Chilivis Grubman attorneys have written about complying with relief programs enacted to help tackle the financial strain of the COVID-19 pandemic. CG attorneys have also monitored and written about the government’s efforts to combat fraud against the CARES Act programs and other COVID-19 related relief programs. More than a year after many of these programs were enacted, the Department of Justice (“DOJ”) continues to investigate and arrest individuals perpetrating fraud.
On July 9, 2021, the DOJ announced the arrest of a California man who allegedly engaged in a scheme to defraud two COVID-19 related relief programs – the Paycheck Protection Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”). The PPP provides forgivable loans to qualified businesses, while the EIDL is a Small Business Administration (“SBA”) program that provides low-interest financing to small businesses, renters, and homeowners in regions affected by declared disasters. The PPP has disbursed over $780.4 billion alone.
The arrested California man allegedly submitted over two-dozen PPP loan applications and at least seven EIDL loan applications. These applications contained false information and documents, according to the press release. The fraudulent applications included false employee information, false or exaggerated payroll information, and fake tax documents. The applications were also submitted on behalf of several individuals and businesses.
The perpetrators sought more than $8 million in PPP and EIDL funds as part of the scheme. Based on the false loan applications, the government disbursed $3.6 million in loan proceeds and the California man netted approximately $2 million from the scheme. The California man and others spent the illegally obtained proceeds on personal expenditures unrelated to the COVID-19 pandemic, which appears to be a recurring theme in COVID-19 relief program fraud. According to the press release, the California man and his counterparts used the proceeds at restaurants, retail stores, on personal investment accounts, and to purchase cryptocurrency. A $100,000 Tesla was also purchased with the proceeds.
The California man was charged with six counts of wire fraud. For each wire fraud count, he faces up to twenty years in prison. He was also charged with three counts of bank fraud and he faces up to thirty years in prison for each bank fraud count. The press release also details continued interagency collaboration, which CG attorneys have discussed. The FBI and the SBA Office of Inspector General continue to investigate this scheme.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with government investigations, including fraud investigations and prosecutions. If you need assistance with such a matter, please contact us today.