United States Department of Justice Opens Investigation Into PPP Loans and Borrowers

The U.S. Justice Department has opened an investigation into businesses and self-employed individuals that applied for loans under the Paycheck Protection Program. Over $500 million in loans to over 4.6 million businesses and individuals have been made under the PPP, and with over $100 million still available under the PPP to be loaned.

In connection with this investigation, Assistant Attorney General Brian Benczkowski, head of the Department of Justice’s criminal division,  stated “whenever there’s a trillion dollars out on the street that quickly, the fraudsters are going to come out of the woodwork in an attempt to get access to that money.”   As part of this broad government investigation, Federal prosecutors have already contacted 15 of the 20 largest U.S. banks and loan processors, and also the Small Business Administration.  U.S. banks make PPP loans to eligible borrowers, and the SBA administers the PPP.

Erik Doerring, a former attorney with the United States Department of Justice, and head of Burr & Forman’s PPP Audit and CARES Act Audit, Investigation and Defense Team, states “if a business or self-employed individual has taken out a PPP loan, and may have also have applied for forgiveness, these people and businesses must be very careful in the information they provide to the banks and SBA.  If a bank or the SBA begins to ask questions, the business should not go alone here, but should seek out experienced legal counsel.  PPP borrowers should be very mindful of whether their PPP is loan is being “reviewed” by their bank or the SBA.  A ‘review’ can turn into a criminal investigation.”

Burr & Forman has a dedicated team to counsel individuals and businesses in government audits, investigations and defense related to the Paycheck Protection Program (PPP) and Coronavirus Aid, Relief and Economic Security (CARES) Act. The PPP and CARES Act Audit, Investigations and Defense Team represents and advises clients in audits and investigations involving PPP loans and tax benefits that may have been claimed under the CARES Act.  This multidisciplinary team combines more than 230 years of legal experience and attorneys with previous government positions, including attorneys with IRS Chief Counsel, the United States Department of Justice, and United States Attorneys’ Offices.

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