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Guest Blog: Predictions For Future PPP Fraud Prosecution By DOJ, by David Bouchard, Esq.
This article by David Bouchard is one of the most thorough and incisive pieces I have read about the potential scale of SBA Paycheck Protection Program loan fraud prosecutions over the next few years. I reached out to David and he gave us permission to republish it. This is a must-read for professionals and anyone concerned about this subject. – Jeff
David Bouchard
David is a partner at Finch McCranie, LLP, where he defends individuals and businesses facing investigation and prosecution. You can contact David at david@finchmccranie.com.
Republished with the permission of the author. Originally published on Law360.com, Jan. 25, 2021
By last August, just four months after the first Paycheck Protection Program loans were disbursed, federal prosecutors had filed 41 criminal complaints charging nearly 60 people with PPP fraud in cases involving alleged losses totaling approximately $62 million.[1]
Without skipping a beat, Hannibal Ware, inspector general of the Small Business Administration, cautioned that such prosecutions amounted to “the smallest, tiniest piece of the tip of the iceberg.”[2]
A few weeks later, the U.S. Department of Justice‘s Acting Assistant Attorney General Brian Rabbit warned would-be fraudsters: “You will be identified. You will be held accountable. You will face the severest of consequences for trying to exploit your fellow Americans’ suffering for your own personal gain.”[3]
In December, the DOJ announced that since the inception of the program it had secured charges of PPP fraud against more than 90 individuals in cases involving alleged losses totaling more than $250 million.[4] By all indications, the DOJ plans to continue prioritizing PPP fraud prosecutions in 2021 and beyond.[5]
Federal prosecutions of PPP fraud to date have targeted clear-cut, egregious wrongdoing — forgeries, falsified borrower information and demonstrably false certifications on PPP loan applications. Such fact patterns will no doubt remain federal prosecutors’ focus and priority in future PPP fraud cases.
Will DOJ prosecutors only pursue the low-hanging fruit of PPP fraud? If not, what else might draw their attention in the future? The unprecedented, historic nature of the program makes it difficult to predict how the DOJ will allocate prosecutorial resources and which cases it will prioritize in the future.
But over time, federal prosecutors will almost certainly turn their eyes to more complicated fraud schemes, including legitimate small businesses’ use of PPP loans on unauthorized expenses that are difficult to detect, loan recipients’ misrepresentation of their eligibility for the program in nonobvious ways, and employers’ exploitation of the program over the long run by, for example, asking their employees to repay compensation received under a PPP loan or to work for free.
The DOJ is also likely to investigate whether certain loan recipients committed fraud by certifying a PPP loan was necessary, a key component of the PPP loan application that has generated debate and confusion since the advent of the program.
If federal prosecutors begin targeting more complex PPP fraud schemes along the lines discussed above, there will likely be difficult questions about criminal intent. It may be challenging, for example, to distinguish between borrowers that intended to commit fraud and those that were well-intentioned but nonetheless failed to comply with a quickly developed, complex federal relief program subject to an evolving patchwork of rules that many lawyers struggled to keep straight.
There may also be contested questions about the materiality of violations of eligibility rules, e.g., inaccurate representations of employee headcount, or of rules regarding authorized uses of loan funds, e.g., if most funds were used for authorized purposes.
Further, there are likely to be disputes over loss to the government given that, at least arguably, there may not be a loss until a borrower’s loan forgiveness application has been approved and the SBA transmits funds to the lender, eliminating the recipient’s repayment obligation.
While forecasting future PPP fraud prosecutions may feel hypothetical, it is not an idle exercise. The DOJ’s tenacious prosecution of PPP fraud is likely here to stay and is unlikely to be reserved for low-hanging frauds.
A Look Back: PPP Fraud Prosecutions in 2020
The first round of PPP funding, which closed in August 2020, was defined by its scope and speed — SBA-approved lenders disbursed more than 5 million loans totaling over $500 billion in just four months to small businesses nationwide.
In response to widespread fear that the pandemic would cause an economic disaster, U.S. Department of the Treasury officials encouraged lenders to prioritize efficient loan disbursement over extensive preloan due diligence — borrower representations on the PPP loan application were to effectively replace conventional loan underwriting.
As Ware found, federal emphasis on running a high-velocity crisis relief program led to “lower[ing] the guardrails” and “relax[ing] internal controls, which significantly increased the risk of program fraud.”[6]
That risk was exploited by fraudsters enticed by historic stimulus funds to be distributed after minimal lender review. Just weeks after the initial round of PPP loans began flowing, federal prosecutors filed the first charges of PPP fraud, alleging the accused had attempted to fraudulently obtain PPP funds through falsely certifying “to have dozens of employees earning wages at four different business entities when, in fact, there were no employees working for any of the businesses.”[7]
By November, DOJ prosecutors had secured charges against 73 people concerning similarly egregious frauds, many of which involved using PPP funds for unauthorized purposes: Lamborghinis, a Rolls-Royce, a diamond-studded $52,000 Rolex watch, a gambling spree in Las Vegas.[8]
And in December, the DOJ announced that to date more than 90 people had been charged with PPP fraud. In one of those cases, United States v. Ameet Goyal, the accused is scheduled to stand trial in March 2021 in the U.S. District Court for the Southern District of New York on various charges, including lying on PPP loan applications to circumvent the rules that each borrower is limited to one loan and that applicants with pending criminal charges are ineligible to participate in the program.
