November 26, 2022

Volume XII, Number 330

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November 23, 2022

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President Biden Extends Statute of Limitations for PPP and EIDL Fraud to Ten Years

In August, President Biden signed two bills into law that give the Department of Justice and other federal agencies more time to investigate and prosecute Paycheck Protection Program (“PPP”) and COVID-19 Economic Injury Disaster Loan (“EIDL”) cases. H.R. 7352, the “PPP and Bank Fraud Enforcement Harmonization Act of 2022” and H.R. 7334, the “COVID-19 EIDL Fraud Statute of Limitations Act of 2022” extend the statute of limitations for fraud charges involving PPP and EIDL fraud to ten years. Previously, the statute of limitations for these offenses was limited to five years, except in the case of federal bank fraud where the statute of limitations is also ten years. Both bills passed with bipartisan support from Congress and clearly signal that pandemic relief fraud prosecutions and enforcement remain a top priority for the federal government.

In the last two years, as total funding for the relief pandemic programs climbed to over $813 billion, the government unsurprisingly began to see greater numbers of pandemic relief fraud cases almost immediately. In its own analysis, the Small Business Administration’s OIG identified potential fraudulent loans totaling over $4.6 billion and as of December 2021, the OIG’s PPP Fraud Hotline complaints exceeded 54,000. Some estimates put the amount of PPP and EIDL fraud at 10% of the total funds disbursed. As of March 2022, the Department of Justice reported it had charged over 1,000 individuals with criminal charges connected to alleged fraud of over $1 billion. It also reported that investigations of more than 1,800 individuals and entities were underway in connection with more than $6 billion in relief loans.

The longer statute of limitations ultimately gives the Department of Justice and other federal agencies more time to investigate large and more complex PPP and EIDL cases. In fact, a survey of recent cases nationwide suggests that these prosecutions have become more complex and involve greater amounts of fraud and larger numbers of defendants. Importantly, the longer statute of limitations also gives the government time to consider investigations into lenders and other insiders in cases where key individuals may have facilitated fraudulent loans through lax application review procedures. 

In the future, borrowers and others who authorized or facilitated PPP and EIDL loans should be prepared for increased scrutiny and should maintain all loan documentation for at least 10 years from the date the loan was received, used or forgiven, whichever is later. Companies and individuals who received the relief funds should also be proactive and conduct due diligence now, checking to see that the loans were properly received, and the funds were appropriately used.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume XII, Number 249
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About this Author

Kurt R. Erskine Shareholder Polsinelli PC
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Former U.S. Attorney Kurt R. Erskine is an experienced litigator who relies on his decades of experience with the Department of Justice to help health care providers, corporations, organizations and individuals navigate complex government investigations and high-stakes civil and criminal litigation. Kurt has successfully tried dozens of federal jury trials to verdict and handled hundreds of cases during his federal career. 

Kurt focuses his practice on internal and government investigations, white-collar defense and complex litigation with an...

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Adrienne E. Frazior Shareholder Polsinelli PC
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Adrienne Frazior is an experienced trial lawyer with specific experience in health care fraud and government investigations. She delivers practical legal advice in the complicated and constantly evolving health care industry while providing strategic legal, compliance and operational guidance and support to a wide range of health care clients. Before formulating a legal strategy, she works with clients to consider all aspects of an existing or potential dispute, including their legal and business goals. Clients rely on her to help resolve important disputes, whether...

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Ellen H. Persons Government Investigations Attorney Polsinelli Atlanta, GA
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As a former assistant U.S. attorney, Ellen Persons uses her experience to help clients navigate through the complexities of government investigations. Ellen is tenacious and meets challenges head on. She develops innovative, pragmatic, and cost-efficient solutions to her clients' litigation issues. 

Ellen focuses her practice on defending clients against allegations of fraud. She has experience defending companies and executives against qui tam litigation and associated government investigations. She also has experience with internal corporate investigations and corporate legal...

404.253.6048
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