Investigations of possible fraud in the federal Paycheck Protection Program are prompting some loan recipients to seek legal counsel, some lawyers say, the New Jersey Law Journal reported. Some of those cases involve clear-cut allegations of fraud, along the lines of the New Jersey lawyer charged earlier this month with fraudulently obtaining $9 million in PPP loans. But many investigations appear to focus on the more nebulous issue of whether the businesses really needed the money, lawyers said. Defense lawyers say they are getting calls from PPP loan recipients who have been contacted by investigators, or fear they may face charges in connection with the aid program. “What people don’t understand is that there is tremendous political pressure to get the money out the door,” said Christopher Porrino, chairman of the litigation department at Lowenstein Sandler. Knowing whether a PPP recipient will face trouble for taking aide it didn’t need is difficult, Porrino said. Applicants were required to certify that they needed the money to make payroll, “a pretty mushy standard,” he said. Adams said the PPP application process was fairly simple, although the specific requirements changed repeatedly while applications were being taken. The Small Business Administration, which runs the PPP program, apparently did not conduct a lengthy review of each application due to a desire to distribute the funds promptly. “If you sacrificed the speed at which this relief went out to the public for greater due diligence and verification, you may exacerbate an economic collapse. The speed at which this went out helped these businesses,” Adams said. Timothy Anderson, a criminal defense lawyer in Red Bank, said Congress made the application process “as easy as possible,” and when applicants made representations about their finances, “took their word for it.” In making the process so easy, though, the government “assumed a certain amount of fraud,” said Anderson. Read more.
In related news, U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell will testify on Sept. 24 before the Senate Banking Committee on coronavirus relief, the committee said in a statement yesterday.
