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COVID Frauds of the Week: More Fraud on the PPP

Posted  May 22, 2020

As we enter our third month of nation-wide shelter-in-place efforts, fraudsters continue to exploit government relief programs. For the second week in a row, the Eastern District of Texas DOJ is going after a purported small business owner for defrauding the Paycheck Protection Program (PPP). Samuel Yates has been charged with wire fraud, bank fraud, and making false statements for allegedly submitting fraudulent loan applications under the PPP program.

According to unsealed court documents, Yates sent false PPP loan applications to two different lenders. In one, he claimed to have 400 employees and a monthly payroll of $2 million. In the second, he claimed to have 100 employees. He was able to obtain a loan of over $500,000 through this second application. For each application Yates allegedly used a random name generator to come up with his list of “employees” and submitted forged tax documents.

The PPP provides low-interest loans for small businesses and non-profits who agree to meet certain requirements, such as maintaining employment levels. So far, the government has allocated over $650 billion for the program, with the initial funding of $349 billion lasting about a week. Eastern District of Texas U.S. Attorney Joseph D. Brown encouraged lenders to report suspicious PPP loan applications, stating, “It is a priority of the Department of Justice to deter and prosecute this type of fraud.”

The PPP is not the only government benefit program vulnerable to fraud. Just yesterday, Washington state officials disclosed that an international scheme stole “hundreds of millions of dollars” from the state’s unemployment insurance system. The scam could translate to increased delays for those who legitimately need these benefits. As these incidents demonstrate, this kind of fraud does not just hurt the bottom line—it also prevents funds from getting to the people who need them most. It is more important than ever that whistleblowers bring these frauds to light.

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Tagged in: Catch of the Week, COVID-19, Government Loan Programs, Importance of Whistleblowers, Whistleblower Eligibility,