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Government Agencies Stepping up Efforts Against Pandemic Fraud

New stories on Payment Protection Program (PPP) loan fraud continue to make headlines every day as the pandemic confusion and post-pandemic chaos have contributed to administrative headaches for the U.S. Government. A recent New York Times article outlined various situations that have added fuel to this existing fire.

According to investigators who are now delving into the multitude of fraud cases created as a result of the PPP loan rollout, Congress had heavily relied on the honor system during the onset of the pandemic as they were preoccupied with getting funding out to the public as quickly as possible. However, without the proper controls set in place to prevent abuse of the system, individuals took advantage of the situation.

PPP loans were supposed to be reviewed by the banks, but many fintech lenders were less diligent due to the massive influx of requests, casting doubt on the level of due diligence that was performed during these reviews.

As a result, hundreds of people in various government agencies are currently working on thousands of pandemic-related fraud cases. The Small Business Administration office is a remarkable example of this unprecedented workload, as it is in the process of reviewing two million potentially fraudulent loan applications. Some cited cases even include providing unemployment benefits to the incarcerated and the dead. Due to the sheer volume of cases that are still in progress, government agencies are expected to continue investigating these crimes for many years, as President Biden recently signed a bill extending the statute of limitation for pandemic-related fraud to 10 years.

In the midst of this turmoil caused by the pandemic, it is more important than ever to properly maintain documentation to justify your benefits, as government agencies are now heavily scrutinizing any potential applications for signs of fraud. If you need assistance in recreating your records, contact Ken Yormark at kyormark@citrincooperman.com or your Citrin Cooperman Forensic and Litigation Advisory Services advisor.

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