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DOJ Turns Its Attention to Lenders in PPP Loan Fraud Investigations

While the DOJ has primarily focused its efforts on prosecuting the end recipients of PPP loan relief, the government seems to be shifting its focus to lenders of the government-funded relief. In its investigations of lenders, the DOJ is more likely to focus on how the lender aided or facilitated the fraud, such as falsifying tax returns, or if the lender did not act in good faith in originating the loan. 

As the government continues investigating and prosecuting PPP borrowers — viewed as low-hanging fruit where much of the fraud is egregious and easily detectable — it is likely to increasingly pursue both banks and other nontraditional lenders where a case can be made that the lender either failed to comply with its Bank Secrecy Act and anti-money laundering obligations, or turned a blind eye to suspicious PPP loan applications.

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covid-19, litigation, white collar, insights, clapp_hannah