The Covid-19 act brought a $2.2 trillion dollar relief package. That’s good for  most Americans, who just want to live their lives and who don’t want to hurt anyone while doing it.

It also creates opportunities for those who are willing to engage in fraud to get what they want. That’s why the Act itself allocates $190 million to various government entities just so they can identify fraud, waste, and abuse.

In Beaumont, Texas, an engineer named Shashank Rai was recently charged with fraud. He applied for millions of dollars in forgivable SBA Paycheck Protection Program loans. He approached two different banks, claiming he had 250 employees working for him and earning wages. Rai had no employees at all.

Rai wasn’t the only one to attempt this form of fraud. In New England, David Staveley and David Butziger both claimed to have dozens of employees working with them across four different business entities in order to get their hands on $500,000 in PPP funds.

Making false statements to get a loan is always a form of fraud, and it’s always something that either the state or the federal government can and will prosecute. Banks and other agencies are getting a lot better at following up on and verifying claims. 

This vigilance also has implications for people who want to get a loan for perfectly legitimate reasons. It’s important to understand that even innocent actors could find themselves facing scrutiny. In Rai’s case, the scrutiny was almost immediate. Yet immediate scrutiny will not come in all cases. Some believe investigations into CARES Act fraud will continue for decades.

The first, best line of defense is to maintain thorough documentation and proof of your claims. The second is to make sure you have a lawyer who is ready to defend you in the event that your actions or claims come into question. This should be an attorney with a history of defending white collar defendants. 

If, prior to applying, you are uncertain whether anything you are doing might appear questionable it may even be a good idea to consult with counsel while you are filling out any applications. This can help you get a “second eye” on whether you are truly eligible for certain programs.

Believe it or not, there are certain eligibility criteria which can be confusing and which are open to interpretation. These are exactly the sorts of issues that attorneys excel at.

You should also keep careful track of how you spend the money, as spending the money improperly can also open you or your business up to sanctions or criminal charges at a later date.

See also:

In the News: Feds Continue to Crack Down on Covid-19 Fraud

Federal Investigators Set Covid-19 Priorities

3 Myths About White Collar Crime

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