While the fact patterns in the early cases varied, most can be fairly described as the low-hanging fruit of PPP fraud. They involve what is alleged to be obvious abuse of the stimulus program, often for the borrowers’ self-enrichment.
Looking Ahead: Future PPP Fraud Prosecutions
With many businesses hamstrung by the ongoing pandemic, the second round of PPP loans is expected to generate another frenzy of applications from cash-starved businesses. Bad actors are certain to try to exploit the fast-moving relief program by filing fraudulent loan applications, just like they did last year. And there is no reason to believe that the DOJ will call off its hunt for egregious cases of PPP fraud — whether it occurred in round one or two of the program.
After federal prosecutors have targeted the most obvious, straightforward frauds, they will almost certainly turn their attention to investigating and prosecuting more complex cases. While there are no certain answers as to what types of cases the DOJ will pursue going forward, the DOJ is likely to prioritize the following issues, among others.
First, the DOJ will likely continue targeting loan recipients that misused PPP funds. PPP loan recipients are authorized to use loan funds for specified purposes, such as payroll expenses, rent, mortgages and utilities. When applying for loan forgiveness, recipients must document and certify their use of PPP funds for valid purposes.
The DOJ may prosecute a loan recipient for misrepresenting its use of PPP funds and for improper use of such funds. Among other potential charges, such conduct may give rise to prosecution under Title 18 of the U.S. Code, Section 1341 for mail fraud; Section 1343 for wire fraud; and Section 1344 for bank fraud.
Second, the DOJ is likely to continue pursuing loan recipients that were ineligible for PPP relief under applicable rules. Both rounds of PPP funding were limited to businesses with a certain number of employees — in the first round, 500 employees; in the second round, 300 employees — including employees of affiliate businesses.
Accurately calculating employees under the applicable guidance is a challenge for most lawyers, let alone small businesses trying to navigate a pandemic. The eligibility requirements are even more complex when considering that businesses also may have been eligible for PPP funding if they otherwise qualified as a small business concern under SBA standards or met the alternative size standard.
DOJ prosecutors may decide that PPP loan recipients that were ineligible for PPP funds should be prosecuted for, among other things, misrepresentations on loan applications. Considering the many landmines that even well-meaning loan recipients might inadvertently step on in certifying eligibility for a PPP loan, such cases would likely generate contested questions regarding intent.
Third, future DOJ criminal investigations will likely focus on an issue picked up in anonymous complaints appearing in news reporting — employers that received PPP loans asking employees who received compensation because of a PPP loan to provide free work for the employer in the future or to pay the employer back for payments provided as a result of a PPP loan.[9]
For example, The New York Times reported that owners of a Pilates studio that received a PPP loan told instructors running virtual classes during the pandemic that the instructors would receive short-term extra payments out of the studio’s PPP loan but that the instructors’ future wages would be garnished when the pandemic subsided.[10]
Similarly, the Times reported that an owner of a dermatology clinic began garnishing a worker’s wages after the worker was paid more than usual thanks to a PPP loan the owner received.[11]
Ware said the SBA is aware of these more complicated schemes, and it stands to reason that the DOJ is too.[12]
Fourth, the DOJ is likely to investigate whether certain loan recipients falsely attested their PPP loans were necessary and, in doing so, committed a crime. To be eligible for a loan, borrowers must certify on the PPP loan application under threat of potential civil and criminal penalties: “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”[13]
If anything, that proposition is ambiguous. The Department of Treasury’s relevant guidance is hardly clarifying that:
Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.[14]
In short, the Treasury’s oblique advice has done little to resolve confusion and uncertainty arising from the thorny necessity certification.
If PPP loan recipients took comfort in the necessity certification’s focus on then-existing economic conditions, i.e., “current economic uncertainty,” the SBA’s recently released loan necessity questionnaire may be cause for concern.[15] The questionnaire features a series of questions about a loan recipient’s financial performance after receiving a PPP loan. It asks, in part, that recipients provide information on:
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Gross revenues compared to the prior year;
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Capital improvement projects;
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Dividends or capital distributions to owners;
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Prepayment of outstanding debts;
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Employees or owners receiving annualized compensation of more than $250,000 during the covered loan period.
These and other data points solicited by the questionnaire were not in the round one PPP application, which simply asked whether “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
Nonetheless, the SBA says it will use the questionnaire to evaluate whether loan recipients properly certified that economic uncertainty made their loan requests necessary.[16]
Thus, the SBA plans to evaluate whether loan recipients completed the necessity certification in good faith based at least in part on their financial performance after receipt of a PPP loan — i.e., based on metrics that were neither known nor knowable when recipients completed the necessity certification and submitted their applications.
The SBA has been cryptic about how the questionnaire data will be weighed against other relevant factors, saying that its “assessment of a borrower’s certification will be based on the totality of the borrower’s circumstances through a multi-factor analysis.”[17]
Even so, the questionnaire increases the risk that when federal investigators make decisions about the propriety of a loan recipient’s necessity certification, they will rely on 20-20 hindsight and minimize the “current economic uncertainty” that motivated a PPP loan application.
