In a recent Mercury News article by Leonardo Castañeda entitled “A Lafayette Youth Baseball League Supposedly Got a $5 Million PPP Loan. Here’s What Really Happened,” Christopher M. Ferguson discussed the issue of fraudulent loans issued under the federal Paycheck Protection Program during the COVID-19 pandemic.
Excerpts from the article are below:
Those kinds of cases are likely to keep coming to light, said Christopher Ferguson, an attorney who specializes in white-collar crime with Kostelanetz & Fink in New York, but they’re hard for outside observers to spot without access to documents such as confidential IRS payroll records.
Based on the public data there could be warning signs if, for example, a company received a large loan despite having just a handful of employees, he said. “Another huge red flag is if a company suddenly just came into existence at or about the time of the loan application,” Ferguson said.
“You never know, there could be legitimate reasons for all of that, but those are the sorts of things that look like potential red flags without knowing more,” Ferguson said, adding that it was hard to comment on specific companies without significantly more information than what is publicly available.
Even outright fraud cases might take years to adjudicate. Ferguson pointed to the 2008 Troubled Asset Relief Program, which funneled billions of dollars to troubled financial institutions during the Great Recession. One fraud case that grew out of that program just concluded earlier this year, when the defendant was sentenced. “That just gives you an example,” Ferguson said. “Ten years later, there are still cases being adjudicated from TARP fraud.”
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