The government is continuing to investigate individuals who submitted fraudulent applications for funds under the Paycheck Protection Program (PPP) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In fact, the government has established a national hotline to report fraud involving COVID-19.
The Northern District of Texas recently charged Dinesh Sah (Sah) with wire fraud, bank fraud and money laundering in one of these cases. According to the Department of Justice (DOJ) press release, Sah submitted 15 fraudulent applications, for various businesses that he claimed to own or control, to eight different SBA lenders seeking approximately $24.8 million in PPP loans. In his applications, Sah claimed that these businesses had numerous employees and hundreds of thousands of dollars in payroll when, in fact, no business had employees or paid wages in the amounts claimed in the PPP applications. The indictment further alleges that Sah submitted fraudulent documentation in support of his applications, including falsified federal tax filings and forged bank statements. Sah received approximately $17.3 million in PPP loan funds and used the proceeds primarily for personal expenses, such as buying multiple homes and luxury cars, and sending millions of dollars in international transfers. To date, the government has seized more than $6.5 million in proceeds that Sah obtained. https://www.justice.gov/opa/pr/texas-man-charged-24-million-covid-relief-fraud.
While this case appears to be another example of egregious conduct to fraudulently obtain funds under the PPP, not surprisingly, the DOJ is already prioritizing these investigations. Cases where alleged misrepresentations are not so flagrant are coming, but they will take longer to investigate before charges can be filed.
Those who applied for PPP funds should be proactive in protecting themselves from criminal charges or lesser government scrutiny. Individuals who obtained funds under the PPP should verify that all representations made in connection with the application were and continue to be accurate. That means substantiating the accuracy of the same so that if there is an investigation, there is contemporaneous, documentary support. They should also consult government guidance documents to ensure that they are compliant. My May 1, 2020 blog post further discusses coronavirus fraud investigations and steps that applicants can take to protect themselves against government scrutiny. https://wirskyelawfirm.com/coronavirus-fraud-investigations/.