PPP Loan Fraud: The Next Batch of Wire Fraud Cases

The scourge of the COVID pandemic and the myriad of problems it has created in all facets of American life have resulted in numerous remedial measures in order to keep the court system moving, protect the health of Americans and also keep businesses afloat.  A key part of these measures find their genesis in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Part and parcel of that act is the Paycheck Protection Program, the function of which has been to assist businesses with the payment of mortgages, rents, utilities, and employee payroll through low interest loans.

            As with any type of loan, be it a mortgage or a small business loan, or otherwise, as in any time of crisis, we find as attorneys that fraud often goes hand-in-hand with the application process.  To no one’s surprise, some allegedly less scrupulous individuals seek to take advantage of this system or at least are being misconstrued in doing so.  So, as the nation begins to finally come out from under the cloud of COVID restrictions, and the PPP loans continue to be doled out, the existence of allegedly fraudulent loan applications or the misappropriation of the monies received will begin to be more prevalently prosecuted.

            The Department of Justice is obviously no stranger to prosecuting loan fraud.  But considering the impetus for the PPP program (COVID), the source of the funds (the taxpayers), and the importance of what the program was designed to protect (the economy), expect the DOJ to come down particularly hard on this type of alleged malfeasance in the coming months.  It can be expected to take shape in different ways.  You can expect prosecutions of those who fraudulently applied for PPP loans (e.g. persons without small businesses), fraudulent loan processors who have turned PPP loans into a cottage industry, but also legitimate business owners who misappropriated the loan proceeds.  For example, last week, the DOJ announced the guilty plea of a Texas man who owned a wedding planning business to the charge of wire fraud centered around his receiving close to three million dollars in PPP loans.  Instead of utilizing those funds for its intended purpose, the man allegedly paid off his home mortgage, invested in personal securities, and bought cars.

            So as these investigations develop in earnest, expect a marked increase in the number of wire fraud cases on the federal docket.  Should your number unfortunately be called, it is important to remember you have a right to an attorney and should immediately contact someone with experience in defending federal wire fraud cases.

             . . .  and coming soon . . . the next batch of fraud cases . . . COVID Vaccine card fraud . . . stay tuned.

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