The SBA has promised that it will not refer any perceived violations of the necessity certification to other agencies, e.g., the DOJ, if the borrower simply repays the PPP loan at issue.[18] But that assurance is unlikely to give much confidence to concerned borrowers. Some may not be able to repay at all or may not be able to meet whatever repayment deadline the SBA dictates. In either case, the SBA would presumably feel free to proceed as it chooses.
And even if the SBA’s conditional promise were enforceable, it has not been adopted by other federal agencies. There appears to be nothing stopping the DOJ, for example, from learning through other means that a borrower allegedly improperly executed the necessity certification and then proceeding as it deems fit. Based on the stern warnings from DOJ officials about PPP fraud, that seems reasonably likely to occur.
Further, the SBA’s prefatory language to the loan necessity questionnaire could be read to conflict with its previous promise to extend grace to noncompliant borrowers that simply repay their loans:
Failure to complete the form and provide the required supporting documents may result in SBA’s determination that you were ineligible for either the PPP loan, the PPP loan amount, or any forgiveness amount claimed, and SBA may seek repayment of the loan or pursue other available remedies.[19]
Even if the SBA does not intend such language to modify its earlier promise, there are good reasons discussed above why that promise may provide cold comfort.
Takeaways
Federal prosecutors will almost certainly continue pursuing PPP fraud cases with zeal, and the highest priority cases will likely remain those that involve egregious wrongdoing. Such cases are easiest to identify and prosecute. They are also politically popular; they provide easier, faster wins for the DOJ and eye-catching headlines that may help to deter other would-be fraudsters from trying to exploit a crisis relief program.
Only time will tell what types of PPP fraud cases the DOJ will prioritize in the future, but it is likely that federal prosecutors will eventually set their sights on more complicated schemes, such as those discussed above. In the meantime, warnings from regulatory and prosecutorial authorities make clear that PPP fraud prosecutions have only just begun. To date we have seen “the smallest, tiniest piece of the tip of the iceberg.”
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David Bouchard is a partner in the law firm of Finch McCranie, LLP. He defends individuals and businesses facing investigation and prosecution. David can be reached at david@finchmccranie.com. To read more about David: https://www.finchmccranie.com/david-bouchard.html.
For decades, the esteemed lawyers of Finch McCranie, LLP have successfully defended individuals and businesses in criminal investigations and prosecutions nationwide. The firm boasts a deep bench of white-collar criminal defense lawyers, including former federal prosecutors, a former Federal Defender, and alumni of white-collar groups at top international law firms.
[1] https://www.nytimes.com/2020/08/28/business/ppp-small-business-fraud-coronavirus.html.
[2] https://www.nytimes.com/2020/08/28/business/ppp-small-business-fraud-coronavirus.html.
[6] https://www.sba.gov/sites/default/files/2020-10/SBA%20OIG%20Report%2021-02.pdf.
[7] https://www.justice.gov/usao-ri/pr/two-charged-stimulus-fraud.
[8] https://www.nytimes.com/2020/08/28/business/ppp-small-business-fraud-coronavirus.html.
[9] https://www.nytimes.com/2020/08/28/business/ppp-small-business-fraud-coronavirus.html.
[10] https://www.nytimes.com/2020/08/28/business/ppp-small-business-fraud-coronavirus.html.
[11] https://www.nytimes.com/2020/08/28/business/ppp-small-business-fraud-coronavirus.html.
[12] https://www.nytimes.com/2020/08/28/business/ppp-small-business-fraud-coronavirus.html.
[15] Only for-profit and non-profit businesses that received, together with affiliates, PPP loans with an original principal amount of $2 million or greater are required to complete the Questionnaire. https://www.sba.gov/sites/default/files/2020-12/SBA%20Form%203509%20–%20PPP%20Loan%20Necessity%20Questionnaire%20%28For-Profit%20Borrowers%29-508_0.pdf.
Previously, “SBA, in consultation with the Department of the Treasury, [] determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to [the necessity certification]: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.” https://www.sba.gov/sites/default/files/2020-12/Final%20PPP%20FAQs%20%28December%209%202020%29-508.pdf (FAQ 46).
SBA cited to conservation of “finite audit resources” and the desire to “focus its reviews on larger loans, where the compliance effort may yield higher returns,” as some reasons for the safe harbor. Id. Yet SBA has also stated that PPP loans smaller than $2 million will be subject to review by SBA “as appropriate” to evaluate “compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form.” Id. For these reasons, and those stated in the above article, the safe harbor for loans under $2 million may do little to quell concerns about criminal and civil inquiries.
[17] https://www.sba.gov/sites/default/files/2020-12/Final%20PPP%20FAQs%20%28December%209%202020%29-508.pdf (FAQ 53).
[18] https://www.sba.gov/sites/default/files/2020-12/Final%20PPP%20FAQs%20%28December%209%202020%29-508.pdf (FAQ 46).
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More on SBA PPP & EIDL Loan Fraud:
Entrepreneur’s #4 Most Viewed Article of 2020: I Went to Prison for SBA Loan Fraud, by Jeff Grant, Link to article here.
Clara CFO YouTube Channel: Thinking About PPP Fraud?: Hannah Smolinski interviews Jeff Grant About Going to Prison for SBA Loan Fraud. Interview sponsored by Upside Financial. Link to article and YouTube video here.
