Nearly a year and a half after the passage of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”)1 on March 27, 2020, the Special Inspector General for Pandemic Recovery (“SIGPR”) has ramped up and is investigating fraud related to the U.S. government’s pandemic relief efforts.
On March 26, 2021, the Department of Justice (“DOJ”) issued a press release trumpeting the agency’s “historic level of enforcement action” in response to COVID-19 related fraud.
While the 5-page Paycheck Protection Program (“PPP”) Loan Forgiveness Application looks pretty simple, those who have already worked with the form know that it is not.
On July 28, 2020, the Small Business Administration’s (“SBA”) Inspector General (“IG”), Hannibal “Mike” Ware, issued a Management Alert informing SBA Administrator Jovita Carranza that the IG’s preliminary review of the Economic Injury Disaster Loan and Advance (“EIDL”) grant program revealed strong indicators of widespread potential fraud.
Since the Paycheck Protection Program Flexibility Act became law on June 5, 2020, Treasury and the Small Business Administration (“SBA”) have released several new and revised rules for the Paycheck Protection Program (“PPP”). This guidance implements provisions of the PPP Flexibility Act and makes other changes to the program.
The U.S. Department of Justice (DOJ) has a track record of aggressively pursuing those suspected of fraudulently exploiting federal relief programs meant to combat crises,1 and early signs indicate that DOJ will continue this practice with the current COVID-19 pandemic.
Scrutiny into Paycheck Protection Program Loans Intensifies — Attracts SEC Attention
On May 16, 2020, the Small Business Administration (“SBA”), in consultation with the Department of the Treasury, released the Paycheck Protection Program (“PPP”) Loan Forgiveness Application (the “Application”), available here.
On May 13, 2020, the Department of the Treasury and the Small Business Administration (“SBA”) released guidance on how SBA will review a borrower’s required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”