Investigations into PPP Fraud

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The PPP was put into place to help small business, including many paint contractors, keep their payroll going during coronavirus shutdowns. But failure to correctly oversee the program created an opportunity for many business to obtain funds fraudulently.

P-P-Paycheck Fraud with CARES act?

Give someone an opportunity and they’ll find a way to work the system. Investigations have been opened into thousands of businesses accused of making off with millions of dollars of money earmarked for small business COVID relief. For example, money was given to businesses created after the program was put in place, to businesses that were in a “do not pay” database –excluded for various reasons from doing business with the government – and to businesses that had over 500 employees and were therefore ineligible for loans under the program.

Companies illegally applying for multiple loans received over a billion dollars by “double-dipping” into the funding. Furthermore, many companies that received loans left out key information or supporting documentation in their applications. Some business owners had a good ol’ time, buying luxury items for themselves instead of paying their employees. The fraud was widespread, as the SBA found tens of thousands of cases where companies received money for which they were ineligible.

Lack of Transparency

While the Justice Department opened up a fraud department when the program was created, the SBA did not release all the names of the businesses who took out loans, and in fact, ran the program with a “self-certification” vetting process and a lack of transparency that made it relatively easy for some businesses to fudge their information, or simply make something up.. Recently a federal judge ordered the SBA to release the names and loan amounts of all companies receiving monies under the program. The audits are focusing mainly on companies that received loans over $2 million, which adds up to about 20% of the total money lent. All in all, red flags went flying for nearly $3 billion in loans to around 11,000 borrowers.

Due to this misuse of taxpayer money, borrowers applying for loan forgiveness under the program rules are urged to make sure their initial applications will not raise audit concerns.

Reporting Suspected Fraud

You may report fraud, waste, mismanagement, or misconduct involving SBA programs or employees either online or by calling the Office of the Inspector General (OIG) at 800-767-0385. You may report anonymously or confidentially, where they have your information, but it is not released. An anonymous report may hinder an investigation since they can’t contact you for followup information.

The PPP program has assisted many painting contractors whose business were shut down during the COVID pandemic.

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