Justice Department finds evidence of PPP loan fraud
Amid mounting criticism of the lending effort, the Justice Department has reportedly uncovered potential fraud among companies seeking relief with the Paycheck Protection Program (PPP). Deputy Attorney General Brian Benczkowski said prosecutors contacted 15 to 20 of the largest loan processors and the Small Business Administration (SBA), Bloomberg reported.
Benczkowski said in the report: “Anytime there is a trillion dollars on the streets this quickly, scammers are going to come out of the woods to try and access that money. The investigation revealed several warning signs in information prosecutors reviewed over the past week. Problems were reportedly found in which apps got the green light and which didn’t.
The Justice Department’s work to investigate the fraudulent use of coronavirus aid is modeled after the model used by its health care fraud strike force. This team has used data analysis for over 10 years to find Medicare-related criminal activity in addition to other federal programs. Prosecutors decide who to contact by monitoring increases in Medicare billing in certain areas.
Even so, glaring evidence of fraud or legally questionable actions has not been publicly disclosed. In issuing the loans, financial institutions had wide discretion and the guidelines for the effort were not firmly written.
But, as previously noted, companies that have taken out Paycheck Protection Program loans could meet probes if they don’t meet the criteria for coronavirus relief, US Treasury Secretary Steven Mnuchin said in April.
Some of the larger companies receiving loans qualified during the self-certification stage of the PPP process, but may not actually need the money to stay on a level playing field. the coronavirus pandemic by Mnuchin.
The PPP requires companies to certify that “the current economic uncertainty makes this loan request necessary to support the applicant’s ongoing operations”.