The Philadelphia Inquirer: Steal Money from the Feds? First, Meet Jeff Grant, an Ex-Con who Committed Loan Fraud, by Erin Arvedlund: Link to article here.
CFO Dive: After Serving Time, Fraudster Cautions Against PPP, Other Emergency Loans, by Robert Freedman. Link to article here.
Fraud Stories Podcast with Mark Lurie: SBA/PPP Loan Fraud with Guest: Jeff Grant. Link to podcast here.
Forbes: As Law Enforcement Pursues SBA Loan Fraud, Jeff Grant Talks Redemption, by Kelly Phillips Erb. Link to article here.
Taxgirl Podcast: Jeff Grant talks Desperation and Loans in a Time of Crisis with Kelly Phillips Erb on Her Podcast. Link to article and podcast here.
Business Talk with Jim Campbell: Jeff Grant Talks with Jim About Going to Prison for SBA Loan Fraud and What to Know When Taking Coronavirus Relief Money, Biz Talk Radio Network, Broadcast from 1490 AM WGCH Greenwich, CT. Listen on YouTube here.
Babz Rawls Ivy Show: Babz Rawls Ivy & Jeff Grant Talk SBA / PPP Loan Fraud and 7 Things to Know Before You Take Coronavirus Relief Money, WNHH 103.5 FM New Haven. Watch on YouTube here.
DOJ Press Release: Justice Department Takes Action Against COVID-19 Fraud
We’ve never before reprinted a Department of Justice press release. This one is worth reprinting in full. – Jeff
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Friday, March 26, 2021
Historic level of enforcement action during national health emergency continues
The Department of Justice announced an update today on criminal and civil enforcement efforts to combat COVID-19 related fraud, including schemes targeting the Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL) program and Unemployment Insurance (UI) programs.
As of today, the Department of Justice has publicly charged 474 defendants with criminal offenses based on fraud schemes connected to the COVID-19 pandemic. These cases involve attempts to obtain over $569 million from the U.S. government and unsuspecting individuals through fraud and have been brought in 56 federal districts around the country. These cases reflect a degree of reach, coordination, and expertise that is critical for enforcement efforts against COVID-19 related fraud to have a meaningful impact and is also emblematic of the Justice Department’s response to criminal wrongdoing.
“The Department of Justice has led an historic enforcement initiative to detect and disrupt COVID-19 related fraud schemes,” said Attorney General Merrick B. Garland. “The impact of the department’s work to date sends a clear and unmistakable message to those who would exploit a national emergency to steal taxpayer-funded resources from vulnerable individuals and small businesses. We are committed to protecting the American people and the integrity of the critical lifelines provided for them by Congress, and we will continue to respond to this challenge.”
“To anyone thinking of using the global pandemic as an opportunity to scam and steal from hardworking Americans, my advice is simple – don’t,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division. “No matter where you are or who you are, we will find you and prosecute you to the fullest extent of the law.”
“We will not allow American citizens or the critical benefits programs that have been created to assist them to be preyed upon by those seeking to take advantage of this national emergency,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “We are proud to work with our law enforcement partners to hold wrongdoers accountable and to safeguard taxpayer funds.”
In March 2020, Congress passed a $2.2 trillion economic relief bill known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. Anticipating the need to protect the integrity of these taxpayer funds and to otherwise protect Americans from fraud related to the COVID-19 pandemic, the Department of Justice immediately stood up multiple efforts dedicated to identifying, investigating, and prosecuting such fraud. Leveraging data analysis capabilities and partnerships developed through its vast experience combatting economic crime and fraud on government programs, the Justice Department’s response to COVID-19 related fraud serves as a model for proactive, high-impact white-collar enforcement, and demonstrates our agility in responding to new and emerging threats. This rapid and nationwide response enabled the Justice Department to quickly ensure accountability for wrongdoing amid a national crisis and sent a forceful message of deterrence during an ongoing crisis. The multifaceted and multi-district approach to enforcement during this national health emergency continues and is expected to yield numerous additional criminal and civil enforcement actions in the coming months.
On criminal matters, the Justice Department’s efforts to combat COVID-19 related fraud schemes have proceeded on numerous fronts, including:
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Paycheck Protection Program (PPP) fraud: Prominent among the department’s efforts have been cases brought by the Criminal Division’s Fraud Section involving at least 120 defendants charged with PPP fraud. The cases involve a range of conduct, from individual business owners who have inflated their payroll expenses to obtain larger loans than they otherwise would have qualified for, to serial fraudsters who revived dormant corporations and purchased shell companies with no actual operations to apply for multiple loans falsely stating they had significant payroll, to organized criminal networks submitting identical loan applications and supporting documents under the names of different companies. Most charged defendants have misappropriated loan proceeds for prohibited purposes, such as the purchase of houses, cars, jewelry, and other luxury items. In one case, U.S. v. Dinesh Sah, in the Northern District of Texas, the defendant applied for 15 different PPP loans to eight different lenders, using 11 different companies, seeking a total of $24.8 million. The defendant obtained approximately $17.3 million and used the proceeds to purchase multiple homes, jewelry, and luxury vehicles. In another case, U.S. v. Richard Ayvazyan, et al., in the Central District of California, eight defendants applied for 142 PPP and EIDL loans seeking over $21 million using stolen and fictitious identities and sham companies, and laundered the proceeds through a web of bank accounts to purchase real estate, securities, and jewelry.
