Examples of Paycheck Protection Program Fraud
In an effort to help businesses and workers thrown into financial turmoil by the COVID-19 pandemic and the subsequent forced closure of non-essential businesses, the U.S. Small Business Administration implemented the Paycheck Protection Program (PPP).
Under the program, businesses can receive PPP loans that can be forgiven to the extent the funds are used to pay rent or payroll. The program is designed to incentivize business owners to keep their employees on payroll. Employers who follow the PPP’s guidelines and used 75% or more of the PPP funds for payroll-related expenses would get most or all of the loan forgiven by the federal government.
While the PPP was meant to help smaller businesses, several larger corporations applied for the program illegally or used the funds granted to them improperly.
There are several instances of ineligible businesses attempting to get funds from the PPP by submitting fraudulent applications, as well as eligible businesses using their funds from the PPP illegally.
Examples of PPP fraud include the following:
- Applying for multiple PPP loans
- Misrepresenting the immediate need for PPP funds
- Submitting a fraudulent PPP application with falsified business records that overstate the company’s true number of employees
- Using more than 25% of PPP funds for non-payroll expenses, or using the funds to pay for large bonuses or incentive compensation for executives
- Making layoffs after receiving PPP funds
In an effort to crack down on PPP fraud, the federal government may reward whistleblowers with up to 30% of the funds recovered through any resulting litigation.
Additionally, whistleblowers are protected from getting fired or receiving any other retaliation from their employer for reporting cases of PPP fraud.
The PPP was meant to keep workers employed. Any business using the funds from the PPP for any other purpose may be prosecuted.
If you know that your employer applied for the PPP illegally, or used the funds from the PPP improperly, our Sacramento attorneys can help you file a claim under the False Claims Act. You may be entitled to 30% of the recovered funds from any ensuing litigation.
Contact Kershaw, Cook & Talley today at (916) 520-6639 to schedule a free, confidential consultation with our team.