House Small Business Committee Advances PPP and EIDL Loan Fraud Bills

Two of the 7 bills advanced by the House Small Business Committee deal with fraud in the Paycheck Protection and Economic Impact Disaster Loan programs.

Both bills would establish a ten-year statute of limitations for fraud-related lawsuits. HR 7352 is for PPP, and HR 7334 is for EIDL. The PPP invoice includes all types of PPP fraud, and the EIDL invoice includes EIDL advances and targeted EIDL advances.

House Small Business Committee advances bills on PPP and EIDL loan fraud

The 10-year time frame mirrors the 10-year time frame established for lawsuits related to bank fraud.

The dollar amount of fraud for the PPP and EIDL programs combined is estimated at $80 billion, or about 10% of the programs.

To report fraud, call the SBA Office of the Investigator General at 800-767-0385. Reports are confidential.

California PPP and EIDL Loan Fraud Case

An eight-person criminal network in California was able to secure more than $18 million in Covid relief funds, securing a collective of 150 loans from PPP and EIDL programs.

Three of the members of the criminal network were convicted in June 2021, then fled and were captured in Montenegro (Europe) at the end of February 2022.

Richard Ayvazyan, 43, who authorities say was the leader of the group, was sentenced to serve a 17-year sentence. His wife, Marietta Terabelian, 37, turned 6. After their sentencing and sentencing, the two cut off their anklets and fled, abandoning their three children.

They used Covid relief funds to buy luxury homes, diamonds and gold coins.

“The SBA, by sending this money, basically told people, apply and sign, and tell us that you really are entitled to the money,” Justice Department Inspector General Michael Horowitz said in a statement. interview on NBC’s Nightly News. “What didn’t happen were even minimal checks to make sure the money was getting to the right people at the right time.”

Horowitz said the fraudsters took money from deserving candidates. He added that the way these programs were structured, the programs “invited fraudsters”.

Ways Fraudsters Worked

With the PPL program, scam applicants most often inflated the number of employees. As one of the PPP requirements, a loan could be canceled if the applicant later returned labor to all employees. Additionally, the money could be used for salary expenses. In fraud cases, employees may be real people, but they have never been employed by the company.

To date, for the PPL, more than $800 billion has been spent, covering more than 21 million loans.

With the EIDL, documents contained false information regarding the extent of the damage and the value of the damaged equipment. In some cases, companies were created on paper but did not exist. The SBA’s Investigator General has already identified $78.1 billion in fraudulent EIDL claims and rewards.

What about banks from SBA lenders?

With the PPP and EIDL programs, small business owners enroll through SBA-approved lenders. The final decision rests with the SBA. In the event of fraud, the lending banks are off the hook.

Wording regarding SBA programs and lending banks states that lenders “will be held harmless if borrowers fail to meet program criteria.”

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