The U.S. Department of Justice (DOJ) has accused a reality television personality of stealing millions of dollars from the Paycheck Protection Program (PPP) by using the funds for personal purchases.
The federal program was established to "disperse hundreds of billions of dollars in loans to small businesses to prevent worker furloughs and to pay other expenses as they incur losses due the impacts of the coronavirus pandemic."
A reality show star who owns a company in Georgia, applied for a PPP loan on April 15, 2020. He claimed he needed the loan to cover his alleged monthly payroll of nearly $1.5 million for 107 employees. He received a loan of $2.04 million, which he certified would be used to "retain workers and maintain payroll or make mortgage interest payments, lease payments and utility payments."
However, according to prosecutors, he spent more than $1.5 million of the PPP loan within days of receiving it. He allegedly bought $85,000 worth of jewelry and paid $40,000 in child support.
When interviewed by federal agents, the man claimed that he used the funds to pay employees and cover other expenses for his trucking business. He denied using the money for personal purchases.
Agents searched the man's home and seized around $80,000 in cash; the jewelry allegedly purchased with PPP funds; and a 2019 Rolls-Royce Wraith, as well as $503,000 of PPP funds from three bank accounts. Authorities arrested him on May 13, 2020. Darryl Coote "Reality TV star, Texas engineer charged with coronavirus relief fraud" upi.com (May 14, 2020).
Commentary and Checklist
Federal loan programs, like the PPP, always have qualifications and certifications that those applying for the funds must meet. Misstating those can lead to prosecution, as well as misusing funds received, as in the source article.
Thousands of family-owned businesses, foundations, and other family employers applied for and secured PPP loans. Congress has passed a new Act that may allow for more PPP distributions.
Families must monitor how the funds are spent and have a system of oversight in place at all times to help reduce the risk of fraud.
Here are some ways you can help keep PPP loans and other finances safe:
• Only utilize someone who has the required qualifications and is capable of performing the job duties well. If certification, such as a CPA license, is necessary, ask for evidence of annual renewal to keep on file.
• Implement a systematic policy for auditing financial records that includes routine third party auditing and carry out the policy without fail.
• Train staff on the procedure for reporting suspected wrongdoing and make sure that all reports are handled anonymously and result in a thorough investigation.
• If another member of the staff suspects that your financial manager has acted unethically, investigate the matter right away.
• Routinely check your credit score and investigate possible illegal causes if your score is unjustifiably low.
• If possible, have more than one person manage your finances. If only one person does your accounting or has access to money, make sure that person takes vacations periodically and another person looks over the accounts while he or she is gone.
• Never let one person have total control of your finances without any oversight, no matter who that person is.