How We Pre-Warned Them About the PPP Scams That Could Backfire

When COVID-19 struck, everyone was numb struck. Then boom, the government introduced its relief programs, and everyone was happy! Or you, at least, felt a tiny spec of hope. But while millions of Americans were looking forward to such relief programs as the Paycheck Protection Program (PPP), I was busy shooting videos warning you about one or two things.

Firstly, I cautioned how complex the application process was, pointing out that you needed help from an accountant like me to figure out the entire application process. Secondly, and most importantly, I warned about how everyone could be tempted to try and steal from the government. I also cautioned that stealing the PPP money was a bad idea. Why? Well, fast forward to today, tens of PPP fraud cases are currently before the Department of Justice (DOJ). People are getting arrested after several months of getting the money. More of you are also being secretly investigated. This means that if you are one of those who did that, it is probably too late for you.

How did people steal the Covid relief money?

Now, we get to the scams people planned and carried out to get their hands on the PPP money. To understand this better, let me show you the kinds of charges that many arrested individuals face. See below:

  1. Wire fraud
  2. Bank fraud
  3. False statement to a financial institution
  4. Conspiracy to commit fraud

To answer how some of you committed PPP fraud, we now look at how the charges (1-4) laid above can arise.

Wire fraud, which carries a sentence of up to 20 years in prison, arises when an individual commits fraud through the use of some form of telecommunication. This could involve a phone call, text messages, fax, email, or social media messaging, among many. Therefore, when you sent your fraudulent papers to the bank so that they submit them to the government for approval, you committed wire fraud.

Bank fraud, which carries a sentence of up to 30 years in prison, is when an individual uses deception to steal money or assets from a bank or financial institution. As such, if you used deception, such as pretending to be an operating company when you were not, to apply for PPP, you committed bank fraud.

Sending false statements to a financial institution is a white-collar crime. This involves presenting false information (statements) about your company. For example, stating that you employ 20 people with an average monthly wage expense of $100K when you know that you actually employ only 5 people. Therefore, many of you who submitted fraudulent PPP loans committed this crime. You lied about your business payroll expenses.

Finally, conspiracy to commit fraud is a crime that an individual commits when they plan to “manufacture” false statements, present them to a bank, and get what they thought was free money from the government. So, everyone who unlawfully got the PPP relief money committed this crime.

How we did warn you about PPP scams

As soon as the PPP applications opened, I knew that some ‘clever’ small business owners would try to defraud the government. I see this almost every year in my job as an accountant and tax professional. People just don’t learn – but I am not here to give a motherly tongue-bashing to a naughty child! What’s important is that I did warn you about all this before you could apply for the PPP.

Every week, I go online and do live video presentations, which the replays are available. During these live sessions, back in early 2020, I said a lot about how the PPP could mess up the lives of many small business owners. I warned about how complex the application process was and cautioned those with an appetite for stealing from the government. A few individuals listened to me and hired me to compile their application documents. And guess what? Those who got it have no problems at all because they did everything buy the book.

Therefore, if there is such a program in the future, ensure that you play by the rules. They are there to guide you, help your business grow, and not make you poor, as some of you believe. In fact, abiding by the rules and implementing the strategies that accountants and tax professionals like me tell you to do is what makes you rich, not stealing.

What can you do to avoid falsifying numbers to banks or the government in the future?

Many of you who are on the wrong side of the law lack these two things: Bookkeeping and Accounting. Therefore, to avoid making mistakes or submitting falsified documents, ensure that your bookkeeping and accounting is in order. My company offers these services in an amazing fashion. Book an appointment with us today and never have to worry again about losing out on government money in the future or having to commit fraud to get it. Contact us today.

People have also asked the following questions

  1. What are PPP scams?

PPP scams are when an individual or business provides falsified information to a financial institution that handles PPP applications. They do so to get PPP loans.

  1. What happens if PPP loan funds are misused?

Individuals who misused PPP loans are charged with money laundering crimes because they use multiple bank accounts to divert the money from business accounts to somewhere else, hoping it will not be traced.

  1. What if I made a mistake on my PPP application?

If you submitted a PPP application with mistakes, you must reach out to the financial institution handling your application. If the error resulted in your application being denied, then you must correct the error and re-submit.

  1. How many times can you get PPP loan?

There is only one limit per business. But if you are the same person who owns two businesses, both with separate EINs, then your two companies can apply separately for the PPP.