Attention FAE Customers:
Please be aware that NASBA credits are awarded based on whether the events are webcast or in-person, as well as on the number of CPE credits.
Please check the event registration page to see if NASBA credits are being awarded for the programs you select.

PPP Loan Forgiveness: Preparing for and Responding to SBA Reviews, Appeals of Forgiveness Denials, and Other Governmental Scrutiny

By:
Reetuparna Dutta and Jason E. Markel
Published Date:
Feb 1, 2022

Nearly two years ago, on March 27, 2020, the Paycheck Protection Program (PPP) was created with the enactment of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act.[1] The CARES Act substantially expanded eligibility for small business loans administered by the U.S. Small Business Association (SBA) under its existing Section 7(a) loan program. PPP was designed as a mechanism for eligible businesses to access loan proceeds to help them weather the economic and business uncertainties caused by the COVID-19 pandemic, and to help preserve jobs and the income of their employees. Eligible borrowers who properly expended PPP loan proceeds during a “covered period” for payroll and certain other defined expenses could apply to have their loans forgiven in whole or in part.

The CARES Act and PPP were hardly models of clarity when enacted. The legislation was introduced in the Senate, passed the House, and was signed by President Trump within a matter of days. As a result, there was virtually no substantive legislative history generated to serve as an interpretive guide on Congressional intent. As borrowers began applying for loans, they faced many unanswered questions about PPP eligibility, permissible uses, forgiveness, and both the short- and long-term implications of taking the loans.

The SBA endeavored to fill in the blanks and provide explanations by publishing numerous Interim Final Rules (IFRs), developing and updating Frequently Asked Questions (FAQs), and issuing various PPP-related forms and instructions. Congress also amended certain aspects of the program through the Paycheck Protection Program Flexibility Act (June 5, 2020), made additional changes to PPP and added a Second-Draw PPP loan program (PPP2) through the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act (December 21, 2020), and expanded eligibility to additional non-profits, digital news producers, and shuttered venue operators through the American Rescue Plan Act (March 11, 2021). With each of those statutory amendments, the SBA issued new IFRs and updated its FAQs and various application forms and instructions. The result is an enormous patchwork of statutes, regulations, and non-binding guidance, some of which are retroactive, while others are prospective. As a result, borrowers continue to face confusion over the program rules, long after they applied for the loans and spent the proceeds.

This article will address the PPP forgiveness process, SBA reviews and requests for information, appealing a denial of forgiveness, and the possibility of non-SBA government scrutiny of PPP borrowers. In navigating these steps in the PPP process, it is imperative that borrowers and their financial advisors understand both the rules that apply to their applications, and the actions to take if they become involved in a government investigation around the PPP proceeds. The careful borrower will seek the assistance of counsel at the earliest possible time, to avoid later difficulties and mistakes.   

The Forgiveness Process           

Unlike a traditional loan, PPP and PPP2 loans were not subjected to an underwriting process on the front end, and personal guarantees from small business owners were not required. The CARES Act instead required borrowers to do little more than complete an application form and make certain certifications on those applications, including that “the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient.”  But if borrowers later want their loans to be forgiven, they are essentially subject to a back-end underwriting review by the SBA. This review comes long after borrowers presumably structured their business operations and financial projections around an expectation of forgiveness. For some borrowers, a forgiveness denial and the burden of repayment could have devastating consequences. Care must therefore be taken by borrowers when preparing forgiveness applications to ensure that their applications are not only completed fully and correctly, but also with an understanding of the implications of the SBA review and administrative appeals processes that could come into play if forgiveness is denied.

At the most basic level, forgiveness applications come in three versions:  (1) the full Form 3508; (2) Form 3508EZ for borrowers with loans over $150,000 where certain conditions are met; and (3) Form 3508S for borrowers with loans of $150,000 or less. Forms 3508 and 3508EZ both list supporting documents that must be submitted with the forgiveness application. The instructions to all three versions, however, also include a section titled “Documents That Each Borrower Must Maintain But Is Not Required To Submit.” In the process of completing their forms and documentary submissions, borrowers should be careful not to overlook that heading, or the paragraph that appears below it, which describes the types of materials that borrowers should collect and preserve when they submit their forgiveness application:

All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application, documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan (including the Borrower’s gross receipt reduction certification for a Second Draw PPP Loan, if applicable), documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements.

