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Recent Criminal Investigations Surrounding The Paycheck Protection Program In The Us


Recent Criminal Investigations Surrounding the Paycheck Protection Program in the USIn this article, you can discover:

  • Why the Paycheck Protection Program was created by the US government.
  • Potential red flags that could lead to accusations of PPP fraud.
  • The definition of PPP fraud and loan stacking.

What Is The Paycheck Protection Program, And Why Are Criminal Investigations Surrounding It?

The Paycheck Protection Program (PPP) was a government-sponsored program under the Small Business Administration (SBA) developed under the Coronavirus Aid Relief and Economic Security Act (CARES Act) in response to the COVID-19 pandemic.

The purpose of the PPP was to provide cash to business owners to keep employees on the payroll even if their business revenues had crashed or diminished.

The funds could also be used for certain business expenses. The program was very popular, particularly after it was announced that the loans would be forgiven. However, the program’s structure made it attractive to criminals and susceptible to fraud. Over $800 billion was distributed under these programs, and the federal government is now investigating many of these loans.

What Are Some Red Flags That Could Lead To Accusations Of PPP Fraud?

Several red flags could draw attention to a business or individual by federal investigators. For instance, one big red flag would be if a business did not exist but applied for PPP loans. It would be easy for the government to determine whether the business was non-existent just by checking to see if the business had been organized as a corporation or LLC, or some other entity in the state, or whether prior tax returns had been filed.

Similarly, if a business was created when the PPP program was announced, it could raise suspicion. Exaggerating a business’s number of employees is another situation that could draw attention to it.

Using the money for something other than employees and business purposes is also a red flag. While this might be more difficult to investigate, a closer inspection might be warranted if federal agents suspect misuse of the funds.

What Is PPP Loan Application Fraud?

PPP loan application fraud involves lying or misrepresenting information on the loan application. Examples include representing that a business existed when it did not, exaggerating the number of employees or total payroll, and exaggerating other business expenses.

Any of these actions would generally increase the number of funds a business or individual was eligible for, which would be interpreted as fraudulent conduct.

What Are Examples Of Loan Stacking When It Comes To PPP Fraud?

Loan stacking refers to the situation where the same company or individual submitted the same application to multiple banking institutions, funding multiple loan amounts. This is different from just applying for a second PPP loan.

In loan stacking, the same application is used to get multiple distributions, and the banks are unaware that the applicant has submitted the same application to other institutions.

For more information on PPP Loan Fraud Cases In Illinois State, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (708) 218-0947 today.

Donald N. Macneil, Esq.

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