Brokers Blamed for Rampant PPP Loan Fraud but So Far Have Largely Evaded Punishment

In an update to our previous coverage of Paycheck Protection Program (“PPP”) Loan Frauds, further investigations into allegations of fraud/abuse in connection with COVID-19 relief program related scams have revealed a troubling trend that many of those responsible for obtaining the loans apparently continue to avoid punishment. That is because many of those responsible for filling out the paperwork and causing loans to be distributed to individuals did not receive the money themselves but instead received a brokerage fee or “kick-back” from the individual whose name was on the loan after the money was distributed. Such is purportedly the case of a 45-year-old North Side woman who has received a rent-subsidy voucher from the Chicago Housing Authority, who said she was contacted via Facebook by an unnamed broker who said they could assist her receive federal assistance via the Paycheck Protection Program. The woman claimed she agreed to split the approximate $42,000 in proceeds with the broker, but because she has refused to identify her, the broker has seemingly escaped identification and evaded punishment. The problem is seemingly widespread in the Chicagoland, with over 8,800 people who receive CHA vouchers or live in public housing being linked to over 10,000 PPP loans totaling over $190 million. While these publicized examples suggest that “brokers” have escaped punishment, we disagree that it is the case. We are well aware of numerous, significant, investigations and prosecutions related to both brokers and recipients of relief program funds.

Widespread Links Between PPP Loans and People with Ties to Public Services

Earlier last month, two more law enforcement officers, including an Illinois State Police master trooper, were linked with fraudulent PPP loans, adding to the growing list of public employees who have been accused, fired, or criminally charged for their part in Covid related aid fraud, which is estimated to reach at least $200 billion at this point. “Active criminal investigations” are underway involving the two officers according to the state police, but officials noted accusations against a third state police officer, a former district commander, was not being pursued by their department because the agency does not initiate administrative proceedings against individuals who have retired. Although it is taking some time for mass charging and investigations to publicly come to light, it is clear that many investigations are ongoing and we anticipate them to continue for years to come particularly given the extended statute of limitations related to federal banking crimes. If you believe you are under investigation or have been arrested for alleged COVID-19 relief program fraud, such as PPP or EIDL loans, you should contact an experienced criminal defense attorney for consultation and representation.