TARP & Federal Stimulus Fraud
The United States has seen two economic crises in the past 15 years—the collapse of the banking system in the Great Recession, beginning in 2008, and the COVID-19 crisis and resulting lockdowns, which tanked the economy beginning in 2020. To respond to these crises, the federal government passed various bailout packages to prop up the economy, beginning with the Troubled Asset Relief Program (TARP) and continuing into the 2020s with the Payroll Protection Program (PPP).
Both programs are vulnerable to abuse and exploitation. Fraudsters have not only applied for bailout funds when they did not qualify for them, but they have squandered the moneys disbursed in illegal ways. In all, fraud in both programs likely exceeds $100 million—and likely several times more.
If you have evidence of TARP or federal stimulus fraud, please contact Stacey Evans Law today. We fight abuse of governmental programs and can help you blow the whistle on this illegal activity.
TARP Fraud
Due to overly lenient mortgage lending, many financial institutions were on the verge of collapse during 2008 as mortgage defaults piled up and the economy entered a vicious negative cycle. Financial institutions had bundled mortgages and sold them as securities, which worked great as housing prices rose. But when the economy turned south, defaults piled up and these mortgage-back securities became practically worthless.
Through TARP, the government bought these securities to clear them from a financial institution’s balance sheets. Later, the government gained the power to purchase equity in financial institutions to improve their liquidity.
TARP was rife with the potential for fraud, with financial institutions misstating the value of mortgages and/or other liabilities to qualify for funds. Some institutions also shifted assets around to meet various qualifications.
Covid-19: Paycheck Protection Program
The government responded to the COVID-19 pandemic with a variety of stimulus programs, perhaps the most important of which was the Paycheck Protection Program, or PPP. This program allowed businesses, nonprofits, and self-employed workers to obtain low-interest loans to cover payroll and related expenses for the duration of the pandemic. In many cases, loans were forgiven if the business stayed open.
There are many examples of PPP fraud, including:
- Falsely claiming that the company employed fewer than 500 employees. Larger employers did not qualify for the program.
- Stealing another person’s identity to apply for a PPP loan.
- Misstating payroll costs to obtain a larger loan.
- Failing to disclose if employees left the company, which would reduce payroll.
- Using funds for something other than payroll or a qualified expense.
- “Stacking” loans by obtaining multiple loans from several private banks.
According to the New York Times, about 15% of PPP loans were probably fraudulent. And the Department of Justice brought many cases over the past couple years for fraud.
Suspect Fraud? Contact Our Firm Today
One of our Atlanta TARP and federal stimulus fraud attorneys can meet to review what you know. If you report the fraud, you might end up receiving a portion of the amount the government recovers from the scammer—sometimes up to 30% of the amount. Call us today to schedule a confidential consultation call.