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Economic Injury Disaster Loans (EIDL) fraud: The department has also focused on fraud against the EIDL program, which was designed to provide loans to small businesses, agricultural and non-profit entities. Fraudsters have targeted the program by applying for EIDL advances and loans on behalf of ineligible newly-created, shell, or non-existent businesses, and diverting the funds for illegal purposes. The department has responded, primarily through the efforts of the U.S. Attorney’s Office for the District of Colorado and their partners at the U.S. Secret Service, acting swiftly to seize loan proceeds from fraudulent applications, with $580 million seized to date and seizures ongoing. The EIDL Fraud Task Force in Colorado, comprised of personnel from five federal law enforcement agencies and federal prosecutors, is investigating a broad swath of allegedly fraudulently loans and their applicants. It is working to identify individual wrongdoers and networks of fraudsters appropriate for prosecution.
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Unemployment Insurance (UI) fraud: Due to the COVID-19 pandemic, more than $860 billion in federal funds has been appropriated for UI benefits through September 2021. Early investigation and analysis indicate that international organized criminal groups have targeted these funds by using stolen identities to file for UI benefits. Domestic fraudsters, ranging from identity thieves to prison inmates, have also committed UI fraud. In response, the department established the National Unemployment Insurance Fraud Task Force, a prosecutor-led multi-agency task force with representatives from more than eight different federal law enforcement agencies. Additionally, the department is hiring Assistant U.S. Attorneys in multiple U.S. Attorney’s Offices whose focus will be UI fraud prosecutions. Since the start of the pandemic, over 140 defendants have been charged and arrested for federal offenses related to UI fraud. In one case, U.S. v. Leelynn Danielle Chytka, in the Western District of Virginia, a defendant recently pleaded guilty for her role in a scheme that successfully stole more than $499,000 in UI benefits using the identities of individuals ineligible for UI, including a number of prisoners.
Through the department’s International Computer Hacking and Intellectual Property (ICHIP) program, ICHIP advisors have provided assistance and case-based mentoring to foreign counterparts around the globe to help detect, investigate and prosecute fraud related to the pandemic. The ICHIPs have helped counterparts combat cyber-enabled crime (e.g., online fraud) and intellectual property crime, including fraudulent and mislabeled COVID-19 treatments and sales of counterfeit pharmaceuticals. ICHIPs conducted webinars for foreign prosecutors and law enforcement in Asia, Africa, Europe, and South America on how to take down fraudulent COVID-19 websites. These webinars addressed methods for finding the registrar for a particular domain and requesting a voluntary takedown as well as the U.S. legal processes necessary for obtaining a court order that would bind a U.S. registrar. This has resulted in the take down of multiple online COVID-19 scams and significant seizures of counterfeit medicines and medical supplies such as masks, gloves, hand sanitizers and other illicit goods.
The department has also brought actions to combat coronavirus-related fraud schemes targeting American consumers. With scammers around the world attempting to sell fake and unlawful cures, treatments, and personal protective equipment, the department has brought dozens of civil and criminal enforcement actions to safeguard Americans’ health and economic security. The department has prosecuted or secured civil injunctions against dozens of defendants who sold products — including industrial bleach, ozone gas, vitamin supplements, and colloidal silver ointments — using false or unapproved claims about the products’ abilities to prevent or treat COVID-19 infections. The department has also worked to shutter hundreds of fraudulent websites that were facilitating consumer scams, and it has taken scores of actions to disrupt financial networks supporting such scams. The department is also coordinating with numerous agency partners to prevent and deter vaccine-related fraud.
The department is also using numerous civil tools to address fraud in connection with CARES Act programs. For example, in the Eastern District of California, the department obtained the first civil settlement for fraud involving the Paycheck Protection Program, resolving civil claims under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and the False Claims Act (FCA) against an internet retail company and its president and chief executive officer arising from false statements to federally insured banks to influence those banks to approve, and the SBA to guarantee, a PPP loan. FIRREA allows the government to impose civil penalties for violations of enumerated federal criminal statutes, including those that affect federally-insured financial institutions. The FCA is the government’s primary civil tool to redress false claims for federal funds and property involving a multitude of government operations and functions. The FCA permits private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Such whistleblower complaints have been on the rise as unscrupulous actors take advantage of vulnerabilities created by the COVID-19 pandemic and the new government programs disbursing federal relief, and whistleblower cases will continue to be an essential source of new leads to help root out the misuse and abuse of taxpayer funds.
Indictments and other criminal charges referenced above are merely allegations, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The unprecedented pace and tempo of these efforts is made possible only through the diligent work of a wide range of Justice Department partners, including the Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section, the Civil Division’s Commercial Litigation Branch (Fraud Section) and Consumer Protection Branch, U.S. Attorneys’ Offices throughout the country, and law enforcement partners from the FBI, Department of Labor Office of Inspector General, U.S. Secret Service, IRS-Criminal Investigation, Defense Criminal Investigative Service, Homeland Security Investigations, U.S. Postal Inspection Service, the Offices of Inspectors General from the Small Business Administration, Department of Homeland Security, Social Security Administration, Federal Deposit Insurance Corporation, Department of Health and Human Services, Department of Veterans Affairs, Federal Housing Finance Agency and Federal Reserve Board, Food and Drug Administration’s Office of Criminal Investigations, Treasury Inspector General for Tax Administration, Financial Crimes Enforcement Network, Special Inspector General for Pandemic Relief, Pandemic Response Accountability Committee, OCDETF Fusion Center and OCDETF’s International Organized Crime Intelligence and Operations Center.
