IRS CI Continues to Target PPP and ERC Loan Applicants and Recipients in 2023

In June 2023, the U.S. Small Business Administration’s Office of Inspector General released a report in which it concluded that “at least 17 percent of all COVID-19 EIDL and PPP funds were disbursed to potentially fraudulent actors.” This means that more than $200 billion in COVID-19 relief funds went to individuals and businesses that didn’t qualify to receive them.

Fraud under the Internal Revenue Service’s (IRS) Employee Retention Credit (ERC) program has proven to be a significant source of loss for the federal government as well. The New York Times published an article calling the ERC a “magnet for fraud,” noting that while the IRS does not yet know how many ERC refunds were fraudulent, it has paid $152 billion in refunds after the Congressional Budget Office initially estimated that the program would cost just $55 billion.

Due to the scope of the fraud perpetrated under the Paycheck Protection Program (PPP) and ERC, the IRS’ Criminal Investigation Division (IRS CI) is continuing to aggressively target fraud under these programs.

IRS CI Investigations Targeting PPP and ERC Fraud

This is evident from IRS CI’s press releases. IRS CI publishes press releases announcing investigations and charges almost daily and often publishes a dozen or more in a single day. If you scroll the list, you will see that a significant portion of IRS CI’s efforts are currently devoted to uncovering PPP and ERC fraud. IRS CI is targeting both taxpayers and tax preparers, and it is targeting individuals and businesses that both successfully and unsuccessfully applied for PPP loans and ERC refunds.

Here are a few of the most recent examples:

• On June 30, IRS CI announced the conviction of a woman who was found guilty of making false statements in order to obtain $10 million in PPP loans. She was convicted of making false statements designed to influence a bank, money laundering and contempt after the jury found that she submitted eight fraudulent PPP loans by claiming that her company with no employees had $4.7 million in monthly payroll expenses.
• On July 3, IRS CI announced that a police officer has pleaded guilty to wire fraud in connection with the submission of a fraudulent PPP loan application. Wire fraud carries up to 20 years in federal prison. According to IRS CI, the police officer submitted a fraudulent PPP loan application on behalf of a business he owned, falsely claiming that the business had payroll expenses that qualified for a $125,579 PPP loan.
• On July 6, IRS CI announced that two women had pleaded guilty to conspiracy to commit wire fraud for their role in an operation that sought to obtain multiple fraudulent PPP loans. Conspiracy to commit wire fraud also carries up to 20 years in federal prison.

Contact Boston PPP and ERC Fraud Lawyer Kevin E. Thorn

Kevin E. Thorn, Managing Partner of Thorn Law Group, represents individuals and businesses in IRS CI matters, including PPP and ERC fraud investigations. If you would like to speak with Mr. Thorn in confidence, please call 617-692-2989 or request an appointment online today.