As part of an ongoing investigation, the Justice Department has charged 57 people who perpetrated as business owners for taking more than $175 million from the Paycheck Protection Program.
The small business fund was meant to aid businesses throughout the COVID-19 pandemic, but has now been taken advantage of by people who may have needed the money, but would not be using it towards the prevention of job loss and business closure.
According to the head of the Justice Department’s criminal division, Brian C. Rabbitt, the people charged were “individuals or small groups, acting on their own, who lied about having legitimate businesses or who claimed that they needed P.P.P. money for things like paying workers or paying bills, but instead used it to buy splashy luxury items for themselves.”
Among the 57 charged individuals, most cases requested loans ranging from $30,000 to double-digit millions. For instance, two Buffalo, New York men attempted to take out a loan for $7.6 million. Going forward, the Justice Department plans on focusing on criminal rings as most of the large PPP loan claims were made by these particular groups.
“These defendants used lies to obtain millions of dollars in PPP funds and then spent those funds not on their workers, but on things like luxury cars, homes, renovations, diamond jewelry, even adult entertainment and trips to Las Vegas,” Rabbitt said. “Any time the federal government makes a large amount of money available to the public on an expedited basis, the opportunities for fraud are unfortunately clear,”
Ironically, during the summer, many PPP loans were given to major corporations that didn’t need the additional resources and people who didn’t even own businesses.
Meanwhile, legitimate businesses ran by entrepreneurs were either oddly denied or couldn’t apply because funds ran out. Partiality and favoritism also were factors in some banks’ decisions as they opted to distribute funds to existing customers.
