If you are even somewhat aware of what is happening around the country then you must know that winter is here. No, not that frigid storm expected to bring record low temperatures across the nation, but for those that tried to defraud the government in the PPP and EIDL programs.
I wrote about the fraud in the PPP and related financing programs that were supposed to help business owners across the country through the Covid induced lockdowns and beyond. The fraud was almost expected when the PPP program was rolled out because of how quickly it was done with little testing and large dollar amounts being given as incentives.
When news started of investigations and actual fraud cases being handed down I offered my opinion that ‘winter is coming’ for the fraudsters, meaning a drastic increase in criminal prosecutions. This wasn’t a secret but many didn't realize the magnitude of what actually was happening. Then more major reports came out.
Now here we are over two and a half years after the program rolled out and tens of billions are assumed as fraud with much of it likely never to be recovered. We have had congressional hearings, new laws proposed and passed, new committees formed, major news reports, and even a CNBC American Greed episode detailing one couples story of PPP fraud.
Each week there is a new report on either an indictment or a conviction of someone that tried yet couldn't outrun the feds. Lenders and others fintechs who processed the loans are being investigated. This will go on for years to come.
Many won’t bat an eye, they will blame the banks, one side of the government or the other, but ultimately it boils down to the individuals. I’m not even calling them business owners because many didn’t even have a real business.
Understanding all of this can help both funding companies and brokers when speaking to merchants who are unwilling to provide certain information, documentation, or other stips to get funding. A simple rebuttal as to why you need this information would be to protect the funding company's interests, “just look at all the PPP fraud”.
Most business owners wouldn’t be able to successfully overcome that unless they have something to hide. You aren’t accusing anyone of anything because most business owners have good intentions, however, it is fair to point out the amount of fraud.
If you want to see the latest cases here is a great resource that tracks Cares Act Fraud: https://www.arnoldporter.com/en/general/cares-act-fraud-tracker.