Michael E. Horowitz, Chair of the Pandemic Response Accountability Committee (PRAC), heralded last week’s Senate passage of legislation that extends the statute of limitations for Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loan (EIDL) fraud from 5 to 10 years. The legislation passed the House of Representatives on June 8, 2022. Chair Horowitz had called for passage of both bills earlier this year in separate testimony before the House and the Senate. The legislation now goes to President Biden to sign.
“Holding wrongdoers accountable is central to the PRAC’s mission and extending the statute of limitations for pandemic-related fraud recognizes the magnitude of the fraud that we are investigating and the complexity of these cases. Enactment of these laws will allow our investigators more time to pursue those who defrauded programs intended to assist small business owners and their employees during a national crisis,” Chair Horowitz said. “We’ll continue to work with our partners, like the Small Business Administration Office of Inspector General, to pursue every dollar stolen from relief programs.”
The PRAC’s efforts to fight fraud in pandemic-related spending would be further enhanced by Congress’ passage of the Administrative False Claims Act of 2021, S.2429. The bipartisan bill would help Inspectors General (IGs) recover stolen tax dollars for taxpayers by raising the jurisdictional limit for administrative recoveries of “smaller” false or fraudulent claims against the government from $150,000 to $1 million. The bill was introduced by Senate Judiciary Committee Chairman Dick Durbin and Ranking Member Chuck Grassley and is currently pending on the Senate floor.
“The PRAC is committed to using all the tools that IGs have available to hold wrongdoers accountable—including criminal, civil, and administrative actions,” said Chair Horowitz. “I am hopeful that the Senate will pass this legislation, and that the House will consider similar legislation to give watchdogs additional flexibility we need to recover stolen tax dollars, including fraudulently obtained pandemic relief money.”
More about the legislation
H.R. 7352, or the PPP and Bank Fraud Enforcement Harmonization Act of 2022, amends the Small Business Act to extend the statute of limitations for fraud by borrowers under the Paycheck Protection Program. H.R. 7334, or the COVID–19 EIDL Fraud Statute of Limitations Act of 2022, extends the statute of limitations for fraud by borrowers under certain COVID–19 economic injury disaster loan programs of the Small Business Administration.
The 10-year statute of limitations is consistent with that for bank fraud, which has been charged in most cases of alleged PPP fraud because most loans were issued by traditional banks. However, many loans were issued by nonbanks, or fintechs. These cases could only be prosecuted as wire fraud, which has a statute of limitations of five years. Now, regardless of the type of lender, watchdogs will have ten years to pursue fraud in small business relief programs.
Currently, the oversight community has more than 650 active investigations into PPP and EIDL loan fraud. To date, OIG investigations have resulted in more than 700 indictments in cases of PPP and EIDL loan fraud, with total charged losses of more than $1.2 billion.
S. 2429, or the Administrative False Claims Act of 2021, raises the maximum amount of a fraud claim that may be handled administratively from $150,000 to $1 million, allows responsibilities in the administrative process assigned to the Attorney General or an Assistant Attorney General to be delegated to other Department of Justice employees, and allows the government to recoup costs for investigating and prosecuting these fraud claims.
To date, the PRAC is aware of more than one million pandemic relief awards worth $362 billion, that ranged from $150,000 to $1 million. While the scope of the fraud for these “smaller” awards has not yet been fully determined, the legislation would ensure that investigators could pursue them regardless of the dollar amounts involved.
Learn more:
- See how the Department of Justice and PRAC partners work together to find and charge pandemic fraudsters in our biggest fraud cases.
- The PRAC’s Fraud Task Force works in step with the PACE, our advanced data analytics platform, to fight pandemic relief fraud.
###
The PRAC was established by the CARES Act to promote transparency and support independent oversight of the funds provided by the CARES Act and other related emergency spending bills. In addition to its coordination and oversight responsibilities, the PRAC is tasked with supporting efforts to “prevent and detect fraud, waste, abuse, and mismanagement [and] mitigate major risks that cut across program and agency boundaries.”
If you have additional questions, please contact Lisa Reijula at lisa.reijula@cigie.gov