PPP fraud enforcement driven by data analytics, top DOJ official says

Federal investigators have identified hundreds of people suspected of illegally obtaining Payroll Protection Program loans designed to help businesses struggling amid the coronavirus pandemic, U.S. Justice Department officials said Thursday, while pledging to aggressively prosecute fraud against the government relief program.

“The amount of fraud that we’ve uncovered to date and that we’ve prosecuted to date is significant. The amount of fraud that we’re currently investigating and anticipate charging in the future is also significant,” Brian Rabbitt, the acting head of the Justice Department’s criminal division, said. “And, given what we’ve seen so far, we believe there’s an additional set of fraudulent activity out there that we intend to continue pursuing.”

Rabbitt’s remarks came as the Justice Department announced that, as of Thursday, its criminal division had charged 57 people with fraudulently seeking to steal more than a combined $175 million in loans through the Payroll Protection Program, or PPP, an initiative passed as part of the Cares Act that authorized government-backed loans to help businesses through the slowdown brought on by the coronavirus outbreak. He predicted “plenty of work” in the months ahead.

Rabbitt, who previously served as Attorney General William Barr’s chief of staff, said the criminal division fraud section has used data analytics to bring a flurry of fraud cases within months of the relief program’s launch. Financial companies have also assisted the Justice Department by detecting potential fraud and freezing accounts.

“To bring these cases as quickly as we have, and to sort through the volume of loans made by the [Small Business Administration], the fraud section and its partners deployed the first-in-class data analytics capabilities they have developed and employed to great effect in other criminal investigative areas, such as health care fraud and market manipulation,” he said.

At a press conference, John Jimenez, a deputy assistant FBI director, said the bureau had “identified nearly 500 PPP-related subjects—individuals we believe have fraudulently requested or received hundreds of millions of dollars in Cares Act stimulus funds.”

Rabbitt highlighted the recent arrests of two people in Miami accused of participating in a ring that attempted to steal $24 million in coronavirus relief funds. He noted also that, just hours earlier, indictments had been unsealed against seven other people charged with taking part in a criminal ring that sought to steal and launder hundreds of thousands of dollars in PPP funds.

“The involvement of these rings is unsurprising, but it’s particularly troubling to us here at the department, and we will be focusing on these types of cases going forward,” Rabbitt said.

Rabbitt said the Justice Department would also add to a string of recent cases against individuals who, acting on their own, represented that they needed PPP funds to pay bills or employees, but then used the relief money to purchase “splashy luxury items for themselves.” Indeed, in several cases, the Justice Department has accused individuals of spending their coronavirus relief funds on sports cars, diamond jewelry and home renovations, even trips to Las Vegas.

In July, for instance, a Florida man was charged with obtaining nearly $4 million in PPP funds and purchasing a Lamborghini for more than $300,000. At the time of the man’s arrest, authorities seized the $318,000 car and $3.4 million from bank accounts.

“PPP funds … were intended to help keep American businesses afloat. They were intended to help ordinary, everyday Americans pay their bills and put food on the table,” Rabbitt said.

“I can assure you they were not intended to help support fraudsters’ dreams of owning Lamborghinis, Rolls Royces, Range Rovers, or diamonds.”

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