CARES Act Fraud

CARES Act and Payroll Protection Program Fraud

In the midst of the Coronavirus pandemic, the Federal Government is coming to the aid of small businesses in an attempt to provide some much-needed economic support at a time when everyone is suffering.

The loans are being pushed out by the government at breakneck speed because people need money now and it is in the best interest of the government to get money into the economy as quickly as possible. Because of this speed there is bound to be a lack of oversight in the application process – which means that mistakes will be made – likely by both borrower and lender.

In addition to these loans being handed out quickly, they are also unique for other types of loans in that the amount used to pay for qualifying expenses including expenses such as payroll costs, rent and other utilities can be forgiven – meaning you don’t ever have to pay it back.

The Payroll Protection Program is a much-needed stimulus in this time of economic upheaval. However, with the lack of oversight and the added benefit of forgiveness, there are opportunities for fraud – even if it is a mistake.

For example – the amount of the loan you are allowed to take is based on your average monthly payroll costs – but there is no clear-cut guidance as to how to calculate that number exactly. The amount of the loan that is forgivable is dependent upon the actual payment of the qualified expenses – but again, there is no clear-cut guidance as to exactly what expenses are qualified for forgiveness.

Many People on Parole or Probation are Ineligible for a Cares Act Loan. Find out how The McShane Firm can Help you.

Imagine another scenario – you take out a loan based on the calculations that you worked out for your business. Sometime after receiving the loan, you realize that there is not enough to sustain your business, so you close up shop and declare bankruptcy. The money may not have been for payment of qualifying expenses, but due to bankruptcy, the bank has no mechanism by which to recoup the loan so they will instead go after you for fraud.

If you claim more than you are entitled to claim, or request to forgive more than you are entitled to forgive, even by innocent mistake, or declare bankruptcy soon after taking the loan, you could be facing criminal fraud charges. While the government is acting fast now to get money to small businesses, when this is all settled and it’s time to look at repayment, you better believe that the government will be trying to get back as much money as they possibly can. And at this point, it becomes more than just getting the money back. Now it is a Federal criminal case, which means steep fines and jail time.

If you have been charged with a federal crime for fraud regarding the CARES act and the Payroll Protection Program, we can help. Our team of experienced attorneys are licensed to practice in Federal District Courts in Pennsylvania. Our law firm practices exclusively criminal defense and we are here to fight for you. Contact The McShane Firm today!