The FBI and Justice Department are reportedly ramping up investigations and prosecutions of companies believed to have fraudulently obtained Paycheck Protection Program loans during the pandemic. 

The PPP program allowed smaller senior living, skilled nursing operators and other businesses with fewer than 500 employees as of Feb. 15, 2020, to tap into a bailout fund to pay bills and keep workers on the payroll. The companies were eligible for forgivable loans up to $10 million.

Applications to the program ended May 31, 2021, with loan authorizations continuing through June 30 of that year. The federal government spent billions of dollars on the loan forgiveness program, and at least 130 senior living operators were estimated to have taken advantage of it as of June 2020.

The Small Business Administration inspector general, however, “estimates that 17% of PPP loans were distributed to businesses and individuals who committed fraud. Thousands of investigations have been opened across the country targeting COVID-19 related fraud,” attorney Bradly Stephen of Dinsmore & Shohl LLP wrote in an article featured in The National Law Review. “The DOJ has brought criminal charges against hundreds of individuals, and many more criminal cases are coming.”

In January, for example, the owner of an assisted living community was sentenced to two years in federal prison in a plea deal for fraudulently obtaining more than $1 million in PPP that he was said to have used for personal gain, in addition to other charges.

Investigators are not limited to healthcare-related businesses.

In February, 11 individuals from Missouri, Kansas, Texas and Washington were indicted for submitting false and fraudulent applications for PPP loans from February 2021 to July 2022.

“The conspiracy allegedly caused more than $220,000 in fraudulent PPP loans to be issued to ineligible borrowers, most of which were forgiven even though the funds were not used for the purposes specified in the PPP,” according to the Justice Department. 

Stephen said the investigations are expected to continue for some time.

“The end is nowhere in sight for recipients of PPP loans, because Congress increased the statute of limitations for prosecution of PPP fraud to 10 years,” he said. 

“Finally, the government has indicated that it will even look to investigate instances of fraud regarding PPP loans that have already been forgiven,” Stephen added