To learn more about the department’s COVID response, visit: https://www.justice.gov/coronavirus. For further information on the Criminal Division’s enforcement efforts on PPP fraud, including court documents from significant cases, visit the following website: https://www.justice.gov/criminal-fraud/ppp-fraud. For further information on the Civil Division’s enforcement efforts, visit the following website: https://www.justice.gov/civil.
To report a COVID-19-related fraud scheme or suspicious activity, contact the National Center for Disaster Fraud (NCDF) by calling the NCDF Hotline at 1-866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Press Release Number:
21-272
CFO Dive: Jeff Grant: After Serving Time, Fraudster Cautions Against PPP, Other Emergency Loans, by Robert Freedman
Taking money hastily can create more problems than it solves if the additional resources aren’t tethered to need.
Screen grab/CFO Dive, data from White Collar Week
White Collar Week with Jeff Grant, All Things SBA, PPP & EIDL, with Guest: Hannah Smolinski, CPA, Virtual CFO, Podcast Ep. 21
White Collar Week with Jeff Grant
It’s the Isolation that Destroys Us. The Solution is in Community.
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Podcast Ep. 21, All Things SBA, PPP & EIDL, Guest: Hannah Smolinski, CPA – The Virtual CFO
Today on the podcast, we have Hannah Smolinski. Hannah is a CPA and founder of Clara CFO Group, a virtual CFO and consulting services firm providing small businesses with financial clarity as they grow. Her experience for one of the world’s largest accounting firms inspired her to bring that level of financial expertise to the small business community through financial strategy, best practices, and knowledge to realize their missions.
Hannah is also a Senior Advisor to Upside Financial and its PPP forgiveness product, PPP Advisor Pro.
This episode is chock full of important and topical financial information for small businesses and entrepreneurs, up to the minute details about PPP, PPP2, and EIDL loans, SBA loan fraud, and so much more.
So coming up, Hannah Smolinski, the Virtual CFO, on White Collar Week. I hope you will join us. – Jeff
Listen on Apple Podcasts:
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Listen on SoundCloud:
Watch on YouTube:
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If you have a friend, family member, colleague or client with a white collar justice issue, please forward this post; they can reach us anytime – day or night! Our contact info: http://prisonist.org/contact-us.
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Guests on this Episode:
Hannah Smolinski
Hannah Smolinski, CPA, Founder & CEO of The Clara CFO Group and Upside Financial Senior Advisor.
Hannah Smolinski is a CPA and the founder of Clara CFO Group, a virtual CFO and consulting services firm providing small businesses with financial clarity as they grow. Her experience working for one of the world’s largest accounting firms inspired her to bring that level of financial expertise to the small business community through financial strategy, best practices, and knowledge to realize their missions.
Please check out Hannah’s informative and topical videos about SBA PPP & EIDL Loans, and other financial topics, on her Clara CFO Group YouTube Channel.
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Big thanks to our friends at Upside Financial.
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You can find all episodes of our podcast “White Collar Week with Jeff Grant” on our website prisonist.org, our Facebook page, Podbean, YouTube (video), SoundCloud, Apple Podcasts, Spotify, LinkedIn, Instagram and Twitter.
Information About our White Collar Support Group…
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More on SBA PPP & EIDL Loan Fraud:
Entrepreneur’s #4 Most Viewed Article of 2020: I Went to Prison for SBA Loan Fraud – 7 Things to Know When Taking COVID-19 Relief Money: by Jeff Grant, J.D., M.Div.. Link to article here.
The Philadelphia Inquirer: Steal Money from the Feds? First, Meet Jeff Grant, an Ex-Con who Committed Loan Fraud, by Erin Arvedlund: Link to article here.
Hannah Smolinski YouTube: Thinking About PPP Fraud?: Hannah Interviews Jeff Grant About Going to Prison for SBA Loan Fraud. Link to article and YouTube video here.
CFO Dive: After Serving Time, Fraudster Cautions Against PPP, Other Emergency Loans, by Robert Freedman. Link to article here.
Fraud Stories Podcast with Mark Lurie: SBA/PPP Loan Fraud with Guest: Jeff Grant. Link to podcast here.
Forbes: As Law Enforcement Pursues SBA Loan Fraud, Jeff Grant Talks Redemption, by Kelly Phillips Erb. Link to article here.
Taxgirl Podcast: Jeff Grant talks Desperation and Loans in a Time of Crisis with Kelly Phillips Erb on Her Podcast. Link to article and podcast here.
Business Talk with Jim Campbell: Jeff Grant Talks with Jim About Going to Prison for SBA Loan Fraud and What to Know When Taking Coronavirus Relief Money, Biz Talk Radio Network, Broadcast from 1490 AM WGCH Greenwich, CT. Listen on YouTube here.
