Justice Department announces fraud charges in small-business aid program

click to enlarge Pedestrians walk past a shuttered business on Broad Street in Newark, N.J., Monday, May 18, 2020. Fifty-seven people were charged with trying to steal more than $175 million from the Paycheck Protection Program, law enforcement officials said. - BRYAN ANSELM/THE NEW YORK TIMES
Bryan Anselm/The New York Times
Pedestrians walk past a shuttered business on Broad Street in Newark, N.J., Monday, May 18, 2020. Fifty-seven people were charged with trying to steal more than $175 million from the Paycheck Protection Program, law enforcement officials said.
By Katie Benner
The New York Times Company


WASHINGTON — The Justice Department on Thursday said it had charged 57 people with trying to steal more than $175 million from the Paycheck Protection Program of emergency loans to help small businesses during the coronavirus pandemic as questions swirled about how its funds were disbursed.

Some cases involved “individuals or small groups, acting on their own, who lied about having legitimate businesses or who claimed that they needed PPP money for things like paying workers or paying bills, but instead used it to buy splashy luxury items for themselves,” Brian C. Rabbitt, the acting head of the department’s criminal division, said at a news conference.


In other cases, coordinated criminal rings stole large sums of money from the loan program, Rabbitt said.

“We will be focusing on these types of cases going forward,” he said.

The federal government offered emergency loans to small businesses through the Paycheck Protection Program as part of the Coronavirus Aid, Relief and Economic Security Act enacted in March to stave off a wave of catastrophic job losses as the pandemic took hold in the United States and businesses were forced to close. The loans could be forgiven if the funds were used to cover payroll and certain other expenses.

Rabbitt said that the 57 cases charged by the criminal division ranged from loan requests for $30,000 to about $24 million, and that cases had been brought across the U.S. Federal prosecutors around the country had also brought separate fraud cases related to the coronavirus relief programs, he said, but he did not mention how many.


The department and other law enforcement agencies this week arrested suspects accused of trying to steal $24 million in funds from the program as part of a criminal ring. On Thursday morning, the Justice Department unsealed charges against seven people accused of participating in a separate criminal ring that worked to steal and launder hundreds of thousands of dollars from the lending program; it arrested two men in Buffalo, New York, accused of trying to steal $7.6 million.

When applications for the program closed last month, 5.2 million loans had been made totaling more than $525 billion.

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