As expected, investigations into potential fraud and abuse are
already underway in the award of massive stimulus funds under the
CARES Act Paycheck Protection Program (PPP) (see our previous alert
from April 23, 2020, "CARES Act Borrowers Beware: The Past is
Prologue"). On May 5, the Justice
Department announced its first prosecution, charging two Rhode
Island businessmen with fraudulently seeking more than a half
million dollars in forgivable PPP loans, based on an application
claiming dozens of employees at four business entities, which in
fact had no employees.
The Treasury Department has announced it will audit all PPP
loans in excess of $2 million, as well as "other loans as
appropriate," if the borrower applies for forgiveness, and
recent Small Business Administration (SBA) guidance has put
borrowers specifically on notice that their certifications of need
and eligibility for PPP loans will be subject to close scrutiny and
potential investigation. Borrowers
