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Fraud and Other Borrower and Lender Concerns in PPP and Other CARES Act Lending Programs

Proceeds Certification, Loan Forgiveness and Other Triggers: New Federal Oversight, SBA Guidance and FAQs

Recording of a 90-minute premium CLE webinar with Q&A

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Conducted on Wednesday, August 19, 2020

Recorded event now available

or call 1-800-926-7926

This CLE course will examine the regulatory and enforcement framework around emergency COVID-19 loan programs, including the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan Program (EIDL). The panel will discuss actions by borrowers and lenders that can trigger potential liability, the federal enforcement authorities responsible for investigating potential wrongdoing, and best practices for responding to an investigation.


Two primary components of emergency COVID-19 relief legislation are the PPP and EIDL loan programs administered by the Small Business Administration (SBA), which have supported millions of forgivable and low-interest loans to eligible businesses and nonprofits. Lenders and borrowers who participate in these loan programs must comply with numerous rules and restrictions or face potential investigation and enforcement action.

For instance, a small business owner who inflates average monthly payroll costs or employee headcount to qualify for a larger PPP loan or loan forgiveness could face criminal liability under the Small Business Act, the False Claims Act, and other federal fraud statutes. Similarly, a business owner or executive who falsely certifies that a business meets the SBA's applicable size and affiliation rules to qualify for a PPP loan could face criminal liability. Likewise, a lender that fails to monitor for and report suspicious activity connected with emergency loans could face civil and criminal liability under the Bank Secrecy Act.

Loans awarded through the PPP and EIDL fall under the investigative authority of the SBA Office of Inspector General. The CARES Act also established new investigative bodies, including the Special Inspector General for Pandemic Recovery (SIGPR) and the Pandemic Response Accountability Committee (PRAC), responsible for investigating possible fraud and abuse associated with the various federal COVID-19 relief programs. Moreover, anyone who extends or receives financing through a federal COVID-19 relief program should be aware that the U.S. Department of Justice (DOJ) and Federal Bureau of Investigation (FBI) have indicated they will prioritize the investigation and prosecution of all criminal conduct relating to the COVID-19 pandemic.

Listen as our authoritative panel discusses the potential liabilities for borrowers and lenders in applying for or processing PPP and other emergency funding, and the unique pitfalls in applying for loan forgiveness. The panel will also discuss the new investigative bodies created under the CARES Act.



  1. Existing regulatory framework for COVID-19 loan programs--SBA and others
  2. Investigations of SBA loan fraud: potential areas of fraud and abuse
    1. Inflating amount of PPP or other emergency loan funding to which borrower is entitled
    2. Qualification issues--company size and affiliation issues
    3. Permissible use of loan proceeds
    4. Applying for loan forgiveness
    5. SBA Guidance and FAQs
  3. Investigations of Treasury-backed loan and securities fraud: new federal oversight
  4. Interagency COVID-19 investigations


The panel will review these and other noteworthy issues:

  • What are the key areas of potential fraud and abuse under the new COVID-19 loan programs?
  • Who are the relevant investigative bodies, and how might lenders as well as borrowers be investigated?
  • What are best practices for responding to an investigation?
  • What risks do lenders face in connection with their participation in COVID-19 loan programs?


Larson, Christian
Christian Larson

Cadwalader Wickersham & Taft

Mr. Larson's practice focuses on advising corporations and individuals in connection with financial regulations,...  |  Read More

Wharton, Kendra
Kendra L. Wharton

Cadwalader Wickersham & Taft

Ms. Wharton is a member of the Global Litigation Group and the White Collar Defense and Investigations practice. She...  |  Read More

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