Medallion Malicki, a defense
attorney with Richards Carrington,
welcome on the business Free
Thank you so much for having me
Ryan. It's a pleasure to be here.
Good to have you, but now you work
for a leading litigation firm.
I'm hearing there are mounting cases
by the Department of Justice and
other federal agencies concerning
paycheck protection program. PPP fraud.
According to the folks over at the
project on government oversight,
there is over 189 billion
in questionable PPP loans,
not all of which may be fraudulent.
But clearly indicating there may have
been substantial abuse of the system and
inadequate controls by the federal Gov.
What insights can you share?
And who is the Department of Justice and
other federal agencies exactly target?
And that's a great question.
I think the thing that to keep in mind is
with this amount of money up for grabs.
You know restrictions and oversight
and the eligibility requirements
being pretty easy to meet,
you know it was a prime target for
fraud out the gate, and you know when
we're looking between organizations
like the Treasury versus the DOJ,
there's different things
that they're looking for.
So the Treasury, for example,
are doing $2,000,000 or more are
kind of that red flag to audit,
whereas the DOJ is going after
any an everybody.
Whether you're an individual or
a smaller company, a larger one.
And I think they have to take that
aggressive approach at this point.
Given the vast amount of fraud.
And so I think it's you know
keeping keeping in mind, excuse me,
just at that Gray area,
and whether you're going to be
prosecuted criminally or if there's
going to be some kind of civil
repercussions for engaging in fraud.
Very interesting with over 18
million paycheck protection program
loans and pandemic related economic
injury disaster loans and advanced
grants approved over the last year.
Combined, by the way to
exceed over $950 billion.
These programs have been crucial
to our economic stabilization as
a country as well as a linchpin
for our recovery going forward.
A lot of organizations will be
seeking PPP loan forgiveness
that is allowed for things like
payroll and retention of employees,
print etc, which also requires
certification of compliance.
Tell us more about that and
what pitfalls should businesses
and organizations of awake.
I think a lot of it rain is going to
be that kind of common sense approach.
If you are asking for a loan that you're
saying is going to go towards your
company and your expenses you know don't
be that guy that's buying a Lamborghini
and not paying your employees, I think
that's going to really cause a commotion.
But more importantly,
just making sure your finances are
in order if you are going to make
those types of certifications,
it should not be a guessing game,
and so if you do have CEOs or
accountants or financial professionals
really leaning in and trusting those
people to make sure that if you
are going to apply for that loan.
And certify that to get that loan forgiveness
that you're going about it the right way.
That those eyes across those Tees
I hear ya Dahlia now the Justice
Department has brought criminal charges
against at least 209 individuals in
119 cases across the country related
to the Paycheck Protection program.
The April project on Government Oversight
report goes on to indicate law enforcement.
Insiders are saying many more pandemic
loan fraud cases will be brought
forth in the months and years ahead.
You've noted to me that PPP.
Fraud can be both intentional
and unintentional.
First, what steps can people take
to verify they operate within
the law and ethical guardrooms?
I'm, you know, a couple pointers.
I would say the first thing is reviewing.
That good faith certification and making
sure that it's up to par is crucial.
I think having your pre application
finances in order in a place that is
organized clear and concise about what
the status of your organization or
company was before COVID hit is crucial.
You know somebody comes back
and asks you for those receipts,
whether it's the SBA or the DOJ.
You know having that information
on hand is extremely important.
One other thing that might be
beneficial in terms of avoiding.
You know impropriety or looking like
you're double dipping in terms of the
tax front is a lot of organizations
are setting up a separate bank account
just for that PPP loan to go into,
and that way if you have expenses
that are necessary or stemming
from that need for the loan,
you can withdraw and show documentation that
the money is coming from that account only,
and you're not commingling the
finances and so you know if
you're doing measures like that,
that might be able to help,
and also avoiding fraudsters there's a
lot of people proactively contacting
small businesses and saying, hey,
give me your sensitive information.
And so just making sure that you're
smart about who you're giving
information to and where you're
getting that loan money from.
Yeah, and I gotta,
I gotta ask because I believe there's
a lot of folks that are probably or
will probably be thinking about.
How can small businesses and
individuals who are owners out
there taking advantage of this
PPP money protect themselves?
Should they be subjected
to a fraud investigation?
You know, if you're at the point
where you're being investigated or
there are charges pending against you,
the most important thing you can
do is not sit back and hope that
the DOJ is going to go away.
'cause that's not going to be the case.
I think hiring federal defense
counsel immediately to be, you know,
your guidance through the process
is really important and also
taking a proactive approach.
I think a lot of these agencies,
if you can establish that
you're not engaging in fraud,
that you have the documentation to support
that and you approach them with that.
With the advice of counsel.
Course I think that's going to go a
long way to either make it so you're
not being charged with anything,
or to show that you didn't have that intent,
which may convert it to a civil situation.
But I think the more you can do to
protect yourself on the upfront,
and rather than having to be on the
defensive is a good strategy to take.
Going to be so fascinating
to see how this all takes
shape and develops in the months and
years ahead.
So so important for people as you say,
to not only be proactive,
but if they need it,
seek appropriate Council medallion.
Maliki with Richards Carrington,
thank you for joining us.
Thank you so much
for having me.