Babz Rawls Ivy Show: Babz Rawls Ivy & Jeff Grant Talk SBA / PPP Loan Fraud and 7 Things to Know Before You Take Coronavirus Relief Money, WNHH 103.5 FM New Haven. Watch on YouTube here.
White Collar Week with Jeff Grant, Podcast Ep. 21: All Things SBA, PPP & EIDL, with Guest: Hannah Smolinski, CPA, Virtual CFO: Link here.
White Collar Week with Jeff Grant, Podcast Episode 09: Small Business Edition, with Guest Kelly Phillips Erb. Link here.
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Louis Reed/Babz Rawls Ivy PSA:
Some very kind words from my dear friends Louis L. Reed and Babz Rawls Ivy in this brief PSA. Thank you Louis and Babz! – Jeff
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All Episodes:
Link here to Podcast Ep. 20: Reinventing Yourself After Prison, with Guests: Glenn E. Martin & Richard Bronson
Link here to Podcast Ep. 19: Insider Trading Charges Dismissed, with Guest: Richard Lee
Link here to Podcast Ep. 18: Is Your Life a Movie? The Producers, with Guests: Lydia B. Smith, Bethany Jones & Will Nix
Link here to Podcast Ep. 17: #TruthHeals, Systemic Abuse & Institutional Reform with Guest: Vanessa Osage, feat. Guest Co-Host Chloe Coppola
Link here to Podcast Ep. 16: Politicians, Prison & Penitence, with Guest: Bridgeport, CT Mayor Joseph Ganim
Link here to Podcast Ep. 15: A Brave Talk About Suicide, with Guests Bob Flanagan, Elizabeth Kelley, & Meredith Atwood
Link here to Podcast Ep. 14: Recovery & Neighborhood, with Guest: TNP’s Tom Scott
Link here to Podcast Ep. 13: Everything but Bridgegate, with Guest: Bill Baroni
Link here to Podcast Ep. 12: The Truth Tellers, with Guests: Holli Coulman & Larry Levine
Link here to Podcast Ep. 11: Blank Canvas, with Guest: Craig Stanland
Link here to Podcast Ep. 10: The Ministers, with Guests: Father Joe Ciccone & Father Rix Thorsell
Link here to Podcast Ep. 09: Small Business Edition, with Guest: Taxgirl Kelly Phillips Erb
Link here to Podcast Ep. 08: The Academics, with Guests: Cathryn Lavery, Jessica Henry, Jay Kennedy & Erin Harbinson
Link here to Podcast Ep. 07: White Collar Wives. with Guests: Lynn Springer, Cassie Monaco & Julie Bennett. Special Guest: Skylar Cluett
Link here to Podcast Ep. 06: Madoff Talks, with Guest: Jim Campbell
Link here to Podcast Ep. 05: Trauma and Healing when Mom goes to Prison, with Guests: Jacqueline Polverari and Her Daughters, Alexa & Maria
Link here to Podcast Ep. 04: One-on-One with Tipper X, with Guest: Tom Hardin
Link here to Podcast Ep. 03: Compassionate Lawyering, with Guests: Chris Poulos, Corey Brinson, Bob Herbst & George Hritz
Link here to Podcast Ep. 02: Substance Abuse & Recovery During COVID-19, with Guests: Trevor Shevin & Joshua Cagney
Link here to Podcast Ep. 01: An Evening with Our White Collar Support Group, with Guests: 16 Members of Our White Collar Support Group
Link here to Podcast Ep. 00: White Collar Week with Jeff Grant: What is White Collar Week?
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Jeff Grant
What is the White Collar Justice Community?
Welcome to White Collar Week with Jeff Grant, a podcast serving the white collar justice community. It’s the isolation that destroys us. The solution is in community.
If you are interested in this podcast, then you are probably already a member of the white collar justice community – even if you don’t quite know it yet. Our community is certainly made up of people being prosecuted, or who have already been prosecuted, for white collar crimes. But it is also made up of the spouses, children and families of those prosecuted for white collar crimes – these are the first victims of white collar crime. And the community also consists of the other victims, both direct and indirect, and those in the wider white collar ecosystem like friends, colleagues, prosecutors, defense attorneys, judges, law enforcement, academics, researchers. Investigators, mitigation experts, corrections officers, parole & probation officers, reentry professionals, mental health care professionals, drug and alcohol counselors – and ministers, chaplains and advocates for criminal and social justice reform. The list goes on and on…
Our mission is to introduce you to other members of the white collar justice community, to hear their very personal stories, and hopefully gain a broader perspective of what this is really all about. Maybe this will inspire some deeper thoughts and introspection? Maybe it will inspire some empathy and compassion for people you might otherwise resent or dismiss? And maybe it will help lift us all out of our own isolation and into community, so we can learn to live again in the sunshine of the spirit.
Along the way, I’ll share with you some of the things I’ve learned in my own journey from successful lawyer, to prescription opioid addict, white collar crime, suicide attempt, disbarment, destruction of my marriage, and the almost 14 months I served in a Federal prison. And also my recovery, love story I share with my wife Lynn Springer, after prison earning a Master of Divinity from Union Theological Seminary in NYC, pastoring in an inner city church in Bridgeport CT, and then co-founding with Lynn in Greenwich CT, Progressive Prison Ministries, the world’s first ministry serving the white collar justice community. It’s been quite a ride, but I firmly believe that the best is yet to come.
