DOJ: 50 individuals criminally charged for PPP fraud, with ‘more to come’

“This impressive number of charged defendants is in addition to a number of cases that have been brought by U.S. Attorneys’ offices around the country,” said Acting Assistant Attorney General Brian Rabbitt of the Criminal Division. “Those offices have been an important part of the Department’s efforts, as well, to combat PPP fraud.”

According to Rabbitt, these charges, in conjunction with charges previously brought by the Criminal Division’s Fraud Section since May, bring the total number of defendants charged by the Criminal Division for PPP-related fraud to 57. The charged cases involved attempts to steal more than $175 million from the PPP and actual losses for the federal government of over $70 million.

“Through our swift efforts to date, we have been able to recover or freeze over $30 million in PPP funds, and we expect to add to that total in the future as we seize additional funds and liquidate assets that defendants have purchased using illegally obtained PPP funds,” Rabbitt said. “We have brought charges in no fewer than 19 separate judicial districts across the United States.”

Fraud categories

The PPP cases fall into two general categories. “The first category involves individuals or small groups acting on their own who lied about having legitimate businesses or who claimed they needed PPP money for paying workers or paying bills, but instead used it to buy splashy, luxury items for themselves,” Rabbitt explained.

The second category of cases, Rabbitt continued, are the “coordinated criminal rings that have engaged in systematic, organized conduct to loot PPP.” In one egregious case, charges were recently filed in Cleveland and Miami against 11 individuals—including a professional athlete and his business manager—who allegedly worked together attempting to obtain $24 million in PPP funds using falsified records and fraudulent application materials.

PPP fraud cases share a few common themes, including the “brazen, bold, and simply false representations that we alleged defendants made in application materials for PPP funds,” Rabbitt said. “These alleged misrepresentations typically centered on the nature and existence of the businesses that defendants were claiming they needed funds and included misrepresentations about things like the number of employees they had, their average monthly revenue and payroll failures, and the applicant’s criminal backgrounds—or lack thereof.”

“In many cases, these defendants didn’t stop in simply making false statements to lenders, but rather tried to back up their lies with fake documents, like falsified tax documents, dummy payroll and revenue records, and in some cases, even stolen personal information,” Rabbitt added.

Department partnerships

During the press conference, Rabbitt highlighted how the Fraud Section has “developed and employed to great effect” what he called “first-in-class data analytical capabilities” that the agency has used in other criminal investigative areas, including healthcare fraud and market-manipulation investigations and cases. “The Fraud Section has truly become a market leader in its use and development of these data analytic techniques,” he said. “Here, again, we see the potential to bring criminal charges quickly and efficiently.”

He also credited the public-private partnerships the Criminal Division has with the financial services industry “to maximize awareness and visibility of suspicious conduct and our collection of critical evidence. Many financial institutions and banks … have been strong partners in assisting us in detecting and investigating potentially fraudulent activity in connection with PPP and other government-aid programs and safeguarding taxpayer dollars by spotting fraud and freezing accounts.”

The Criminal Division continues to collaborate with its numerous enforcement agency partners. These include the Federal Bureau of Investigation; the IRS Office of Criminal Investigations; the Small Business Administration’s Inspector General; the FDIC’s Office of Inspector General; the U.S. Postal Inspection Service; and U.S. Attorneys’ offices across the country.

“These 50 cases are significant in and of themselves, but there is more to come,” Rabbitt concluded. “Our work is ongoing. We are not done here, yet.”