Justice Department: US Charged 57 People with PPP Fraud Cases

By Dana Cruz Sep 10 2020, 22:41 PM EDT

The Justice Department announced Thursday that the United States has charged 57 people for committing Paycheck Protection Program (PPP) fraud so far.

Department of Justice Seal Photo by Chip Somodevilla/Getty Images

The PPP is taxpayer-backed coronavirus pandemic loans. The Justice Department said they would do a months-long effort to root up people committing fraud and other means of profiteering on the program, the Washington Post reported.

The number of people charged goes back from May and amounted to $175 million in fraud, said a Fox Business report. These include people who allegedly received money for fake companies and legitimate business owners who spent funds on luxury items for personal use.

It also involved people who do not qualify but applied anyway or those who received two loans instead of just one. Several other people had already been facing fraud charges.

PPP is meant to help small businesses amid lockdowns, said the Justice Department. It is has been a fraud concern since it was launched in early April.

"The PPP program represented critical help at a critical time," said Acting Asst. Atty. Gen. Brian Rabbitt on Thursday. "Unfortunately, the crisis brings out not only those that try to help others, but those who try to take advantage of the crisis for personal gain."

More Fraud Cases Eyed

Reuters said that a congressional panel last week found tens of thousands of the program's $5.2 million loans, which have been misused or defrauded. The panel found that it could possibly amount to billions of taxpayer funds.

JPMorgan Chase & Co dished out nearly $30 billion PPP loans this week. They have been working with law enforcement after finding out that customers were "misusing" the funds.

According to an article from CNBC, officials are still eyeing hundreds more suspected fraud cases. Officials said they had identified 500 individuals who may have committed PPP fraud.

Some cases even involve criminal rings that work together to steal funds from the program.

"The involvement of these rings isn't surprising," said Rabbitt. "But it is particularly troubling to us here at the department, we will be focusing on these types of cases, going forward."

PPP Fraud's Loss to Government

The $175 million that applicants tried to steal entails a known loss of $80 million to the U.S. government, said officials.

The Justice Department recovered only about $30 million. The total amount from all committed frauds is unclear at this point.

Around $500 billion in PPP was processed by Small Business Administration's approved banks, which could mean the amount of fraud is higher than the known loss.

Immediate Actions Against Fraud

Rabbitt recognized that making large amounts of money available to the public posed a high risk of fraud. He said officials made efforts to identify fraudulent loans soon after banks processed.

"We began investigating almost immediately, and we brought our first cases within months of the first loans being made," Rabbitt said.

Officials said they have been working with lenders to find out more about problematic loans. On Thursday, they said they were using "cutting edge data analytics technology" to quickly identify red flags.

Warning fraudsters, Internal Revenue Service criminal investigations chief James Lee said at the briefing: "You cannot hide from these digital and paper trails."