Tips For Mitigating CARES Act Enforcement Risk

May 7, 2020

- On May 5, the Department of Justice announced its first criminal fraud charges related to funds obtained under the $2.2 trillion federal relief program established by the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").¹ The DOJ charged two individuals in the District of Rhode Island, alleging that they had filed fraudulent bank loan applications for more than $500,000 in forgivable loans guaranteed by the Small Business Administration under the CARES Act Paycheck Protection Program ("PPP"). The DOJ alleged that in order to obtain the loans, the individuals falsely represented that they had dozens of wage-earning employees at four different companies, which they did not actually own or were defunct.

This action makes clear that the DOJ will prioritize the prosecution of such allegedly blatant acts of fraud by recipients of CARES Act funds. If CARES Act oversight is anything like that applied to the 2008 Troubled Asset Relief