Each Form’s instructions also contain a paragraph regarding records retention. Forms 3508 and 3508EZ both state:

Records Retention Requirement: The Borrower must retain all such documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request. The Borrower must provide documentation independently to a lender to satisfy relevant Federal, State, local or other statutory or regulatory requirements or in connection with an SBA loan review or audit.

The Form 3508S version lessens the six-year period to four years for payroll records and three years for all other documentation, following submission of the forgiveness application to the lender.Professional advisors should point out these paragraphs, emphasizing timely collection and preservation of these materials, and provide copies of any relevant supporting records. In the event of an SBA review of the loan, the borrower may be called upon to produce these materials on short notice—generally within 10 business days of a request. Borrowers who failed to adequately prepare for that possibility may find themselves scrambling to locate and produce the records necessary to respond to such an inquiry. Under the SBA’s rules, a failure to respond may result in a denial of forgiveness.

SBA Reviews

The SBA has stated in IFRs and its FAQs that it will review all loans of $2 million or more. The SBA has also stated, however, that it may still review any loan at any time in its discretion, regardless of amount. SBA reviews will focus on three main areas: (1) borrower eligibility; (2) loan amount and use of proceeds; and (3) loan forgiveness amount. Each of these subject areas, particularly eligibility, can give rise to complicated questions, depending on the borrower’s individual circumstances. In the SBA review context, the burden nonetheless falls to the borrower to substantiate its eligibility, proper use, and entitlement to forgiveness. Forgiveness amounts can be eliminated or reduced as a result of the SBA review process due to borrower ineligibility or for improper use of proceeds, ineligible expenses, or incorrect calculations. Forgiveness may also be jeopardized by the failure to respond, or the inadequacy of any response, to a request for information from the lender or the SBA.

            (a)       Borrower Eligibility and Necessity Certification

Borrower eligibility is a broad concept. It encompasses issues involving proper application of foreign and domestic head counts, industry and alternative size standards, express statutory or regulatory disqualifiers, affiliation rules, other measurable standards or data-driven calculations, borrower certifications, and any other rule affecting eligibility. Importantly, a borrower who fails an eligibility review will not be entitled to have any amount of its loan forgiven. The SBA will pursue repayment, and perhaps other remedies. In certain circumstances, personal liability could attach, notwithstanding the absence of personal guarantees. The CARES Act contains a non-recourse provision, which states that the SBA “shall have no recourse against any individual shareholder, member or partner of an eligible recipient of a covered loan for nonpayment of any covered loan, except to the extent that such shareholder, member, or partner uses the covered loan proceeds for a purpose not authorized” as a permissible use. By reverse implication, personal exposure may exist for these individuals if the borrower was not an eligible recipient of the loan or the proceeds were used for impermissible purposes. Bottom line: an SBA review inquiring about eligibility requires careful and prompt attention and response.

An eligibility review may also include how or why the borrower satisfies the “necessity certification,” which is more nebulous. From inception, borrowers and professional advisors alike have struggled with the meaning behind the necessity certification and how to establish it, which may differ from business to business or industry to industry. The SBA guidance offers little more than FAQ #31 (4/23/20), which states in relevant part:

Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.

The SBA’s FAQ #37 (4/28/20) indicates that the above likewise applies to private companies with adequate sources of liquidity.[2]

Borrowers should be prepared to document their good faith, necessity, and uncertainty if called upon to do so. Traditional business records, data, and financial information may supply some of the information.  But supporting information may also be found in communications from customers and suppliers, communications with lenders, period news articles or trade journals detailing impacts to the borrower’s industry, labor-related issues caused by fear or school closings, applicable state and local government COVID-19 restrictions that impacted business operations, impacts on loan covenants or lender agreements, and various other sources of information that may provide context on the economic uncertainties facing the borrower at the time of certification.

