In the past two weeks, the federal government has charged several individuals in Paycheck Protection Program loan fraud schemes. The allegations have ranged from applying for loans for non-operating businesses to using loan funds to buy cars and jewelry. Charges announced this week showed a whole new level of creativity. A Texas man, Samuel Yates, allegedly used an online name generator to make up the names of hundreds of employees in an effort to obtain a $5 million loan. Despite not employing anyone, Yates’ application allegedly claimed that he employed 400 people and had $2 million in payroll expenses. He not only used an online name generator, but also allegedly submitted fake tax documents.
The charges demonstrated the breadth of government resources involved in tracking down loan fraud, as U.S. Immigration and Customs’ Homeland Security Investigations was involved in the investigation, along with several other federal agencies. As we have previously covered, the federal government is aggressively targeting PPP loan fraud and this pattern is expected to continue, especially for clear cases of fraud involving made up business and misuse of PPP funds.