Protecting yourself against PPP Fraud

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It should come as no surprise to anyone that COVID-19 and the pandemic upended everything. Panic, deaths, and economic troubles swept the nation and world. Small and medium sized businesses shut down and continue to struggle to this day. Challenging, and wide-spread events like these bring about both the best and worst in people. These events can bring about a sense of community as we all saw, neighbors helping neighbors. But, sadly, it can also bring out nasty opportunism. Cyber Fraud and data breaches climb year in and year out. The federal trade commission saw a steep climb in identity fraud and losses from fraud between 2019 and 2020.

More and more reports are now surfacing of scammers using the PPP system, that is the Paycheck Protection Program, to defraud institutions and people alike. Families and towns across America are seeing disturbing patterns relating to PPP Fraud. Staying informed and being proactive is the best thing you can and should to avoid being caught up in one of these scams. 

What is the scope of PPP Fraud?

The potential scope of PPP Fraud is vast. Although the program has been hailed as an overall success, the dark side of the program has been exposed. The justice department has been working overtime to uncover fraudulent activity. According to Avvo, the department has earmarked close to a billion dollars to investigate and prosecute fraud

PPP Fraud is both straightforward and complicated. The reason being that the program has direct stipulations to its use. For example, 75% of loan funds are to be used to cover payroll. Hence the name, Paycheck Protection Program. Using funds outside of this scope is technically fraudulent but hardly enforceable. The complications really arise due to the speed at which the program was rolled out. In what seems overnight, the federal government authorized institutions to shell out close to 400 billion dollars in loans. That number has since expanded to close to 800 billion dollars. 

As with many forms of identity theft and fraud, the victims are unaware. Many people do not know that their identities have been used to acquire these fraudulent loans. ProPublica recently investigated a series of households in Ocean County, New Jersey which were unaware of their connections to potentially fraudulent PPP Loans. These loans were given to alleged farms and agriculture businesses, at least that’s what the paperwork claims. In reality, the addresses of these agriculture business were nothing more than seaside homes with unsuspecting families.

Why does this matter? How can it affect me?

This phenomenon of fraud can have a very real impact on individuals and their community. Of course, one is inclined to say “Well I didn’t know my identity was stolen, I’m not going to get in trouble for this loan.” While this might be true, it is a misguided opinion. You can be investigated as being part of this kind of fraud and you must affirmatively clear your name. This kind of identity theft can affect a person for years, even if the scammer is caught. Credit lines and credit scores can be deeply affected by actions such as these. And if the person responsible is not caught, the consequences could be worse.

According to the Identity Theft Resource Center, even having a name and nothing else on a fraudulent PPP loan can affect credit scores, credit lines, monthly payments, employment and so-forth. If not caught early on, a sort of vicious cycle happens where a fake credit profile of an individual is “authenticated” as the years go by. That’s to say, the longer a person goes without knowing their identity was stolen, the more that stolen identity is entrenched into the authentication systems used by the government and banks, thus becoming more and more “real.” Multiply this amongst a community like Ocean County, and the local economy and population could be seriously affected. 

Contact Us

The Small Business Administration (SBA), the agency which runs PPP, advises people to use their approved tools to make sure they are not affected by this scam. It always pays to be proactive. They also encourage those with suspicions or information to contact them regarding fraudulent PPP behavior. 
If you have been a victim of PPP fraud, falsely accused of PPP fraud, or need defense by an experienced attorney against charges of fraud or other white-collar crimes. Contact Us. The Arora Law Firm has years of experience and years of success in this legal area.


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