC), chair of the House Select Subcommittee on the Coronavirus Crisis, said in the March 25 hearing that the Trump administration ignored flags of potential fraud in the Economic Injury Disaster Loan program, and approved loans in batches with little to no vetting and abandoned a rule that required two SBA employees to approve each loan application., The Trump administration ignored flags of potential fraud, While a year has passed since the CARES Act became law and there are more checks now, government watchdogs say the Small Business Administrations oversight of the lending programs is still inadequate. If convicted, the defendants could face several years in prison and hundreds of thousands of dollars in criminal finesas well as responsibility for repaying the fraudulently-obtained PPP loans. Overall, the size of the typical loan nationally was $206,000, according to the statistics. Another large identity theft case led to charges against Jeremie Saintvil of Delray Beach, Florida in March. When they believe they have unearthed sufficient evidence to allege the government has been defrauded, these individuals file qui tam lawsuits, Grossman said. If you have any compliance- or enforcement-related concerns, the contacts below are available to answer questions and provide guidance. 46. Qui tam complaints are filed under seal The DOJ is targeting individuals and businesses in PPP loan fraud investigations, and it is targeting those who received loans of all sizes. Created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Paycheck Protection Program has lent out $755 billion to businesses as of April 11. 2) Strengthen SBA controls to ensure that loans to ineligible recipients are not forgiven. Between May and October 2020, financial institutions filed more than 21,000 and 20,000 suspicious activity reports (SAR) related to PPP and EIDL, respectively, according to the Government Accountability Office. Does something look fishy to you? General Litigation, Kodjo Kumi Pape and Jung used more than $3600 from the fraud scheme to pay for a stay at a resort in San Antonio, Texas, according to the Justice Department. After months of litigation, the SBA released the dataset Tuesday night on every small business that received a Paycheck Protection Program (PPP) or Economic Injury Disaster (EIDL) loan. Government Accountability Office revealed, according to Shear of the Government Accountability Office, the Justice Department unveiled new charges, Greenberg bribed an unnamed Small Business Administration insider, according to the Government Accountability Office, 5.8 million advance grants worth $20 billion, underutilized Program Fraud Civil Remedies Act, Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), first settlement in a Paycheck Protection Program civil enforcement case, remarks before the U.S. Chamber of Commerce, revamped the Paycheck Protection Program loan application, for the Pandemic Response Accountability Committee, Lamborghinis, Strip Clubs, Bogus Companies, and Lies, Spike in Suspected Business Loan Fraud Reports Coincided with Paycheck Protection Program, How a Ukrainian Oligarchs Companies Got Paycheck Protection Program Loans. The program provided those loans to 146,000 state businesses, an average of just under $35,000 per business. Washington, D.C. 20016-8017, Data project moves to Center for Public Integrity, 1 billion records and counting: The Accountability Project reaches new milestone, Site showcases powerful stories and the reporters behind them. However, this data accounts for only a quarter of all loans made through the program. BREAKING DOWN THE PRIVACY ACT REVIEW REPORT #3: Removal of The Small White House Releases National Cybersecurity Strategy, Illinois High Court Rules Per-Scan Damages Can Be Awarded Under BIPA, Grassley-Wyden Bill Aims to Fix Broken Tax Whistleblower Law, Lessons Learned From 2022s Trade Secret Verdicts, Mass. Instead, the DOJ undertook to prosecute any and all cases of apparent PPP loan fraud. The only way you can reverse those things is by understanding the metrics behind it and to have real goals around them.. The Health AI Frontier: New Opportunities for Innovation Across the FTC to Hold Workshop on Recyclable Claims. * Tracker contributor Aidan Mulry is not admitted to the practice of law. Investigation Services . An October inspector general report states that SBA has fired employees and contractors who were involved in approving loans to themselves or who inappropriately influenced loan approval. The Small Business Administration did not respond to questions, but a spokesperson for the agencys inspector general told POGO that we are aware of one employee and two contractors who have been fired for these reasons. House Energy & Commerce Subcommittee Holds Hearing on U.S. Hunton Andrews Kurths Privacy and Cybersecurity. Nick Schwellenbach Irvine, CA: Irvine, CA. An interactive timeline examines President Trumps use of executive orders to restrict access to the U.S. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. As part of its own COVID-19 relief spending tracker The sum total of loans amounts to in excess of $521 billion, and in a statement, Treasury Secretary Steve Mnuchin remarked, "The PPP is providing much-needed relief to millions of American small . the SBA and Treasury Secretary Steven Mnuchin started accepting loan recipients applications just a week later on April 3, 2020. Individuals and companies targeted in PPP loan fraud investigations should engage federal defense counsel promptly, and they should work with their counsel to build sound defense strategies. 23-Year-Old Charged with Submitting Fraudulent PPP Loan Applications In February 2021, the DOJ filed charges against a 23-year-old New York resident who is accused of submitting multiple fraudulent PPP loan applications on behalf of a single company. We are concerned only with actionable fraud. He added that, in selecting enforcement targets, we will follow the law, and we will not pursue companies that access CARES Act programs in good faith and in compliance with the rules.. Acknowledging PPP loan applicants' compliance burdens (and the limited information that was initially made available to applicants), the U.S. Small Business Administration ( SBA) offered a grace period within which companies could return improperly obtained PPP loans without penalty. The three Economic Injury Disaster loans Greenberg obtained should have triggered red flags galore. The program has traditionally been used to help small businesses facing revenue loss in the wake of natural disasters. Both the outgoing Trump administration and the Biden administration appear to have learned lessons from the fraud that occurred in 2020. But the government could have implemented these safeguards from the beginning, which may have prevented significant levels of apparent fraud in the program. The auditor found that the deficiencies were caused by an inadequate entity wide control environment.. According to a court filing signed by a Secret Service agent, a family of four was behind a scheme Investigative Reporting Workshop The U.S. SBA regularly publishes EIDL loan data for all past EIDL loan recipients. He also opened bank accounts and lines of credit at financial institutions and credit card companies in the names of his elderly victims, according to the Justice Department. The Trial Attorneys will join the DOJs Market Integrity and Major Frauds (MIMF) Unit, and the vacancy posting has an expected minimum commitment of two years. This table shows the top 5 industries in California by . U.S. Small Business Administration 409 3rd St, SW. Washington DC 20416 All data in this search comes directly from the publicly available EIDL data on the SBA website. PPP loan fraud investigations can have outcomes ranging from no liability to prosecution for multiple federal criminal offenses. Financial Services, Matthew Bemis But because the Department of Justice has made PPP and EIDL a priority we are seeing results from DOJ rather quickly in a lot of our investigations., Others in government have also remarked on how fast many of these cases First Home Bank approved the $8.4 million loan, among the less than 0.1% of Paycheck Protection Program loans this large or larger (the maximum is $10 million). Other government agencies also submit referrals of potential fraud to the office of inspector general, and suspicious activity reports come in through the financial industry by way of the Treasury Department. Generally, cases where there is any substantial gray areasuch as a lack of unambiguous evidence of fraud or when it wasnt clear what a government rule requiredare far more likely to lead to civil enforcement, or to no enforcement. Kindambu applied for two Paycheck Protection Program loans representing Papillon Holdings, Inc. and Papillon Air, Inc., according to court documents. According to court records, Amir Aqeel and several others in the Houston area allegedly created fake tax and payroll documentation in exchange for large kickbacks for referring others into the scheme that involved 12 corporate entities. One case involved applications for hundreds of allegedly fraudulent Economic Injury Disaster loans and at least a $1.3 million loss to the federal government. At this point, theres no obvious indication that Congress is going to act on it, Denlinger said. On March 29, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. Our team of former high-level government prosecutors and seasoned regulatory attorneys provides unparalleled insights and extensive experience in investigations, defense, regulatory and compliance matters involving the various CARES Act programs, including on matters before the Department of Justice, SBA-OIG, state attorneys general, OCC, FDIC, and Federal Reserve Board. The scandal is whats legal, not whats illegal.. Not all the blame can be placed at the Small Business Administrations feet. Six Charged, Five Plead Guilty in PPP Loan Fraud Scheme In January 2021, the DOJ filed charges against six individuals who are accused of submitting fraudulent PPP loan applications that resulted in a total of approximately $3 million being disbursed under the PPP. That story of corruption inside SBA has been overshadowed by other criminal allegations against Greenberg, notably child sex trafficking charges, and a scandal that might bring down a member of Congress. