May 1 (UPI) — The Justice Department said it’s investigating potential fraud in a small business fund created last month by the $2.2 trillion coronavirus relief package.
Authorities said Thursday they are looking into claims involving the Paycheck Protection Program that ineligible businesses may have improperly received government-funded loans. The department acknowledged the inquiry after Treasury Secretary Steve Mnuchin warned that ineligible companies receiving the low-interest, forgivable loans will be prosecuted.
About $350 billion was initially put into the fund, but the money quickly ran out and Congress subsequently had to approve more money. There have been several instances, however, of larger companies taking money from the fund — including national restaurant chains Shake Shack and Ruth’s Chris Steak House and the NBA’s Los Angeles Lakers.
Created to help small businesses keep employees on the payroll during coronavirus-related shutdowns, Mnuchin sought to discourage larger businesses from trying to access the PPP.
To discourage larger businesses, those with more than 500 employees, from trying to get around program restrictions, the Small Business Administration said corporate groupings of individual subsidiary companies will be limited to $20 million in aggregate.
Assistant U.S. Attorney General Brian Benczkowski told Bloomberg a preliminary investigation has already turned up instances of possible fraud.
“There are unfortunately businesses that are sending in loan applications for large amounts of money that are overstating their payroll costs, overstating the number of employees they’ve had, overstating the nature of their business,” he said.