A year after the COVID-19 pandemic hit the United States, it remains to be seen how the Biden Administration will approach enforcement against businesses who received pandemic relief through the
Continue Reading COVID-19 Enforcement Trends One Year Into the Pandemic
On July 15, 2020, the Department of Justice (“DOJ”) charged Andrew Marnell with bank fraud in connection with $8.5 million worth of Paycheck Protection Program (“PPP”) loans he obtained for fake business expenses, that were then spent on gambling and stock market bets, incurring millions of dollars in losses. See United States v. Marnell, No. 2:20-mj-03313-DUTY (C.D. Cal. Jul. 15, 2020).
Continue Reading DOJ Cracks Down on COVID-Relief Fraud
With the Department of Justice’s (DOJ) decision to drop charges against Michael Flynn, materiality has come to the forefront of popular legal discourse. At the same time, prosecutors and whistleblowers will carefully consider enforcement/false claims actions against entities who may have wrongfully received relief funds under the Coronavirus Aid, Recovery, and Economic Stability Act (CARES Act). Such actions likely will turn on whether alleged misrepresentations were materially false. Those applying for CARES Act funds, such as those under the Paycheck Protection Program (PPP), must ensure all of their representations and certifications are truthful. However, those accused of making misrepresentations in order to receive government funds may find refuge in a more narrow view of the materiality requirement.
Continue Reading Materiality Concerns For CARES Act Enforcement Cases
The devastating economic impact of the COVID-19 pandemic already has set in, with the future of thousands of businesses hanging in the balance. Big and small businesses alike are finding it difficult to cope with the downturn. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provisions related to small business loans provide a glimmer of hope. Among other forms of economic relief, the CARES Act created the $349 billion Paycheck Protection Program (“PPP”) to provide funding to assist small businesses impacted by the pandemic. After the initial allocation of PPP funds was exhausted the President signed a bill providing an additional $484 billion in relief, including $310 billion for the PPP, on April 24, 2020[1]. It may turn out for some businesses, however, that these provisions will be nothing more than fool’s gold. The U.S. Small Business Administration (“SBA”) loan programs, including the PPP under the CARES Act, only are available to qualifying businesses that strictly comply with complex rules related to the size of the business, including its employee count, financial condition, affiliations, control and ownership, and industry classifications. Businesses that reflexively jumped at the SBA money grab without discipline or compliance are at risk of aggressive government enforcement that surely will follow.
Continue Reading Small Business Money Grab Under the CARES Act Brings Enforcement Risks