At the onset of the economic crisis caused by the COVID-19 pandemic, one of the most significant and popular government programs was the Paycheck Protection Program (PPP), a forgivable loan offered through the SBA to help businesses stay afloat during quarantines and lockdowns. While PPP loans did indeed help many businesses during the pandemic, the ultra-fast way in which it was put together also opened the door for many opportunists to try and defraud the program. As of April 2021, authorities estimated at least $4.6 billion had been stolen from the PPP fund through fraudulent claims and schemes. Let's take a look at some of the biggest instances of alleged PPP fraud reported since the pandemic began.
Ring of 22 People Charged in Elaborate PPP Fraud Scheme
In July 2021, a local Atlanta news outlet reported that 22 people (half of whom are from the Atlanta area) had been charged in an elaborate PPP loan fraud scheme. According to authorities, the scheme ended up costing the government about $11.1 million in fraudulent claims.
The Justice Department says the defendants either submitted or assisted with submitting fraudulent PPP loan applications on behalf of 14 businesses between April and August 2020. The funds totaled between $700,000 - $850,000 for each company. The funds were then used to purchase luxury vehicles, jewelry, and other personal items. As of now, six of the 22 defendants have pled guilty to the charges, including the alleged ringleader.
Online Lender Investigated for Sending $7 Million in PPP Funds to Fake Farms
The House Select Subcommittee on the Coronavirus Crisis has opened an investigation into online lending platforms Kabbage and BlueVine for possibly enabling widespread fraudulent PPP claims—including up to $7 million in aid for farms that don't exist.
In May 2021, news outlet ProPublica reported that Kabbage processed 378 loans collectively worth $7 million to single-person businesses (most of them listed as farms) that don't appear in state corporation records and were listed at residential addresses with no visible agricultural activity. Some of the fake farms were notably strange in description (e.g., an orange grove in Minnesota) or had unusual names. One such entity, a supposed cattle ranch called “Beefy King,” falsely used the physical address of the mayor of Long Beach Township, New Jersey, whose home sits on a sandbar by the ocean, according to the mayor himself.
The investigation was prompted by the fact that while Kabbage facilitated the speedy processing of PPP loans, many of the applications were allegedly not even reviewed by humans, opening the door for widespread fraud.
If you received assistance from a PPP loan and are now suspected of receiving it fraudulently, the Sigal Law Group can help you. Call us today at (818) 325-0570 for a free consultation.