The 'paycheck protection' scams

 John Sexton:

Back in December the Secret Service estimate as much as $100 billion worth of COVID relief funds from the Paycheck Protection Program had been stolen by fraudsters. Today NBC News has a story reflecting on the total scope of pandemic fraud. Turns out if you start handing out money with few safeguards, a lot of people will line up to take it.

Many who participated in what prosecutors are calling the largest fraud in American history—the theft of hundreds of billions of dollars in taxpayer money intended to help those harmed by the pandemic — couldn’t resist purchasing luxury automobiles. Also mansions, private jet flights and swanky vacations.

They came into their riches by participating in what experts say is the theft of as much as $80 billion — or about 10 percent — of the $800 billion handed out in a Covid relief plan known as the Paycheck Protection Program. That’s on top of the $90 billion to $400 billion believed to have been stolen from the $900 billion Covid unemployment relief program — at least half taken by international fraudsters — as NBC News reported last year. And another $80 billion potentially pilfered from a separate Covid disaster relief program…

“Nothing like this has ever happened before,” said Matthew Schneider, a former U.S. attorney from Michigan now with Honigman LLP. “It is the biggest fraud in a generation.”

How did it work? PPP was set up to allow businesses to take out loans backed by the government, but in light of the pandemic those loans didn’t have to be paid back so long as the money was spent on legitimate “business expenses” such as payroll. In short order the government gave out $800 billion. Fraudsters looking to grab some of that loot invented companies that didn’t exist or inflated the number of employees they had and skimmed money off the top.

For much of 2020, lenders did little to verify the applications, prosecutors and experts say, in part because Congress required the U.S. Small Business Administration (SBA), which ran the program, to issue explicit guidance that in the interest of getting the money out fast, lenders “will be held harmless for borrowers’ failure to comply with program criteria.” The Government Accountability Office warned of fraud risk, but the program continued under that rule.

“The government spent approximately $800 billion and provided 21 million loans to individuals,” said Haywood Talcove, CEO of Lexis Nexis, which works with the government to verify identities…

“There’s absolutely no security on there. There’s no validation of any information,” Talcove said. “And voila, you have company ABC with 40 employees and a payroll of $10 million. And you go and apply for a PPP loan. It was a piece of cake.”

Some of the fraudsters have been caught. Last July a Texas man was sentenced to 11 years for stealing $24 million from the program....

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A Florida rapper named “Baby Blue” was sentenced to 20 months for a similar scam involving $24 million. He used some of the money to buy himself a Ferrari. Earlier this year three fraudsters in California were arrested in Montenegro for stealing $18 million.

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So far, only about a 100 have been caught.  The FBI should be concentrating on these cases rather than going all out on Biden's daughter's diary that wound up in the hands' of Project Veritas.