A Houston man, Lee Price III, allegedly collected $1.6 million in Paycheck Protection Program (PPP) relief funds on account of two businesses with no known employees, and purchased a Lamborghini Urus, a Rolex watch, and real estate among other extravagant personal purchases according to the criminal complaint.
Price is charged with making false statements to a financial institution, wire fraud, bank fraud and engaging in unlawful monetary transactions. The complaint alleges the man was involved in a scheme to submit fraudulent PPP loan applications to federally insured banks and other lenders. According to the complaint, Price submitted two fraudulent applications. Although the loan applications allegedly declared both companies had numerous employees with significant pay wages, the complaint alleges neither entity had employees nor payroll expenses consistent with the amounts claimed in the applications.
Paycheck Protection Program (PPP)
The Paycheck Protection Program (PPP) is part of the CARES Act, which was enacted in March of this year. The PPP allows qualified small businesses to receive loans at a low interest rate for two years. PPP loan proceeds must be used to pay business payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses use the funds on authorized expenses within a set period of time and use at least a certain percentage of the loans towards payroll expenses.
Bank Fraud and False Statements in PPP Loan Application
Applying for the PPP Loan Program using false or inaccurate information can be charged as bank fraud for making false statements using 18 U.S.C. §1001. Section 1001 makes it a federal crime to knowingly or willfully make a false representation, or to file a document known to contain a false statement, to an agency of the executive branch, which includes the SBA.
Statute of Limitations for COVID-19 Fraud
The statute of limitations for bank fraud is ten (10) years. While some fraud committed during this uncertain time may go undetected for a few years, the DOJ has ten years to investigate and charge for COVID-19 relief fraud and PPP Loan Fraud.
COVID-19 and CARES Act related fraud charges are expected to be imminently forthcoming as the DOJ has prioritized the prosecution and investigation of such fraud. If you need assistance with a fraud case, please contact our office.