How looters who abused the Paycheck Protection Program pulled off the 'biggest fraud in a generation': report
In 2020, the COVID-19 pandemic inflicted widespread economic pain in the United States, and the Paycheck Protection Program (PPP) was designed to alleviate the suffering that many businesses experienced. But PPP was abused by some people who didn’t really need the help, and NBC News reporters Ken Dilanian and Laura Strickler examine some of those abuses in an article published on March 28.
Some fraudsters, Dilanian and Stricker note, used PPP funds to purchase “Lamborghinis, Ferraris and Bentleys” as well as “Teslas.”
“They came into their riches by participating in what experts say is the theft of as much as $80 billion — or about 10% — of the $800 billion handed out in a COVID relief plan known as the Paycheck Protection Program, or PPP,” the NBC News reporters explain. “That’s on top of the $90 billion to $400 billion believed to have been stolen from the $900 billion COVID unemployment relief program — at least half taken by international fraudsters — as NBC News reported last year. And another $80 billion potentially pilfered from a separate COVID disaster relief program. The prevalence of COVID relief fraud has been known for some time, but the enormous scope and its disturbing implications are only now becoming clear.”
Dilanian and Strickler add, “Even if the highest estimates are inflated, the total fraud in all COVID relief funds amounts to a mind-boggling sum of taxpayer money that could rival the $579 billion in federal funds included in President Joe Biden’s massive ten-year infrastructure spending plan, according to prosecutors, government watchdogs and private experts who are trying to plug the leaks.”
Attorney Matthew Schneider, a former federal prosecutor, describes these PPP abuses as “the biggest fraud in a generation.” And Michael Horowitz, inspector general for the U.S. Department of Justice, told NBC News’ Lester Holt, “What didn't happen was even minimal checks to make sure that the money was getting to the right people at the right time.”
PPP, Dilanian and Strickler note, “authorized banks and other financial institutions to make government-backed loans to businesses — loans that were to be forgiven if the companies spent the money on business expenses.”
“Nearly 10 million such loans have already been forgiven,” the reporters observe. “Many of the loans-turned-grants were for millions of dollars, public records show. Experts say millions of borrowers inflated their numbers of employees or created companies out of whole cloth. For much of 2020, lenders did little to verify the applications, prosecutors and experts say.”
Juan Gonzalez, a federal prosecutor for the Southern District of Florida, stresses that those who committed PPP fraud did a tremendous disservice to Americans who legitimately needed financial relief because of the pandemic.
Gonzalez told NBC News, “This is billions of taxpayer dollars that has been stripped from them. And more angry should be the people who did lose their jobs, who worked for businesses that couldn't apply for this money because it was gone. Those are really the ones who should be the angriest of all.”
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