The Department of Justice (“DOJ”) unsealed an indictment charging seven individuals across two states for their alleged participation in a scheme to obtain $16 million in forgivable Paycheck Protection Program (“PPP”) loans guaranteed by the U.S. Small Business Administration (“SBA”) under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. 

Enacted on March 29, 2020, the CARES Act established the PPP to provide emergency relief to small businesses experiencing economic hardship as a result of the coronavirus.  Specifically, through the PPP, the CARES Act authorized up to $349 billion in forgivable loans to small businesses for job retention and other expenses.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

In the newly unsealed indictment, DOJ alleges that the Defendants conspired to submit more than 80 fraudulent PPP loan applications by falsifying the number of employees and the average monthly payroll expenses of the applicant businesses.  Defendants are alleged to have falsely certified that they would use PPP funds to retain workers and cover payroll expenses; instead, according to DOJ, Defendants used the PPP funds for their own personal use and benefit.  Finally, Defendants are also alleged to have written over 1,100 fake paychecks totaling more than $3 million in fraudulent PPP loan proceeds.

Read the DOJ press release here.