On August 5, President Biden signed two bills into law that extend to ten years the statute of limitations for civil and criminal enforcement actions for fraud on the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL). These are programs formed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law in March of 2020.
The CAREs Act provides relief to businesses and individuals hurt by the COVID-19 pandemic. Specifically, the PPP is a federal loan initiative that was designed to help small businesses pay their employees and meet expenses during the COVID-19 pandemic. The EIDL is a federal loan initiative that can provide up to $2 million of financial assistance to small businesses or private, non-profit organizations that suffer substantial economic injury because of the declared disaster. The EIDL is significant because it is the only form of SBA assistance not limited to small businesses.
Since September 2021, the U.S. Department of Justice (DOJ) has made several announcements regarding prosecuting defendants for defrauding COVID-19 relief programs. In previous articles, CG attorneys have discussed the prosecution of such cases. For example, in December of 2021, CG attorneys discussed a former NFL player who was sentenced to federal prison for his involvement in a scheme to defraud the PPP by using false information and falsified documents to obtain a loan of $1,246,565 for his company. Last week, CG attorneys discussed the DOJ’s announcement of a PPP scheme involving a tax preparer pleading guilty to conspiring with others in schemes to defraud the IRS and the PPP.
Under the False Claims Act, the government had six years to investigate and indict those believed to have presented false statements. That statute of limitation applied to the PPP and EIDL programs. However, President Biden has now signed two bills that will expand the window of time for federal prosecutors to charge fraud in connection with the distribution of relief funds during the COVID-19 pandemic. The PPP bill (HR 7352) includes all PPP-related fraud, while the EIDL bill (HR 7334) includes both the initial EIDL advances as well as the targeted advances. This legislation comes in response to the estimated $80 billion spent on fraudulent PPP and EIDL loans and the scrutiny that SBA has received from Congress.
“My message to those cheats out there is this: You can’t hide. We’re going to find you. We’re going to make you pay back what you stole and hold you accountable under the law,” exclaimed President Biden at a press conference.
Because PPP fraud can now be investigated and prosecuted into 2031, and COVID-19 EIDL fraud can be investigated and prosecuted into 2032, it is imperative that companies and individuals who received government-sponsored pandemic relief, maintain detailed, organized, and accurate records related to such loans. Moreover, if such loan recipients have not conducted due diligence to ensure compliance in receiving and using those funds, now is the time to do so.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with white-collar criminal investigations. If you need assistance with such a matter, please contact us today.