Federal Investigation Into the Paycheck Protection Program

A small business owner in suburban Chicago is fighting to keep his business open. He and his wife opened up an indoor play area for young children. Their business allows parents and caregivers to pay to come in and let their children play while enjoying an adult sitting area with wifi. Before the coronavirus pandemic, they were profitable and beginning to pay off their initial business loan. When the virus struck, however, they were forced to close down temporarily.

The business owner applied for the Paycheck Protection Program so he could still pay his employees and keep the lights on. He was so concerned about losing his business and his life savings that he gave misinformation on his application. Now he is worried that he could face white collar criminal charges for making a few misstatements, even though he had the best intentions.

The Paycheck Protection Program

The pandemic spurred state governments to shut down many businesses. As a result, Americans saw massive unemployment numbers. In response, Congress passed the CARES Act to help companies and individuals ride out the coronavirus pandemic financially. The federal government has paid out over a trillion dollars to businesses and individuals through the CARES Act.

The CARES Act authorized the Paycheck Protection Program. Through this program, businesses can apply for loans processed by the Small Business Administration. These loans allow employers to keep their workers employed during the coronavirus crisis. The Paycheck Protection Program (PPP) closed on August 8th, 2020, and the Small Business Administration stopped processing new applications on that day.

The federal government stated that it would fully forgive PPP loans but only under certain conditions. The employer must have used the PPP funds for payroll cost, rent, interest on mortgages, and utilities. The employer must have used at least 60% of the PPP loan on payroll expenses.

The U.S. Justice Department Has Opened an Investigation Into the PPP

Now, the US Department of Justice has opened an investigation into two businesses that successfully applied for loans through the PPP. They are on the hunt for small businesses and self-employed individuals who took out PPP loans and provided fraudulent information to obtain them.

Investigators have already contacted 15 of the largest U.S. loan processors and banks. They have also contacted the small business administration. One spokesman stated that they will begin reviewing PPP applications. If they find any evidence of fraud or misrepresentation within the PPP loan applications, or within claims for loan forgiveness, the review will turn into a federal criminal investigation.

Penalties for Fraud are Serious

If you are facing federal criminal trial charges related to the PPP loan forgiveness program, it is essential that you contact an attorney as soon as possible. When you need an attorney, experience matters. The consequences for a federal white-collar crime conviction, including fraud and misrepresentation, are severe. If convicted, you and your business could suffer life-altering consequences. Contact the skilled criminal defense lawyers at Glasgow & Olsson today to schedule your initial consultation.

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