Thank you for sharing!

Your article was successfully shared with the contacts you provided.
paycheck compensationFor anyone following developments in the massive small business stimulus program known as the Payroll Protection Program (PPP), May 14 is an important date. That is the deadline imposed by the Treasury Department and Small Business Administration (SBA) for arguably undeserving recipients of PPP loans to return the funds “no questions asked.” According to Treasury Secretary Mnuchin, the IRS and SBA will be auditing all loans in excess of $2 million and will be prosecuting instances of fraud. Secretary Mnuchin has also indicated that further guidance will be forthcoming to clarify, and likely limit, the criteria the government will use to determine who is deserving (and not deserving) of the loans.

Once the May 14 deadline has passed, the government will no doubt seek to make examples of undeserving PPP loan recipients. The government has a number of tools in its arsenal for doing so. Indeed, the first criminal fraud charges stemming from the PPP program have already been brought in the District of Rhode Island in U.S. v. Staveley, 1:20MJ34LDA (D. RI). That appears to have been a clear case of fraud involving phantom employees for several businesses, at least one of which the defendants did not even own. The more difficult, and likely more common, case arises from those borrowers who otherwise would be eligible under the PPP but whose economic need for the loan may be questionable. This article discusses what tools the government has for pursuing seemingly undeserving PPP borrowers, the obstacles to bringing such cases, and the factors that may influence the government’s decision in pursuing criminal or civil cases.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.