Federal agents have arrested two New England businessmen with illegally trying to procure hundreds of thousands of dollars in federal Paycheck Protection Program (PPP) loans. This is the first fraud case. Thousands of small businesses are struggling across the country amid the coronavirus pandemic.

About Paycheck Protection Program

The government designed the Paycheck Protection Program to provide a direct incentive for small businesses to keep their workers on the payroll. The SBA will forgive loans if all employees remain on the payroll for eight weeks. Plus, businesses need to use the money for payroll, rent, mortgage interest, or also utilities. Any federally insured institution, credit union, or Farm Credit System is accepting applications. Soon, other regulated lenders will be available.

COVID-19 Fraud and the PPP Program

Prosecutors charged two New England residents with fraud after illegally receiving nearly $544,000 in Small Business Administration loans. The pair claimed dozens of employees earning wages at four different entities, however, there were not any employees. The men discussed the plot via email. The Department of Justice charged both with conspiracy to make false statements to influence the SBA and conspiracy to commit bank fraud.

The New England businessmen may be the first case, but the US Justice Department expects more cases in the future. This is the first of several investigations launched by federal authorities. Congress approved PPP as part of the CARES Act to provide billions to struggling small businesses. The SBA has approved loans for over 4 million businesses. The government forgives loans if a business spends 75% of the loan money on keeping or rehiring employees.

Free COVID-19 Consultation

If you or someone you love was negatively impacted by COVID-19, compensation may be available. Our attorneys are experienced with complex litigations. Therefore, these claims could be complicated and problematic without the right team. We are dedicated to fighting for justice. Our consultations are free. Contact us today.