            (b)  Loan Amounts and Use of Proceeds

The initial loan amount requested on a PPP application is based on average monthly payroll costs times a multiplier. That seems simple enough, but the calculation depends upon applying the definition of payroll costs correctly, as it existed at the time. Determining payroll costs is not a one-size-fits-all exercise. Not only was the definition of payroll costs itself tweaked slightly, but borrowers need to consider the different rules as they apply to S corporations, C corporations, limited liability companies, partnerships, self-employed (with and without employees), farmers/ranchers, and nonprofits. The loan amount also depends on correctly applying the $100,000 annualized salary cap and owners’ compensation rules, if applicable.

As for use of the proceeds, PPP loan applications required borrowers to certify that “the funds will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments, as specified under the Paycheck Protection Program Rule….” Following the passage of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, the certification was expanded to encompass covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures.

Because an SBA review could encompass any or all of the above issues, it would be wise to revisit them and any related definitions to verify prior calculations before submitting a forgiveness application, and to ensure that adequate records are available and preserved to support all the calculations.

            (c)  Loan Forgiveness Amount

Forgiveness for payroll costs and other forgivable expenses is dependent upon making such expenditures during the “covered period” and in accordance with PPP criteria and applicable definitions surrounding such expenses. At least 60% of the loan proceeds must have been spent on payroll costs. Statutory amendments to the PPP have afforded greater flexibility to borrowers in self-defining the “covered period” during which the forgivable expenditures must be made, and by broadening the types of forgivable expenses. The instructions to the forgiveness applications provide borrowers with considerable detail about how to calculate payroll and non-payroll expenses, consistent with the statutory definitions. Much of the forgiveness application calls for data-driven calculations, and Forms 3508 and 3508EZ both require the applicant to submit considerable supporting documentation. Moreover, some borrowers may have applied one or more safe harbors to avoid forgiveness reductions. The instructions direct the borrower to maintain supporting records for invoking certain safe harbors, which the SBA could request as part of its review process. 

Responding to an SBA Review Request

SBA reviews are often initiated by the SBA through the lender, who then notifies the borrower. Such notification will likely include a request for information.  As noted above, the borrower is often afforded only 10 business days to respond.  If the SBA initiates a review, the borrower should provide all information requested in a timely manner. The involvement of outside counsel familiar with the PPP rules is recommended to assist with this process. Although the SBA may include requests for specifically identified documents, the SBA may also phrase certain requests more broadly to seek “all documents” that the borrower relied upon or which support a particular calculation, eligibility requirement, or other determination.  Remember that discussion above about collecting and preserving the “Documents That Each Borrower Must Maintain But Is Not Required To Submit?” This is where that paragraph starts having significance and importance.

The SBA review process is the point at which the borrower should make its best case on the areas of the SBA’s inquiry, and ensure it has submitted adequate, appropriate, and comprehensive supporting documentation. That may mean, in some instances, producing documentation that the SBA did not directly ask for, but which the borrower, or its attorney or accountant, knows is relevant and important to substantiating or proving the borrower’s position. Failure to submit such materials could potentially jeopardize loan forgiveness.

Some borrowers or their advisors may believe a minimalistic approach should be taken when responding to an SBA review request, thinking that the borrower will simply be able to make a more complete case and introduce additional documents and information through the appeal process if forgiveness is denied. That approach is a mistake, and fails to take into account the timing, procedural limitations, and burden of proof on the appeal process. Borrowers, as well as their accountants and advisors, should be mindful of how that process works when responding to SBA reviews, and recognize that the administrative appeals process is restrictive and will likely prove to be an uphill climb. Borrowers who fail to lay the groundwork and submit complete proof to support their position during the SBA review process will face significant hurdles and constraints in attempting to establish a basis for reversal on appeal.

