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DOJ investigating possible fraud in small business relief program

DOJ investigating possible fraud in small business relief program
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The Department of Justice (DOJ) is investigating potential fraud in the federal small-business coronavirus relief program, among other assistance funds, a top official told The Wall Street Journal on Tuesday.  

Assistant Attorney General Brian A. Benczkowski said in an interview with the newspaper that the department is examining people and businesses, including those that received funding from the Small Business Administration's (SBA) $660 billion Paycheck Protection Program (PPP). He said the department “has a lot of leads and there are multiple ongoing investigations of individuals and small businesses.”

DOJ prosecutors will also look into banks that were responsible for distributing funds, he said, adding that loan programs run by the Federal Reserve and partly financially supported by the Treasury Department will also be investigated.

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“Whenever there is lending like this, there is always a high likelihood or high possibility of bank fraud and other types of fraud,” he told the Journal.

Benczkowski said the DOJ will look for anomalies in the application data. Other submitted data will help the department see if recipients retained or rehired 75 percent of their workforce. If they didn’t, they will have to pay the loans back.

“Being able to gather the data and analyze it in ways that provide you with leads is the only way to go at this as quickly as we can, with our goal being that we want to bring some cases early to send a strong deterrent signal,” Benczkowski told the Journal.

A federal criminal complaint unsealed Tuesday accuses two men of claiming to have dozens of employees to get a PPP loan when they had no workers.

David A. Staveley, also known as Kurt D. Sanborn, and David Butziger were charged with conspiracy to make false statements to influence the SBA and conspiracy to commit bank fraud in the District of Rhode Island. Staveley was also charged with aggravated identity theft, and Butziger was accused of bank fraud. 

Together, they are suspected of working to get $543,959 in forgivable loans, officials said.