The Department of Justice (DoJ) announced today that it has brought the first criminal charges against business owners accused of filing fraudulent loan applications under the coronavirus stimulus plan. According to the government, two Rhode Island business owners have been accused of “conspiring to seek forgivable loans guaranteed by the SBA, claiming to have dozens of employees earning wages at four different business entities when, in fact, there were no employees working for any of the businesses.” The charges include conspiracy, bank fraud, and aggravated identity theft.
The Paycheck Protection Program (“PPP”), initiated by the CARES Act, has set aside over $349 billion for forgivable loans to help small businesses supplement their payroll and other business needs, during the COVID-19 pandemic. With such a sizable investment, many more criminal charges are likely to come across the country.
Business owners should be careful not to run afoul of PPP regulations. The government has expressly stated its intent to conduct audits and initiate criminal prosecutions against those who use funds for impermissible purposes.
The Charges discussed above are allegations only. There has been no determination of guilt.