The Administrative Appeal Process

The SBA first issued an IFR[3] in August 2020 setting forth a proposed administrative appeal process. It also set forth new, PPP-specific Rules of Practice for appealing final SBA forgiveness denials administratively before an Administrative Law Judge (ALJ) appointed through the SBA’s Office of Hearings and Appeals (OHA). Notably, that IFR was issued well after millions of borrowers had already applied for, received, and began spending their loan proceeds.  More than a year later, and after receiving limited public comments, the SBA issued a Final Rule[4] in September 2021, which finalized the appeals process and Rules of Practice. The Final Rule made a few beneficial changes for borrowers, such as extending the loan repayment deferral pending final disposition of an appeal, provided the borrower notifies the lender of a timely appeal.[5]  But overall, the administrative appeals process is generally stacked against the borrower in favor of apparent deference to the SBA’s findings.

Only the borrower, or its legal successor in interest, has standing to appeal.[6]  That rule may have implications to individuals who lose the protection of the PPP’s non-recourse provisions if the borrower was deemed by the SBA to have been ineligible or loan proceeds were used for improper purposes (as discussed earlier). Administrative appeals must be commenced by the borrower within 30 days of receipt of the SBA’s final loan review decision[7] by filing an Appeal Petition electronically through the OHA’s case portal.[8]  The Appeal Petition, which is limited to 20 pages (not including any attachments), must provide the SBA’s decision and certain other information, including a “full and specific statement as to why the SBA’s loan review decision is alleged to be erroneous, together with all factual and legal arguments supporting the allegations.”[9]  Failure to include all required information may result in dismissal.[10]  The SBA may, but is not required to, answer or otherwise respond to the Appeal Petition, unless requested to do so by the OHA.[11] If the SBA does respond, the borrower may not submit a reply unless directed by, or permission is obtained from, the ALJ.[12]

Upon filing the Petition, the ALJ will issue a Notice and Order directing the SBA to prepare the Administrative Record within 20 days, and electronically serve a copy upon the borrower.[13]  The Administrative Record will only include “non-privileged, relevant documents that SBA considered in making its final loan review decision or that were before SBA at the time of the final loan review decision,” and it “need not, however, contain all documents pertaining to the [borrower].”[14] 

The borrower is given 30 days to file any objections to the SBA’s failure to include any document in the Administrative Record that the borrower believes should have been included.[15] The rules, however, incorporate no mechanism by which the borrower may actually review the entirety of SBA’s or the lenders’ files to identify any other materials to which the SBA had access, but perhaps declined to include. To the extent the borrower knows of relevant information that is not included in the Administrative Record, it should identify such materials in its objection. Once the Administrative Record is finalized, that’s essentially the end of the substantive appeals process for the parties. The rules state that “All appeals under this subpart will be decided solely on a review of the administrative record, the appeal petition, any response, any reply or supplemental pleading, and filings related to objection to the administrative record.”[16]

The borrower bears the burden of proof on appeal to establish that the SBA’s loan review decision was based on a clear error of fact or law.[17]  The procedural rules, however, do not afford the borrower an opportunity to make arguments by referencing the documents or specific information presented in the Administrative Record after it has been filed, other than objections to content. Generally, the ALJ is prohibited from admitting evidence beyond the administrative record.[18] Neither discovery nor oral hearings are permitted as part of the appeal process.[19]  Proving “clear error” is a considerably high burden of proof for a borrower to meet, especially in the face of these constraints. In effect, the borrower’s entire appeal may rest upon the quality, content, and arguments set forth in the Appeal Petition. Although the rules do contemplate that the borrower may attach documents to an Appeal Petition, they are unclear as to whether the ALJ may actually consider any attached substantive evidentiary materials if they had not been previously submitted to the SBA.

The limitations on the content of the Administrative Record, the inability to conduct discovery or introduce new evidence, and the lack of opportunity to present a case at hearing, are all reasons why it is critically important for borrowers to submit during the SBA review process all documents and information that may relate to the borrower’s entitlement to forgiveness. Doing so will make the documents part of the eventual Administrative Record if there is an appeal, and the borrower will know to reference them in its Appeal Petition and ensure they are part of the Administrative Record. The high burden of proof a borrower will face on appeal exemplifies why a borrower should endeavor to make its best case for forgiveness during the SBA review process, before the SBA makes its final decision. Those efforts could change the outcome.  But if they don’t, at least the borrower will have laid the groundwork to build the best record it can for undertaking an administrative appeal.

