On September 10, Acting Assistant Attorney General Brian Rabbitt delivered remarks at the PPP Criminal Fraud Enforcement Action Press Conference. A written version of his remarks can be accessed here.
The Paycheck Protection Program (PPP) was part of the CARES Act, which was signed into law on March 27, 2020, in response to the COVID-19 pandemic. Pursuant to the PPP, the federal government has made billions of dollars in forgivable loans to businesses that met certain criteria. Chilivis Grubman has published several blog posts regarding the PPP and related fraud enforcement actions, which can be accessed here, here, here, and here.
In his remarks, Rabbitt noted that “[u]nfortunately, almost every crisis brings out not only those who seek to help others, but also those who try to exploit the situation for their own unlawful purposes and financial gain.” Rabbitt stated that Attorney General Bill Bar has instructed the Department of Justice (DOJ) to focus on pandemic-related fraud, including fraud schemes related to the PPP. Rabbitt explained that, soon after the PPP began, the DOJ set up a “team dedicated to PPP fraud, began investigating immediately, and brought our first cases within months of the PPP being announced.”
Rabbitt announced that, as of the date of his speech, the DOJ’s criminal division, along with various law enforcement partners, had criminally charged more than 50 people who allegedly committed fraud to obtain money from the PPP, and had been able to recover or freeze over $30 million in assets. According to Rabbitt, the cases that have been brought by the DOJ thus far involved PPP loan requests ranging from $30,000 to $24 million, and cases have been brought in 19 federal judicial districts.
Rabbitt explained that PPP fraud cases fall into two categories. According to Rabbitt, the first category involves individuals or small groups who have lied about legitimate businesses or who have claimed that they needed PPP funds for legitimate business purposes, but instead used those funds to purchase luxury items for themselves. The second category described by Rabbitt involves “coordinated criminal rings that have engaged in systematic, organized conduct to loot the PPP.” Rabbitt also spoke of “a few common threads” of PPP fraud schemes, including: (1) “the brazen, bold, and simply false representations we allege the defendants made in their applications for PPP funds”; (2) “the defendants’ use of their stolen PPP funds for entirely illegitimate purposes”; (3) “[t]he money these defendants stole was taxpayer money”; and (4) “the success of the defendant’s fraudulent loan application meant that there were fewer funds available at that time in the PPP for legitimate businesses that were in genuine need of support.”
Rabbitt went on to list some “critical aspects” of the DOJ’s investigation and prosecution of alleged PPP fraud: (1) “the unparalleled speed with which these cases have been investigated and prosecuted”; (2) the DOJ’s “use of data analytics to develop these cases so quickly”; (3) the DOJ’s use of “public-private partnerships to maximize our awareness and visibility of suspicious conduct and our collection of critical evidence”; and (4) the “whole-of-government approach we have employed in bringing these cases.”
Rabbitt concluded his remarks by making it clear that the DOJ’s work related to PPP fraud is ongoing.
The attorneys at Chilivis Grubman represent both individuals and businesses in connection with government investigations and white-collar criminal prosecutions. If you need assistance with such a matter, please contact us today.