Earlier this month, President Biden signed legislation extending the statute of limitations for federal prosecutions against individuals and businesses accused of fraudulently obtaining COVID-19 relief funds, specifically through the PPP and EIDL loan programs. The PPP and Bank Fraud Enforcement Harmonization Act and the COVID-19 EIDL Fraud Statute of Limitations Act extended the statute of limitations to ten years, up from five years.
While federal bank fraud charges already come with a 10-year statute of limitations, fraud charges based on loan applications to non-banks only had a 5-year statute of limitations. Since PPP and EIDL loans are often applied-to through non-bank entities, the legislation ostensibly fixes a “loophole” that would have allowed some PPP and EIDL loan fraud cases to pass the statute of limitations. According to some studies, nonbank lenders are “almost five times more likely to be linked to suspicious PPP loans than were traditional banks.” The same study found that 9 of the 10 lenders “with the highest rates of suspicious PPP loans” were nonbank entities, often referred to as “fintech” firms.
The DOJ’s Inspector General, Michael Horowitz, recently stated that around 10% of PPP and EIDL loan applicants have obtained loans that were “inconsistent with income eligibility requirements.” To date, the DOJ has brought over 1,000 COVID-19 relief fraud cases involving a loss over $1.1 billion. Other reports suggest the Government is investigating cases worth another $6 billion in losses. The new laws extending the statute of limitations for these charges reflect that the Government’s aggressive targeting of PPP and EIDL loan recipients isn’t going away any time soon.
Visit our firm’s website for more information regarding PPP and EIDL loan fraud investigations and prosecutions, our firm is tracking PPP and EIDL loan fraud cases across the country, including what kinds of sentences have been imposed in cases that have ended with a conviction.