The Possibility of Government Scrutiny

SBA reviews are not necessarily the only type of government scrutiny a PPP borrower may face. The amount of money disbursed in the PPP—over $700 billion[20]—as well as after-the-fact program reviews finding indicia of fraud have spurred government regulators into an active investigatory stance. The change in administrations will also likely affect the level of government investigations. For example, in March 2021, even before the program closed, the Majority Staff of the Select Subcommittee on the Coronavirus Crisis found that “the Trump Administration refused to implement basic controls in PPP and EIDL[21] despite warnings from the Select Subcommittee and others, leading to billions of dollars in potential fraud.”[22] Also, in a foreshadowing of the level of investigative activity around the PPP, it noted that “[t]he American Rescue Plan provided more resources to federal watchdogs to combat this problem....”[23] As evidence of the scale of potential fraud in the PPP, the report notes that the SBA OIG received 148,525 hotline complaints relating to the PPP or EIDL, which represents a 19,500% increase over prior years, and that 32 law enforcement and other agencies are investigating small business fraud in pandemic relief programs.[24] Other federal agencies also took notice. In May 2021, the Department of Justice established the COVID-19 Fraud Enforcement Task Force to coordinate enforcement efforts around COVID-19-related fraud among federal agencies, including the FBI, Department of Labor, Department of Treasury, and the Department of Homeland Security.[25] 

Borrowers who may have unusual circumstances or “red flags” on their applications (for example, differences between information on their application and their tax filings) should therefore expect government scrutiny and be prepared to address it. On the civil enforcement side, the major tool used by the federal government to redress PPP-related fraud is the False Claims Act (FCA). The FCA (a Lincoln-era statute passed to redress fraud on the Union army) imposes liability on those who present or cause to be presented false or fraudulent claims for payment or approval or improperly avoid an obligation to pay money to the government.[26] The DOJ has made clear that “[t]he FCA is the government’s primary civil tool to redress false claims for federal funds and property involving a multitude of government operations and functions,” in large part because the FCA allows private individuals to bring an action on behalf of the government and to share in any recovery (i.e., a bounty).[27] For borrowers, this means that every employee, outside consultant, or vendor with knowledge of a borrower’s PPP-related improprieties is heavily incentivized to serve as a governmental watchdog and to initiate legal proceedings to redress fraud. 

Although FCA investigations can sometimes take years, the DOJ has already settled several PPP-related FCA actions. On January 12, 2021, the DOJ settled FCA allegations against SlideBelts, Inc., a manufacturer and seller of fashion accessories, and its president. SlideBelts had filed for bankruptcy in 2019 but, despite being ineligible for a PPP loan due to the bankruptcy, it applied for, and received, a PPP loan, falsely stating that it was not involved in a bankruptcy. To settle these allegations, SlideBelts agreed to pay $100,000 in damages and penalties and re-pay its PPP loan of $350,000.[28] On October 28, 2021, the DOJ announced another FCA settlement with Sextant Marine Consulting, a duct-cleaning company, based on its obtaining a duplicative PPP loan. Sextant agreed to pay $30,000 in damages and penalties and re-paid the duplicate loan of $170,000. Notably, this action was initiated by a whistleblower.[29] Similarly, on August 26, 2021, Seth Bernstein, the owner of a jet charter company, agreed to pay $287,055 to settle allegations that he misappropriated PPP funds for personal expenses. This case was also initiated by a whistleblower.[30] 

Although all of the above settlements are relatively small, they demonstrate both that the government is willing to expend resources on low-damage FCA cases and that whistleblowers fulfill an important role in policing PPP fund use and initiating enforcement actions. Also, as demonstrated by the Bernstein and SlideBelts settlements, the government is willing to hold individuals accountable for PPP abuse.

