Charges against 14 people in a $53 million Payroll Protection Program fraud scheme are the latest in a slew of cases federal prosecutors in Texas are pursuing against business owners who took advantage of the federal government’s pandemic relief program.
What was PPP?
The Paycheck Protection Program was an $800 billion emergency loan program created in March 2020 – the height of the pandemic – as part of the nation’s $2 trillion Coronavirus Aid, Relief and Economic Security Act. The Trump administration signed the CARES Act into law in March 2020 and the government quickly began distributing money the following month.
PPP provided forgivable loans to help businesses maintain payrolls, hire back laid-off employees and cover overhead costs.
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Juan Gonzalez, U.S. attorney in the Southern District of Florida, told NBC News that the Trump administration knew bad actors would slip through the cracks in an application process made intentionally simple.
“Some fraud is inevitable. That’s the price that the government was willing to pay to get the money as quickly as possible into the hands of those that really needed it,” Gonzalez said.
How has fraud been involved?
The easy application process, with little vetting tied to it, effectively invited business owners to apply for the money. In extreme cases, recipients used the loan proceeds to buy sports cars and fancy homes, rather than to retain employees.
In 2021, Dinesh Sah, 55, of Coppell, was sentenced to 11 years in prison after he applied for a $24.8 million PPP loan and received over $17 million. He applied using 15 businesses, many of which did not have employees and were registered after the CARES Act was passed.
Prosecutors said Sah used the money to buy homes in Texas, pay off mortgages for his homes in California and purchase a Bentley convertible, a Corvette Stingray and a Porsche Macan. He was forced to pay nearly $17.3 million in restitution, forfeit eight homes, six cars and more than $9 million.
