The recent pandemic prompted Congress to enact legislation that is intended to provide financial relief to businesses that were especially hard-hit by the widespread disease. One of those statutes, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), appears to have spawned numerous attempts to defraud the government by the filing of false claims. The United States Attorney in Houston recently announced the filing of a two-count bill of information alleging violation of the CARES act against a woman who is a Houston resident.
Relief provided by the CARES Act
The CARES Act provided $349 million of forgivable loans to businesses for reimbursement of expenses for job retention through the Paycheck Protection Program (“PPP”). These loans must be based upon the business’ verifiable expenses for payroll, interest on mortgages, rent and utilities. The PPP loan can be forgiven if the borrower spends a specified amount of the loan proceeds on payroll expenses. A related program, the Economic Injury Disaster Loan (“EIDL”), was intended to provide funding for small businesses, renters, and homeowners affected by natural disasters. The principal amount of EIDL loans was based upon the business’ historical revenue.
The allegations in the charging documents
The charging documents allege that the defendant made false statements to the Small Business Administration to obtain the PPP loan. The defendant is also alleged to have applied for an EIDL loan for a dormant business that she owned. The charging document alleges that the defendant received approximately $13,450 in pandemic-related relief loans and $5,000 in funds for the dormant business.
Penalties
If convicted for the false statements count, the defendant faces up to five years in prison and up to $250,000 in fines. She also faces up to ten years in prison plus up to $250,00 in fines for the theft count. Both charges also carry a penalty of three years of supervised release after completion of the prison sentence.
The successful defense of any fraud claim often involves extensive review of many documents. A knowledgeable attorney is essential to obtaining a favorable outcome.