Bank Fraud Involving PPP Loans Could Result In Jail Time, Even For Relatively Small Advances | Fox Rothschild LLP


The U.S. Department of Justice recently began charging defendants with bank fraud in connection with Paycheck Protection Program loans as part of its ongoing efforts to investigate and prosecute individuals for crimes associated with aid. related to COVID-19. If the government is able to prove that fraud has taken place, individuals are likely to spend a lot of time behind bars, even if PPP loans are for relatively small amounts.


The CARES (Coronavirus Aid, Relief and Economic Security Act), signed into law in March 2020 and later reauthorized to create a second-draw loan program, was designed to provide emergency financial assistance to those suffering losses. economics and uncertainties due to the COVID-19 pandemic. It included $2.8 trillion in economic relief for individuals and businesses and provided access, through the Small Business Administration (SBA), to forgivable loans to cover payroll and other expenses. specified through the Paycheck Protection Program (PPP). It also provided government assistance through the Economic Disaster Loan Program (EIDL) and the Unemployment Insurance Program (UI). However, the CARES Act also allowed people to take advantage of government assistance, and all signs point to one of the most extensive white-collar criminal investigations in US history, as the vast resources government investigative bodies continue to aggressively pursue fraud and abuse. in these programs.

Bank Fraud Related to COVID-19

A person commits bank fraud if he knowingly executes or attempts to execute a scheme to defraud a financial institution; or obtaining money, funds, credits, assets, securities or other property belonging to, or in the custody or control of, a financial institution, by means of false or fraudulent claims, statements or promises . If someone is convicted of bank fraud, they can be fined up to $1 million or jailed for up to 30 years, or both.

Documents for PPP loans are usually submitted to financial institutions i.e. banks. If someone submits documents containing false information as part of their PPP loan application, they could be accused of bank fraud.

Bridgitte Keim, of Tampa, Florida, recently pleaded guilty to bank fraud for submitting false and fraudulent loan applications and supporting documents for PPP loans. Keim faces up to 30 years in prison.

According to the plea agreement, between April and May 2021, Keim executed a scheme to defraud a federally insured financial institution (a bank) and the SBA. Keim also recruited family members to provide their personal information in exchange for free “COVID money”. Keim prepared and submitted false and fraudulent PPP loan applications to the bank on behalf of his relatives on behalf of fictitious businesses. Keim created email addresses in the name of his relatives and communicated with bank employees posing as his relatives to convince loan officers that they were communicating with actual potential borrowers.

Based on these misrepresentations, the bank approved and funded a $20,833 PPP loan in the name of one of Keim’s relatives. Keim then diverted $7,500 of the loan proceeds to his personal bank account.

The pursuit of aggressive lawsuits for relatively small loans that can result in heavy prison sentences demonstrates that individuals and businesses need to exercise caution when dealing with potential fraud issues related to COVID-19 aid. Any communication with banks containing inaccurate information, even if only in email correspondence with the bank, could result in very serious criminal charges.

Any individual or business owner who is concerned about CARES Act compliance or potential exposure to fraud allegations related to COVID-19 should seek legal counsel immediately and not wait to be contacted by law enforcement. of the order. Individuals who have already received a subpoena or investigation from a law enforcement agency should immediately consult with an attorney to assess the full potential for civil and civil and criminal exposure before responding.

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