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. The case involved charges against a company and its CEO that obtained a $350,000 PPP loan after submitting false information to multiple PPP lenders. Suspicious activity reports for small business loan fraud continued at levels far higher than normal through the end of 2020, according to POGOs review of federal data. "The PPP is providing much-needed relief to millions of American small businesses . The charges followed the guilty pleas of five other individuals involved in the alleged scam. The hospitality industry would prefer to see the federal government give them targeted grants, similar to those provided to the airline industry, Longstreet said. Those hired pursuant to the DOJs vacancy posting will focus specifically on, investigating, prosecuting, and deterring fraud in the Small Business Administration's (SBA) COVID-19 disaster relief programs, including the Economic Injury Disaster Loan (EIDL) program and Paycheck Protection Program (PPP).. At least one Small Business Administration employee allegedly took bribes last year to process fraudulent Economic Injury Disaster loans, according to criminal charges recently unveiled by the Justice Department related to the developing scandal involving Representative Matt Gaetz (R-FL). Analyzing that data for red flags is a way to identity subsets of loans and grants that warrant closer scrutiny and to help direct scarce investigative resources. In January, the U.S. Attorneys Office for the Eastern District of California obtained the first settlement in a Paycheck Protection Program civil enforcement case, against an online retailer called SlideBelts Inc. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. Winds light and variable. Find out how you can get involved and stay up to date with our work. a different set of 19 loan recipients traced back to an office park about 30 minutes . Tax Preparer Charged with Submitting 118 Fraudulent PPP Loan Applications Also in March 2021, the DOJ filed charges against a South Florida tax preparer who is accused of submitting approximately 118 fraudulent PPP loan applications, on behalf of himself and his accomplices. According to the DOJ, the tax preparer falsified applicants income and expenses and submitted fraudulent tax forms. Newly released federal data show hundreds of emergency Paycheck Protection Program loans went to help the smallest of Johnstown businesses as they fought through the COVID-19 economic shutdown. Given the focus of the PPP to support employees during the COVID-19 pandemic, the Robinson Bradshaw firm wrote last May, it is easy to imagine how a dissatisfied employee observing imperfect business conduct in securing a PPP loan or applying loan proceeds could use that insider information to bring a qui tam action under the FCA.. project, POGO has been examining equitable access to government loans, grants, and contracts. A total of 30,100 businesses indicated that the loan was saving one job. Seven Charged in Fraud Ring (South Carolina - September 10) . to give the federal government time to investigate and evaluate the complaint before it becomes public. When the first round of funding under the PPP opened in April 2020, the response was overwhelming. More than 1,400 institutions had filed SARs related to PPP, and more than 900 institutions had filed SARs related to EIDL.. The agencys Assistant Inspector General for Investigations Brian Grossman told POGO that not all of the referrals relate to the COVID-19 relief lending programs, but many of them do.. The firms getting maximum loans are likely just a tip of the iceberg: Statistics released last week by the U.S. Small Business Administration showed that 4,400 of the approved loans exceeded $5 million. The law firm K&L Gates, however, wrote in December that since Congress allowed lenders to rely on borrowers self-certified information, that should decrease the likelihood that otherwise law abiding financial service providers would face government scrutiny for the fraudulent acts of their borrowers., The role of employees who become whistleblowers may emerge as a significant factor in civil Paycheck Protection Program cases. Two of the companies, Symbiont Retailers and Horizon Enterprises, were not in good standing before the Paycheck Protection Program began. Help us crowdsource fraud detection in the PPP program! PPP Loans List. The figures cover about 3.77 million transactions; ultimately, about 3.7. The case was brought in Honolulu, Hawaii. The program began issuing loans again in January 2021, and some businesses are eligible for a second loan. The DOJ is prosecuting PPP loan recipients who are accused of both intentionally and unintentionally committing fraud under the PPP. