From $52,000 watches to six-figure Italian sports cars, some crooks are making it easy to detect fraud in the Paycheck Protection Program, a $525 billion effort to help small businesses remain open during the coronavirus pandemic.
The Justice Department has charged nearly 60 program participants with fraud worth about $62 million, according to a report in The New York Times Friday. The fraudulent schemes were easy to spot, investigators said, thanks to ostentatious spending and poorly faked documents.
Here’s one case, as described by the Times:
“[A] Texas man with convictions for forgery and robbery sought loans from six lenders using shell companies with no employees and, in one application, the stolen identity of a wine-shop owner who died in April. He collected $1.6 million and spent hundreds of thousands of dollars on booze, nightclubs, a Rolex and a 2019 Lamborghini Urus, according to the complaint filed against him in federal court in Houston.”
The problem is that the fraudulent activity uncovered so far is just “the smallest, tiniest piece of the tip of the iceberg,” Hannibal Ware, the inspector general of the Small Business Administration, told the Times.
More than 5 million businesses received loans through the program, which were forgivable if they were used to cover payroll and, to a lesser extent, rent and utilities. About 29,000 of the loans were for more than $2 million, and investigators say they will all receive scrutiny in a process that could take years.
Investigators have plenty of leads to work with. The Small Business Administration, which oversees the PPP, has received 42,000 tips on its fraud hotline, a huge jump from the 800 or so it received all of last year, before the program was created.