On March 2, 2023, the White House announced that President Biden intends to ask Congress for $1.6 Billion to combat ongoing fraud related to COVID relief programs, referred to as “pandemic fraud.” This comes in the wake of “historic” levels of fraud that occurred during the COVID-19 pandemic, the full extent of which is still not fully known. In the White House’s announcement, it notes that the requested $1.6 Billion will be for President Biden’s three-part Pandemic Anti-Fraud proposal. These three parts aim at prosecuting those who committed pandemic fraud, investing in fraud prevention, and investing in procedures to protect individuals from identity theft. Thus, it is becoming evident that the federal government is beginning to seriously crackdown on pandemic fraud. Below, PilieroMazza summarizes how these developments can impact small business government contractors…

Impact on Government Contractors

This proposed major investment into investigation and prosecution indicates the federal government’s serious commitment to combatting pandemic fraud. Congress already extended the statute of limitations to prosecute PPP and EIDL fraud to ten years, and with this additional cash investment, SBA would have the resources to pursue pandemic fraud claims for the full ten-year period. This coincides with PilieroMazza’s previous prediction that SBA COVID relief program borrowers will face ongoing fraud allegations, as now the SBA will have the resources to fully investigate any loan it deems potentially fraudulent.

We have also begun to see a wave of PPP loan forgiveness applications get denied based on the borrower’s eligibility, rather than a simple miscalculation in their loan forgiveness. With these increased denials, there is a heightened risk for False Claims Act (FCA) violations as anyone who requests money from the federal government knowing they are ineligible for that payment can give rise to FCA liability. With that in mind, the SBA will now have the resources to fully investigate this wave of denials to determine whether these loan forgiveness claims were fraudulent. This can lead to an increase in investigations, audits, and even fraud allegations… Read the full article here.