Chairwoman Velázquez, Ranking Member Luetkemeyer Introduce Bills to Extend Statute of Limitations on COVID Small Business Fraud Cases
Washington, April 1, 2022
Washington, D.C.— Today, House Small Business Committee Chairwoman Nydia M. Velázquez (D-NY) and Ranking Member Blaine Luetkemeyer (R-MO) introduced two pieces of legislation to extend the statute of limitations for certain fraud cases involving the Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loan (EIDL) program.
“Fraudsters that obtained PPP and EIDL loans abused taxpayer funds and took money away from small businesses when they needed relief the most. Anyone that took advantage of a once-in-a-lifetime crisis to line their own pockets with fraudulent loans must be held accountable,” said Chairwoman Velázquez. “These bills will provide the Department of Justice and state and local law enforcement agencies with the time they need to investigate and prosecute these cases.”
“A core function of this committee is to provide ample oversight over the SBA’s management of emergency relief loan programs. The ongoing fraud and abuse of emergency relief funds by bad actors deserves the time and resources to accurately highlight,” said Ranking Member Luetkemeyer. “This bill does just that. Extending the statutes of limitations from five to ten years gives the time investigators need.”
SBA’s Office of Inspector General has identified 70,835 loans totaling over $4.6 billion in potentially fraudulent PPP loans. Recent reports have found that financial technology (fintech) companies and their lending partners handled 75 percent of PPP loans connected to fraud by the Department of Justice, despite facilitating only 15 percent of the loans overall. During his March State of the Union Address, President Biden announced the appointment of a DOJ Special Prosecutor for COVID-19 Pandemic Fraud as part of an ongoing Administration-wide effort to punish pandemic-related fraud.
One of the biggest challenges identified in prosecuting PPP fraud is the discrepancy in the statute of limitations governing bank-originated and Fintech-originated PPP fraud. Most bank-originated PPP fraud is being prosecuted as bank fraud, which has a 10-year statute of limitations. At the same time, fintech originated loans are prosecuted as wire fraud which carries a 5-year statute of limitations. The PPP and Bank Fraud Enforcement Harmonization Act would establish a 10-year statute of limitations for all PPP fraud, consistent with that for bank fraud.
The second bill, the COVID-19 EIDL Fraud Statute of Limitations Act of 2022, would establish a 10-year statute of limitations for fraud cases involving COVID-19 EIDL loans, EIDL Advances, and Targeted EIDL Advances.