10-Year Statute of Impediments Set Up for Paycheck Assurance Program Advance Extortion : (PPP)



The PPP and Bank Fraud Enforcement Harmonization Act of 2022 (HR7352) was signed into law by President Biden on August 5, 2022. This act builds up a 10-year statute of confinement for criminal charges and a respectful requirement against a borrower who locks in extortion with regard to a Paycheck Assurance Program credit. The act was introduced in the House of Representatives as HR7352.

Table of Contents

A short history of PPP

The Paycheck Protection Program (PPP) was formed as part of the CARES Act, which made it possible for the Small Business Administration to offer loans to qualified firms that were adversely affected by the Coronavirus (COVID-19) epidemic.

The loans, which come with a federal guarantee of 100 per cent, are to be utilized for salaries as well as certain other obligations. The Consolidated Appropriations Act of 2021 (CAA, 2021) included the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act), which extends the program until March 31, 2021, and authorizes additional funding for it. The extension of the program’s duration was included in the Economic Aid Act.

The Economic Help Act permitted smaller borrowers to get Second Draw PPP Loans, widened the scope of permissible expenses, expanded the number of charges that were eligible for reimbursement, and expanded the number of companies that could apply for First Draw PPP Loans.

PPP Scam

Throughout the length of the program, more than 8.5 million businesses were eligible to get PPP loans in order to meet payroll expenditures and other costs not related to payroll while the COVID-19 epidemic was in effect. In spite of the fact that many companies benefited from the scheme, dishonest individuals took advantage of it in order to illegally claim payments. In the report that was published in May by the Office of the Inspector General (OIG), it was found that potentially fraudulent PPP loans accounted for over 70,000 loans with a total value of over $4.6 billion.

The Office of the Inspector General found that the Small Business Administration lacked the organizational framework necessary to fight PPP fraud for the entirety of the program’s execution. In addition, the OIG determined that the SBA did not offer adequate instructions to lenders on how to identify, track, address, and resolve possibly fraudulent PPP loans. This was one of the findings of the investigation. Throughout the course of the OIG’s investigation, the SBA formed the Fraud Risk Management Board with the mission of coordinating actions pertaining to the prevention, detection, and resolution of fraud risk.

The necessity of having a statute of limitations of ten years

The legislation’s primary supporter, Democratic Representative Nydia M. Velázquez of New York’s Seventh Congressional District, argued that the 10-year statute of limitations would offer the necessary amount of time to “bring fraudsters to justice.”

The statute of limitations for PPP fraud will be standardized as a result of this piece of legislation. In spite of the fact that they were responsible for only 15% of the total loans, financial technology (fintech) companies and their lending partners were found to be responsible for as much as 75% of PPP loans that were fraudulently connected to the Department of Justice.

This information was brought to light by the House Committee on Small Business. While there is a 10-year statute of limitations for fraud connected to banks, there is a 5-year statute of limitations for fraud related to original loans made through fintech. This Act evens out the playing field and gives law enforcement agencies more time to go after those who commit fraud.

Administrator Isabella Casillas Guzman of the Small Business Administration (SBA) stated that dedicated teams within the SBA are working with the OIG to “track down the people who abused these relief programs so that they can be held accountable… [the] legislation extends the runway for those investigations and the prosecutions they support.”

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