So I invite you to come along with me as we experience something new, and bold, and different – a podcast that serves the entire white collar justice community. I hope you will join me.
Blessings, לשלום
Jeff
Rev. Jeff Grant, J.D., M.Div. (he, him, his)
Co-founder, Progressive Prison Ministries, Inc., Greenwich CT & Nationwide
Co-host, The Criminal Justice Insider Podcast
Host, White Collar Week
Mailing: P.O. Box 1, Woodbury, CT 06798
Website: prisonist.org
Email: jgrant@prisonist.org
Office: 203-405-6249
Donations (501c3): http://bit.ly/donate35T9kMZ
Psychology Today: https://www.psychologytoday.com/us/therapists/jeff-grant-woodbury-ct/731344
LinkedIn: https://www.linkedin.com/in/revjeffgrant
not a prison coach, not a prison consultant
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Thank you for listening to White Collar Week.
Please subscribe, rate and review the podcast if you loved it – it helps others suffering in silence find us if they need us!
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Follow White Collar Week on Social:
Web: https://prisonist.org/white-collar-week
Facebook: https://facebook.com/whitecollarweek
Twitter: https://twitter.com/whitecollarweek
Instagram: https://instagram.com/whitecollarweek
LinkedIn: https://linkedin/whitecollarweek
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Follow Jeff Grant on Social:
Web: https://prisonist.org
Facebook: https://Facebook.com/revjeffgrant
Twitter: https://twitter.com/revjeffgrant
Instagram: https://instagram.com/revjeffgrant
LinkedIn: https://linkedin/revjeffgrant
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Want to be a guest on the Show? Have a connection you’d like to make?
Email us! info@prisonist.org
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Credits:
Host: Jeff Grant, J.D., M.Div.
Production: Chloe Coppola
Audio Engineering: George Antonios: https://georgeantonios.com
Video Engineering: Todd Nixon
Art Direction: Greyskye Marketing, LLC: https://greyskye.com
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It’s the Isolation that Destroys Us. The Solution is in Community.
Progressive Prison Ministries, Inc. is the world’s first ministry supporting the white collar justice community. Founded by husband and wife, Jeff Grant and Lynn Springer in Greenwich CT in 2012, we incorporated as a nonprofit in Connecticut in 2014, and received 501(c)(3) status in 2015. Jeff has over three decades of experience in crisis management, business, law (former), reentry, recovery (clean & sober 17+ years), and executive and religious leadership. As Jeff was incarcerated for a white-collar crime he committed in 2001, he and Lynn have a first-hand perspective on the trials and tribulations that white-collar families have to endure as they navigate the criminal justice system and life beyond.
Progressive Prison Ministries, Inc. is nonsectarian, serving those of all faiths, or no faith whatsoever. To date we have helped over three hundred fifty (350) individuals, and their families, to accept responsibility for their actions and to acknowledge the pain they have caused to others. In accordance with our commitment to restorative justice, we counsel our members to make amends as a first step in changing their lives and moving towards a new spiritual way of living centered on hope, care, compassion, tolerance, empathy and service to others. Our team has grown to over ten people, most with advanced degrees, all of whom are currently volunteering their time and resources.
Progressive Prison Ministries’ goal is to provide spiritual solutions and emotional support to those who are feeling alone, isolated, and hopeless. We have found that these individuals are suffering from a void but are stuck, and don’t know what to do about it. Our objective is to help them find a path to a healthy, spirit-filled place on the other side of what may seem like insurmountable problems. Many of those we counsel are in a place where their previous lives have come to an end due to their transgressions. In many cases their legal problems have led to divorce, estrangement from their children, families, friends and support communities, and loss of a career. The toll this takes on individuals and families is emotionally devastating. White-collar crimes are often precipitated by other issues in the offenders’ lives such as alcohol or drug abuse, and/or a physical or mental illness that lead to financial issues that overwhelms their ability to be present for themselves and their families and cause poor decision making. We recognize that life often presents us with such circumstances, sometimes which lead us to make mistakes in violation of the law.
All conversations and communications between our ordained ministry, and licensed clinical relationships, and those we serve fall under state privilege laws. This is one reason that attorneys often allow and encourage their clients to maintain relationships with us while in active prosecution or litigation situations.
If you, a friend, family member, colleague or client are suffering from a white collar criminal justice issue or are experiencing some other traumatic or life-altering event, and would like to find a path to a healthy, spirit-filled place on the other side of what seems like insurmountable problems, please contact us to schedule an initial call or appointment.
Copyright 2021, All Rights Reserved, Progressive Prison Ministries, Inc.
Best of Biz Talk 2020: We are Honored to be Named to Jim Campbell’s List of Top 12 Interviews of the Year! I Went to Prison for SBA Loan Fraud
I Went to Prison for SBA Loan Fraud: Link to interview here
Best of Biz Talk 2020: We are Honored to be Named to Jim Campbell's List of Top 12 Interviews of the Year! I Went to Prison for SBA Loan Fraud
I Went to Prison for SBA Loan Fraud: Link to interview here