Bass, Berry & Sims attorneys Denise Barnes and Brian Irving co-authored an article for Corporate Compliance Insights discussing the continued scrutiny from the Department of Justice (DOJ) related to businesses that are alleged to have received COVID-19 relief funds fraudulently.
The rush to provide relief during the COVID-19 pandemic meant that there was less scrutiny of compliance with funding rules in the moment. However, the government has now begun to investigate instances of fraud relating to pandemic relief through the efforts of the fraud task force that the U.S. attorney general established in 2021.
Relief spending amounted to over $4.6 trillion, but the Small Business Administration (SBA) believes fraud investigations will continue as approximately $36 billion in pandemic relief is suspected to have been fraudulently obtained. Further, as stated in a December 2022 Congressional report, fintech companies charged with administering the PPP [Paycheck Protection Program] "appear to have failed to stop obvious and preventable fraud, leading to the needless loss of taxpayer dollars." Denise and Brian point out, "It's no surprise, then, that the government has cracked down on fintechs that were responsible for underwriting pandemic-related loans."
As the new administration takes over, it is expected that COVID-19 fraud enforcement could slow down as more business-friendly prosecutors are appointed. "Notwithstanding that fact, the Trump administration has taken pretty aggressive public stances on cutting government waste and abuse — maintaining pandemic prosecutions seem to align with those positions, even if prosecutors remain focused on the more egregious conduct," the authors suggest.
The full article, "Covid Fraud Enforcement (Yes, This Is Still a Thing)," was published on February 7 by Corporate Compliance Insights and is available online.
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