In response to the economic chaos caused by the advent of Covid 19 in March, 2020, Congress passed the CARES Act, a $2,2 million dollar stimulus package. The government made $300 billion in direct cash payments to individual Americans, $260 billion in increased unemployment benefits, and created the Paycheck Protection Program. This latter program provided forgivable loans to small businesses that used the money to maintain payroll while their employees began to isolate at home.
Unprecedented in scope, the CARES Act was the largest economic stimulus program in the history of the US. Due to the need to rapidly distribute the stimulus money in order to prevent the danger that the US economy could go into a free fall, the normal safeguards and precautions that accompany the distribution of Federal funds went by the wayside.
Soon there were media accounts of blatant fraud. In May, the Department of Justice leveled the first charges. Two men from Massachusetts and one from Rhode Island applied for a $540,000 loan. According to the DOJ, the men certified that they had dozens of employees earning wages at four different business entities, when in fact they had no employees. Shortly thereafter, another man in Georgia received approximately $2,000,000 in Payment Protection Plan money and the DOJ alleged that he used the proceeds to buy $85,000 in jewelry and a Rolls Royce. In Eastern District of Texas, another sought $10 million in loans claiming that he had 250 employees. Investigation revealed that he, in fact, had no employees. When the government searched his home, it found records in his trash reflecting his investment strategy for his recently received government funds. The Northern District of Texas similarly announced it was prosecuting an individual for fraud related to PPP loans totaling $17.3 million and accused the person of using the PPP “as his own personal piggy bank.”
In July, Deputy Attorney General Ethan Davis stated that the Department of Justice’s current priority is prosecuting fraud concerning the CARES Act stimulus funds. In addition to Payment Protection Plan and CARES Act stimulus funds, the government is also aggressively trying to police COVID 19 fraudsters who are attempting to capitalize on people’s fear. In Apri,l a doctor in California was raided for selling a $4,000 COVID 19 “package.” In August, two Florida men who were also selling bogus COVID 19 cures were arrested by Columbian officials for extradition back to the US.
At Broden & Mickelsen we have spoken with local Federal prosecutors who have articulated the emphasis the government is placing on policing CARES act fraud and COVID 19 bogus cure fraud. So far there have been dozens of individual indicted by the government for alleged fraud in PPP loan applications and it is certain that many more indictments will follow.
If you think that you might be under investigation for actions related to the CARES Act, seek the assistance of competent counsel, such as the lawyers at Broden & Mickelsen, with extensive experience in defending people accused of fraud crimes in Federal court.