Perhaps more concerning than civil liability is the possibility of criminal charges relating to the PPP. Most of the criminal enforcement actions related to the PPP have involved the blatant misuse of PPP funds. According to the DOJ, in PPP criminal fraud cases “[m]ost charged defendants have misappropriated loan proceeds for prohibited purposes, such as the purchase of houses, cars, jewelry, and other luxury items.”[31] A typical example is a Florida man who was convicted and is now serving more than six years for fraudulently obtaining $3.9 million in PPP loans, some of which he used to purchase a Lamborghini.[32] 

The IRS is also involved in PPP-related investigations and has participated in investigating criminal charges against tax preparers and accountants. For example, in a case investigated by the IRS and SBA, a tax preparer plead guilty to submitting 118 fraudulent PPP applications on behalf of himself and his accomplices, seeking more than $2.3 million in PPP funds. On each application, the tax preparer falsified the applicant’s prior year income and expenses and submitted fraudulent IRS tax forms, a scheme that collectively netted disbursements of $900,000 in PPP funds.[33] The tax preparer was sentenced to two years in prison, and he agreed to forfeit the entirety of the funds as part of his plea deal. In another example, in a case investigated by the FDIC and the IRS, a tax consultant plead guilty to orchestrating a scheme to obtain more than $23 million in PPP loans by inflating clients’ employee rosters and payroll expenses. His clients obtained $12 million in PPP funds, and paid him almost $1 million in fees.[34] He was already serving a 6-year sentence for tax fraud and now faces up to 10 years in prison for the PPP fraud.

Simply put, careful PPP borrowers should assume that their loans may be scrutinized—not only by the SBA, but potentially by the FBI, IRS, and even the DOJ—and will begin to prepare accordingly. If you or your client receives a request or subpoena for PPP-related records from a government agency, consult with an attorney right away and work together to identify and address any potential issues. 

 


Reetuparna (Reena) Dutta is a partner at Hodgson Russ LLP specializing in civil and criminal government investigations, prosecutions, and white collar criminal defense.  She assists companies in diverse industries, including financial services, healthcare, manufacturing, construction, and real estate, to conduct internal investigations and to respond to government-initiated enforcement actions, grand jury subpoenas, civil investigative demands, and other forms of legal process. 

Jason E. Markel is a partner at Hodgson Russ LLP and a member of the firm’s litigation practice group.  He concentrates his practice on complex civil litigation in a wide variety of contract, construction, corporate, labor, real estate, and commercial business disputes.  He also counsels clients in the manufacturing, healthcare, warehousing, and construction industries on Occupational Safety and Health Act (OSHA) compliance and defense of OSHA citations and whistleblower claims. 

Ms Dutta and Mr. Markel have co-authored numerous PPP articles and participated in multiple webinar presentations discussing PPP loans, litigation-based risks associated with PPP compliance and forgiveness, and potential governmental scrutiny of PPP loans.

 


[1] See 15 U.S.C. § 636(a)(36) (March 27, 2020).

[2] The SBA provided further guidance relating to the necessity certification, including certain safe harbor information for loans below $2 million, in FAQ #46 (5/30/20) and FAQ #53 (12/9/20).  Both of those FAQs, however, were later deleted on July 29, 2021 in conjunction with FAQ #69.  Those deletions may leave borrowers perplexed as to the process and scope of review that the SBA will undertake when examining borrowers’ necessity certifications, and whether that will differ for forgiveness applications submitted before or after the deletions.

[3] 85 Fed. Reg. 52883 (August 27, 2020).

[4] 86 Fed. Reg. 51589 (September 16, 2021).

[5] See, 13 C.F.R. § 134.1202(b).

[6] 13 C.F.R. § 134.1203.

[7]  A borrower may appeal a final SBA loan review decision determining that the borrower: (1) was ineligible for a PPP loan; (2) was ineligible for the PPP loan amount received or used the PPP loan proceeds for unauthorized uses; (3) is ineligible for PPP loan forgiveness in the amount determined by the lender in its full approval or partial approval decision issued to SBA; and/or (4) is ineligible for PPP loan forgiveness in any amount when the lender has issued a full denial decision to SBA.  13 C.F.R. § 134.1201(b).

[8] 13 C.F.R. § 134.1202(a).

[9] 13 C.F.R. § 134.1204(a)(2).

[10] 13 C.F.R. § 134.1204(b).

[11] 13 C.F.R. § 134.1208(a).

[12] 13 C.F.R. § 134.1208(e).

