Since the CARES Act Paycheck Protection Program (“PPP”) was enacted, Chilivis Grubman attorneys have cautioned recipients of increased government scrutiny and enforcement efforts. In Sept 2020, we highlighted Acting Assistant Attorney General Brian Rabbitt’s comment that the U.S. Department of Justice (“DOJ”) has a “team dedicated to PPP fraud, began investigating immediately, and brought our first cases within months of the PPP being announced.” Although communities are relaxing COVID-19 rules, enforcement efforts related to COVID-19 emergency aid programs, like the PPP, continue.
On June 11, 2021, the DOJ announced that a New York man and Oklahoma woman were charged as co-conspirators for allegedly obtaining and laundering nearly $1 million in PPP funds. According to the press release, from May 2020 through October 2020, the pair conspired to obtain nearly $1 million in PPP emergency relief funds. Under the alleged scheme, the pair submitted a PPP loan application for ADA Auto Group, LLC, which is a defunct business owned by the New York man. The PPP loan application allegedly contained materially false information and false certifications about ADA Auto Group, including how the money would be used. Based on the false information and certifications, the PPP loan was approved, and funds were disbursed. The pair allegedly used the loan proceeds to purchase two cars and to cover personal expenses.
Based on the allegations, the New York man and Oklahoma woman were each charged with conspiracy to commit bank fraud, conspiracy to engage in monetary transactions with criminally derived proceeds, bank fraud, and engaging in monetary transactions with criminally derived proceeds. If found guilty, “each face[s] a maximum penalty of 30 years in prison for each conspiracy and substantive count of bank fraud, and a maximum of 10 years in prison for each conspiracy and substantive count of engaging in monetary transactions with criminally derived proceeds,” according to the press release.
The press release also highlighted certain enforcement activities and statistics of the DOJ’s Fraud Section, which leads the DOJ’s prosecution of CARES Act fraud schemes. In the approximate 15 months since the CARES Act and emergency aid programs were enacted, the government has prosecuted over 100 defendants in over 70 criminal cases. Several real-estate properties and luxury items have been seized. The DOJ’s Fraud Section also seized more than $65 million in cash proceeds from PPP fraud. The Fraud Section maintains a site with information on specific enforcement cases, including unsealed pleadings.
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.