The U.S. Department of Justice has charged four Ohioans, accusing them of participating in a fraud scheme to get $1.4 million in COVID-19 pandemic relief funds.
The DOJ alleges the defendants submitted false Paycheck Protection Program loan applications on behalf of businesses. The U.S. Small Business Administration approved the loans, and prosecutors accuse the defendants of using the money on personal expenses beyond the list of items permitted under program regulations.
The federal government launched the Paycheck Protection Program in 2020 as a response to the COVID-19 pandemic to support small businesses. The program gave funds to eligible small businesses that could support up to eight weeks of payroll, including benefits, and allowed participants to use the money on rent, utilizes or mortgages if needed, according to the Treasury Department.
If convicted, the defendants could face prison, restitution and fines. SBA Administrator Kelly Loeffler said the agency intends to continue its efforts to hold fraudsters accountable.
“The Trump Administration delivered a clear message in Ohio today: if you defraud federal programs at any level, we will find you, and work with law enforcement to hold you accountable,” Loeffler said.
The Justice Department suspended an additional 27,486 pandemic-era borrowers from Ohio, accusing them of being tied to about $1.1 billion in suspected PPP fraud and COVID Economic Injury Disaster Loan activity, according to the Small Business Administration.
Economic Injury Disaster Loan loans, also a form of relief brought in response to the pandemic, are loans coming directly from the SBA designed for small businesses that are struggling to make payments due to a disaster.
They must be paid back in full, but the first payments are deferred for about a year to allow recovery time for the business, according to the SBA. Disaster loans may be used on health care benefit continuation, rent, utilities and fixed debt payments.
This fraud crackdown is part of a larger collaboration between Ohio and the federal government, announced June 4 and spearheaded by the White House Task Force to Eliminate Fraud led by Vice President JD Vance.
“The Justice Department today announced unprecedented federal and state cooperation in Ohio in the fight against fraud, including partnerships and a data sharing agreement to enhance the detection and prosecution of fraud,” the DOJ wrote in a June 4 press release.
Outside of Ohio, the DOJ has suspended additional borrowers they suspect of fraud. As of June 5, there are 6,900 suspensions in Minnesota, 112,000 in California and 1,500 in Maine, according to the SBA.
Reporting intern Lilli Malone can be reached at lmalone@dispatch.com or on Instagram at @lillimwrites.
This article originally appeared on The Columbus Dispatch: DOJ charges four Ohioans with pandemic-era fraud
Reporting by Lilli Malone, Columbus Dispatch / The Columbus Dispatch
USA TODAY Network via Reuters Connect
By Lilli Malone, Columbus Dispatch | USA TODAY Network
