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Volume X, Number 298

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Mnuchin Warns of Criminal Liability for PPP; Promises to Audit Large Loans

On April 28, Treasury Secretary Steven Mnuchin announced the SBA would be conducting audits of all businesses that received greater than $2 million in PPP loans, reiterating his warning from last week that businesses borrowing under the Paycheck Protection Program could face potential criminal liability for improperly seeking funds. Further, he stated that such audits would take place before loans will be forgiven under the program. According to SBA data as of April 16, more than 26,000 small businesses have taken loans over $2 million. A formal announcement from the Department of the Treasury is expected soon.

As noted in a previous alert, the SBA last week issued a supplemental Interim Final Rule reminding borrowers to “carefully review the required certification on the Paycheck Protection Program Borrower Application . . . stating that ‘[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.’” In a related FAQ document, the SBA stated that borrowers “must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.”

Given that this guidance was issued weeks after the PPP program went live, with millions of loans already issued, the SBA has provided companies concerned about the accuracy of the certification a safe harbor: if they pay the loan back in full by May 7 the certification will be deemed to have been made in good faith.

© 2020 Bracewell LLPNational Law Review, Volume X, Number 120
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Thomas Kokalas, White Collar Defense, Attorney, Bracewell, law firm
Partner

Thomas Kokalas is a partner in Bracewell's New York office, where he is a member of the firm's White Collar Defense, Internal Investigations and Regulatory Enforcement practice group. He represents corporations and individual clients in federal and state white collar criminal and regulatory cases, internal investigations and compliance reviews.

Mr. Kokalas has represented individuals and corporations in investigations and prosecutions by the Department of Justice, the SEC, the Manhattan District Attorney's Office and the New York State Attorney...

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David Shargel, commercial litigation, white collar criminal defense attorney, Bracewell Law firm
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David Shargel is a senior counsel in the trial section of Bracewell's New York office. His litigation practice focuses general commercial litigation, internal investigations and white collar criminal defense. Mr. Shargel's practice also involves issues surrounding electronic discovery and data management.

Mr. Shargel has litigated complex commercial disputes involving contract, business torts, insurance coverage, technology and fraud, and has litigated disputes concerning federal and state constitutional law, including the Commerce and Due Process Clauses. 

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Rachel goldman, complex commercial litigation, attorney, Bracewell law
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Rachel Goldman is an experienced litigator in both federal and state courts, at the trial and appellate levels. Her practice focuses on complex commercial matters, including claims for breach of contract, post-acquisition disputes, class actions, False Claims Act cases, insurance coverage disputes, contested bankruptcy matters, challenges under the Commerce Clause and the Supremacy Clause, government regulation, securities litigation, construction law, First Amendment and libel actions. Additionally, Rachel's tenure as in-house counsel provides a valuable perspective of...

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David Ball, Intellectual Property Attorney, Bracewell Giuliani, law firm
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David J. Ball is a partner in Bracewell's litigation practice. David has experience in the areas of intellectual property litigation (patent, copyright, trademark, trade dress, and IP theft), bankruptcy litigation, and state and federal appeals.  He also regularly represents financial services firms (international banks, regional banks, hedge funds, etc.) in complex commercial disputes.  David routinely draws on his litigation experience to counsel clients in all manner of business transactions, including risk analysis, contract formation, mergers and acquisitions, and...

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Joseph T. Lasher Complex Commercial Litigation Attorney Bracewell New York, NY
Associate

Joseph Lasher focuses his practice on complex commercial litigation matters and contractual disputes. He advises clients through all phases of the litigation process, including motion practice, trial, and settlement.

Joseph previously served as judicial intern to the Honorable Nanette Laughrey of the U.S. District Court for the Western District of Missouri. He also worked at the Duke Health Justice Clinic as a certified law student, representing clients in disability cases.

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