[13] 13 C.F.R. § 134.1207(a), (d).

[14] 13 C.F.R. § 134.1207(b).

[15] 13 C.F.R. § 134.1207(e)(1), (e)(2).

[16] 13 C.F.R. § 134.1209(c).

[17] 13 C.F.R. § 134.1210.

[18] 13 C.F.R. § 134.1209(a).

[19] 13 C.F.R. § 134.1209(b).

[21] The SBA’s Economic Injury Disaster Loan program allowed the SBA to make low-interest, fixed-rate loans to help small businesses and also to provide “advances” that need not be repaid.  See SBA, FAQ  Regarding COVID-19 EIDL, available at https://www.sba.gov/document/support-faq-regarding-covid-19-eidl.

[22] Memorandum to the Members, Select Subcommittee on the Coronavirus Crisis from the Majority Staff    (March 25, 2021) available at: https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2020-03-25%20Staff%20Memo%20-%20Small%20Business%20Fraud.pdf.

[23] Id.

[24] Id.

[25] DOJ Press Release, Attorney General Announces Task Force to Combat COVID-19 Fraud (May 17, 2021), available at: https://www.justice.gov/opa/pr/attorney-general-announces-task-force-combat-covid-19-fraud.

[26] The FCA allows the Government to obtain treble damages for violations, as well as a per-claim penalty of between $11,803 and $23,607.  See 31 U.S.C. § 3729; see also 28 CFR § 85.5 (FCA per claim penalties).

[27] DOJ Press Release, Justice Department Takes Action Against COVID-19 Fraud (March 26, 2021), available at https://www.justice.gov/opa/pr/justice-department-takes-action-against-covid-19-fraud.

[28] DOJ Press Release, Eastern District of California Obtains Nation’s First Civil Settlement for Fraud on Cares Act Paycheck Protection Program (Jan. 12, 2021), available at https://www.justice.gov/usao-edca/pr/eastern-district-california-obtains-nation-s-first-civil-settlement-fraud-cares-act.

[29] DOJ Press Release, COVID-19 Task Force Nets Florida Duct Cleaning Company; Settles False Claims Act  Allegations Relating to Improper Paycheck Protection Program Loan (Oct. 28, 2021), available at: https://www.justice.gov/opa/pr/covid-19-task-force-nets-florida-duct-cleaning-company-settles-false-claims-act-allegations

[30] DOJ Press Release, Owner of Jet Charter Company Settles False Claims Act Allegations Regarding Misappropriation of Paycheck Protection Program Loan (Aug. 26, 2021), available at https://www.justice.gov/opa/pr/owner-jet-charter-company-settles-false-claims-act-allegations-regarding-misappropriation

[31] DOJ Press Release, Justice Department Takes Action Against COVID-19 Fraud, March 26, 2021, available  at: https://www.justice.gov/opa/pr/justice-department-takes-action-against-covid-19-fraud.

[32] DOJ Press Release, Florida Man Sentenced After Fraudulently Obtaining $3.9 Million in PPP Loans (May 12, 2021), available at https://www.justice.gov/opa/pr/florida-man-sentenced-after-fraudulently-obtaining-39-million-ppp-loans.

[33] DOJ Press Release, Tax Preparer Sentenced in COVID-19 Fraud Scheme (Nov. 17, 2021), available at https://www.justice.gov/opa/pr/florida-man-sentenced-after-fraudulently-obtaining-39-million-ppp-loans.

[34]  DOJ Press Release, Liberian National Pleads Guilty to $23 Million COVID-19 Relief Fraud (Oct. 19, 2021) available at https://www.justice.gov/usao-ndtx/pr/liberian-national-pleads-guilty-23-million-covid-19-relief-fraud

 
Views expressed in articles published in Tax Stringer are the authors' only and are not to be attributed to the publication, its editors, the NYSSCPA or FAE, or their directors, officers, or employees, unless expressly so stated. Articles contain information believed by the authors to be accurate, but the publisher, editors and authors are not engaged in redering legal, accounting or other professional services. If specific professional advice or assistance is required, the services of a competent professional should be sought.