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials. China Again Top Originator of International Patent Cooperation Treaty Non-Willful Failure to File FBAR Under BSA Should Be Penalized on a charged a former mayoral candidate in Georgia, filed charges against a South Florida tax preparer, filed charges against a 23-year-old New York resident, charged a Nevada man with submitting multiple fraudulent loan applications, first civil settlement of a PPP loan fraud case. The data . These investigations have varied widely in both their scope and the specific allegations targeted. Although the PPP was intended as a short-term relief program and many businesses have already exhausted their SBA-backed funds, the DOJ is continuing to target loan recipients suspected of fraud. POGO found that 11 of the 15 loans were funded. The alleged scam involved submitting false information about the applicants businesses as well as fraudulent tax returns that were identical for each of the defendants companies. However, all of the DOJs PPP fraud investigations to date have shared a common thread: The agency has moved quickly in seeking to file charges, and it has shown little sympathy for those accused of unlawfully taking advantage of the PPP. Thats because, at least in part, its optional for loan applicants to supply that information. 7334. Data is available, but its reliability for the purpose of assessing whether Paycheck Protection Program loans are reaching the underserved communities that Congress wanted prioritized is limited because the demographic data is incomplete. But in the year since the CARES Act became law, it has received nearly 150,000 hotline complaints, representing a 19,500% increase over prior years, according to a staff memo from the House Select Subcommittee on the Coronavirus Crisis. Data analysis could also help the agency assess potential policy changes, and the Biden administration made some changes to make access to relief more equitable earlier this year. More due diligence on the part of lenders or the Small Business Administration could have prevented at least some instances of fraud. Theres a lot of red flags that they look at in the data to help us determine if its something we need to look at deeper.. Free Speech Shines Bright, Illuminates Patent Owners Right to Allege California Supreme Court to Address Rounding of Employee Time. Since March 2020, the Department of Justice has publicly announced charges in numerous . Its Here The New National Cybersecurity Strategy. See our documentation for more information. Data last refreshed on 1/31/2022. Man Charged with Obtaining Nearly $2 Million Through Multiple Fraudulent PPP Loan Applications Also in January 2021, the DOJ charged a Nevada man with submitting multiple fraudulent loan applications to multiple PPP lenders. Alleged Bribes to an SBA Insider On March 30, the Justice Department unveiled new charges against Joel Greenberg, a former Florida tax collector. But such gaps can create ambiguities that muddy the waters in overseeing spending., Still, much can be done with the data that does exist. Some of these qui tam lawsuits are traditional whistleblower cases, but others involve individuals who are slicing and dicing the data that has been made available about loans, according to Grossman. That new law permitted SBA to require additional information from applicants, such as tax returns, for loans and advances as part of its verification, according to Shear of the Government Accountability Office. Joshua Edwards, the supposed vice president of ASLAN International Ministry, is accused of submitting fake payroll, tax, and financial documentation in support of the loan application. . NLRB Places New Limitations on Confidentiality and Non-Disparagement Settlement Will Benefit Many Aging-Out Children in the Green Card SEC Commissioner Discusses Reform to Regulation D, Massachusetts AG Settles Enforcement Action Against Auto Lender. EPA Releases Proposed Approach for Considering Cumulative Risks under Revised Colorado Privacy Act Rules Adopted for Review by Colorado AG. In many cases, it will be possible to avoid facing charges with a proactive approachalthough this could prove challenging if the DOJ has already obtained clear evidence of intentional PPP loan fraud. For much of 2020, the agency also issued grants of up to $10,000 under the program that do not have to be repaid by eligible recipients.