Justice Department sees first signs of fraud in wave of SBA loans
The Justice Department has opened a preliminary investigation into how taxpayer money was loaned under the Paycheck Protection Program and has already uncovered possible fraud among companies seeking redress, has said a senior official.
Deputy Attorney General Brian Benczkowski, who heads the department’s criminal division, said prosecutors have contacted 15 to 20 of the largest loan processors and the Small Business Administration, which oversees a relief program, as part of a effort to control the trillions of dollars at the federal level. aid is rushed in to mitigate the economic impact of the coronavirus pandemic.
The review has already revealed several red flags in data prosecutors examined over the past week, Benczkowski said Thursday in a telephone interview. Problems were identified in the approved and rejected applications.
“Anytime there’s a trillion dollars on the street this quickly, scammers are going to come out of the woodwork to try and access that money,” said Benczkowski, a former associate at Kirkland & Ellis LLP in Washington who was led the criminal division for almost two years.
He continued, “Unfortunately there are companies that send out loan applications for large sums of money that overestimate their salary costs, overestimate the number of employees they’ve had, overestimate the nature of their business.” Find out emergency loans here: https://citrusnorth.com/emergency-loans/
The Criminal Division used the Fraud Section’s Market Integrity Unit to oversee P3-related investigations and coordinate with various U.S. attorneys, Benczkowski said. This unit has been tasked with prosecuting Wall Street crimes, including allegations of market rigging at major banks including JPMorgan Chase & Co. and Deutsche Bank AG. Prosecutors will also work closely with inspectors general and other observers, he said.
The Justice Department’s efforts to investigate the fraudulent use of Covid-19 aid build on the model used by its healthcare fraud strike force, which for more than a decade uses data analysis to identify criminal activity related to Medicare and other federal programs. .
In these cases, prosecutors determine who to investigate by monitoring peaks in Medicare billing in certain geographies. Every year they charge hundreds of doctors, caregivers and others to defraud taxpayers, to the tune of a billion dollars a year.
The Justice Department’s interest in coronavirus stimulus funds comes as critics mount to the loan program, which was intended to help small businesses but also sent multi-million dollar checks to large companies.
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Yet glaring examples of fraud or legally questionable behavior have yet to emerge publicly. The banks were given a great deal of leeway in issuing the loans, and the guidelines for the program were loosely drafted. As long as borrowers’ demands are up to standard – and the money has been used for its intended purpose, primarily to pay employees – it can be difficult to accuse borrowers or lenders of intentionally abusing the program.