A rapidly emerging issue in the wake of the COVID-19 pandemic is fraud associated with the CARES Act. Lenders and borrowers who participate in the PPP, EIDL and other SBA loan programs must comply with numerous rules and restrictions, and face potential investigations by the SBA Office of Inspector General. Examples of fraud under the CARES Act are:
Borrowers caught inflating average monthly payroll costs or increasing employee headcount to qualify for a larger loan or to avoid repayment of a PPP loan could face criminal liability under the Small Business Act, the False Claims Act, and other federal fraud statutes.
The CARES Act creates a new Special Inspector General for Pandemic Recovery (SIGPR) who is responsible for investigating possible fraud and abuse associated with loans, loan guarantees, and loan forgiveness distributed by the Treasury. The SIGPR’s investigative authority includes all Federal Reserve programs and facilities funded by the Treasury under the CARES Act. This means individuals employed by financial institutions, businesses and other entities who extend or receive financing through COVID-19 emergency facilities also face possible investigation and sanction by the SIGPR.
The CARES Act also directs $80 million in funding to create the Pandemic Response Accountability Committee (PRAC) the goal of which is to support transparency and promote oversight of the funds spent by coordinating with inspector generals from other agencies.
Facing the possibility of monetary fines and possible prison time, those who are accused of CARES Act crimes need an experienced fraud defense attorney – call us today at 312 525 2017.