In August, President Biden signed two bills into law that give the Department of Justice and other federal agencies more time to investigate and prosecute Paycheck Protection Program (“PPP”) and COVID-19 Economic Injury Disaster Loan (“EIDL”) cases. H.R. 7352, the “PPP and Bank Fraud Enforcement Harmonization Act of 2022” and H.R. 7334, the “COVID-19 EIDL Fraud Statute of Limitations Act of 2022” extend the statute of limitations for fraud charges involving PPP and EIDL fraud to ten years. Previously, the statute of limitations for these offenses was limited to five years, except in the case of federal bank fraud where the statute of limitations is also ten years. Both bills passed with bipartisan support from Congress and clearly signal that pandemic relief fraud prosecutions and enforcement remain a top priority for the federal government.

In the last two years, as total funding for the relief pandemic programs climbed to over $813 billion, the government unsurprisingly began to see greater numbers of pandemic relief fraud cases almost immediately. In its own analysis, the Small Business Administration’s OIG identified potential fraudulent loans totaling over $4.6 billion and as of December 2021, the OIG’s PPP Fraud Hotline complaints exceeded 54,000. Some estimates put the amount of PPP and EIDL fraud at 10% of the total funds disbursed. As of March 2022, the Department of Justice reported it had charged over 1,000 individuals with criminal charges connected to alleged fraud of over $1 billion. It also reported that investigations of more than 1,800 individuals and entities were underway in connection with more than $6 billion in relief loans.

The longer statute of limitations ultimately gives the Department of Justice and other federal agencies more time to investigate large and more complex PPP and EIDL cases. In fact, a survey of recent cases nationwide suggests that these prosecutions have become more complex and involve greater amounts of fraud and larger numbers of defendants. Importantly, the longer statute of limitations also gives the government time to consider investigations into lenders and other insiders in cases where key individuals may have facilitated fraudulent loans through lax application review procedures. 

In the future, borrowers and others who authorized or facilitated PPP and EIDL loans should be prepared for increased scrutiny and should maintain all loan documentation for at least 10 years from the date the loan was received, used or forgiven, whichever is later. Companies and individuals who received the relief funds should also be proactive and conduct due diligence now, checking to see that the loans were properly received, and the funds were appropriately used.