3 Facing Charges for PPP Loan Fraud

Three individuals are facing federal charges for allegedly fraudulently obtaining more than $2.4 million in small business loans as part of the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Costs for PPP Loan Fraud

According to court documents, the three individuals are Khadijah Chapman, 58, from Atlanta; Daniel Labrum, 41, of Southern Jordan, Utah; and Eric O’Neil, 57, of Bethel, Connecticut, are accused of fraudulently obtaining PPP loans for fictitious companies in 2021. The PPP loans were guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The loans were intended to give small businesses an immediate incentive to retain their workforces and to rehire employees who have been laid off as a result of the ongoing COVID-19 crisis.

More than $2.4 million in emergency loans

The defendants, along with others, allegedly falsified information and submitted fraudulent documents to collectively obtain more than $2.4 million in emergency funding guaranteed by the SBA under the CARES Act for small businesses struggling with the economic impact of COVID-19.

According to allegations in the federal indictment, Chapman and O’Neil are each charged with one count of bank fraud. Labrum is charged with five counts of bank fraud and one count of engaging in money transactions with criminally obtained proceeds for their role in the scheme.

If found guilty, Chapman, Labrum and O’Neil could each face a maximum sentence of 30 years in prison for each count of bank fraud. Labrum also faces a maximum prison sentence of 10 years for entering into money transactions with criminally obtained proceeds.

In May 2022, SBA’s Office of Inspector General (OIG) released a report on more than 70,000 loans totaling more than $4.6 billion in potentially fraudulent PPP loans. In order to stem the rising number of PPP fraud cases, the Biden administration appointed a special prosecutor for PPP fraud in March.

The move complements measures already in place to deal with fraudsters at the state and federal levels. The measures have helped to indict more individuals and companies in the more than 1,000 criminal cases and more than 200 civil investigations of 1,800 individuals and entities involving billions of dollars in suspected fraud since May 2021.

The Paycheck Protection Program

The federal government’s Paycheck Protection Program provided support to small businesses to pay their employees after businesses were forced to close during the pandemic. The program authorized $659 billion in forgivable loans to be distributed to small businesses across the country for job retention and certain other eligible business expenses, including interest on mortgages, rent and utilities.

Last week, President Biden signed two bills HR 7334 and HR 7352 that would establish a 10-year statute of limitations for prosecutions related to fraud related to the Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loan (EIDL).

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This post 3 Facing Charges for PPP Loan Fraud was original published at “https://smallbiztrends.com/2022/08/three-individuals-facing-charges-for-ppp-loan-fraud.html”

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