In New York and throughout the country, the IRS watches out for individuals who seek to defraud the government out of tax-payer dollars. If accused individuals are found guilty, the punishment could be long sentences in federal prisons.
Several defendants on this ever-growing list of fraudulent filers are two bank executives who worked at a major New York bank and an accountant. Two have already pleaded guilty. They allegedly filed for loans using false information to defraud the bank where two of them worked out of millions of dollars through the Paycheck Protection Payment loan program.
What is the PPP loan program?
The PPP is a loan program that was put in place in 2020 to help small businesses stay afloat. It was one piece of the CARES Act that aimed to aid the economic recovery during a period of downturn and joblessness. The loans were relatively easy to apply for and could be forgiven if the money was used for the purpose for which it was received. The program was well-intentioned and did succeed in helping many small businesses survive, which is the good news.
The bad news is that the program also reportedly attracted those who did not intend to use the funds for a small business. Two of the defendants were insiders, and the third one, an accountant, allegedly “cooked the books” to substantiate the fraudulent financial applications they submitted.
The consequences of PPP fraud
A special department has now been set up to investigate cases of PPP fraud. According to reports, several recipients who abused the PPP are now on crowdfunding sites asking for help to repay the money. However, even if they were to return the money, crimes like wire fraud may have been committed in submitting false applications and receiving the money. Mounting a defense may be important for these individuals to avoid federal penalties.