Growing evidence suggests that the self-certification vetting process created an聽opportunity for people to take advantage聽of the program鈥檚 open-door design, the聽report says.

The SBA鈥檚 inspector general found 鈥渢ens of聽thousands鈥� of companies that received聽PPP loans when they were ineligible, the聽report says. This could include聽corporations created after the pandemic聽arrived, businesses that had more than聽500 employees and companies that owe the federal government money, hence are named in a do-not-pay database.

Some eligible companies may聽have received more than they should have.

The FBI has opened several hundred PPP-related investigations that involve almost聽500 suspects and hundreds of millions of聽dollars, the report says. The U.S. Justice聽Department already has charged 73聽defendants in fraud cases related to PPP.

The Treasury Department in September received 2,495 suspicious-activity reports involving business loans from banks and other聽depository institutions, more than the total for any year dating back聽to 2014, according to public data.

Many other PPP loans are falling into a gray area in which聽businesses received one despite seeing revenue increase during the聽pandemic.聽Prosecutors are probing some of those cases聽but finding聽it difficult to bring charges, in part because Congress set a low bar聽for obtaining the funds, according to law enforcement officials聽familiar with the matter.

Prosecutors face hurdles in proving business owners lied when聽they said they needed money in the pandemic鈥檚 chaotic early days鈥攅ven if profits kept coming in later, officials said.

Today鈥檚 scams, however, are sophisticated frauds that cost American businesses and individuals billions of dollars a year, federal investigators say.

Estimated losses have soared in recent years from scams known as business-email compromises, in which swindlers con victims into directing money into accounts controlled by criminals. In 2019, the Federal Bureau of Investigation received 23,775 complaints of business-email and email-account compromises, up from 20,373 the prior year.

Annual estimated losses increased too, rising from $1.2 billion in 2018 to more than $1.7 billion in 2019, the FBI said.

鈥淣ow the actors involved are a lot more sophisticated, and share intelligence and organized networks,鈥� said Michael Driscoll, special agent in charge of the cyber-and-counterintelligence division of the FBI鈥檚 New York office.

Business-email scams first appeared on the bureau鈥檚 radar about a decade ago. Back then, the scams tended to be relatively simple, designed to imitate an email from a chief executive asking an employee to transfer money.
Over the years, the scams shifted.

Perpetrators targeted personal email addresses in 2014, pretended to be lawyers in 2015, then moved on to requests for tax information and targeting real-estate transactions.

One new iteration, federal officials said, involves fake requests to divert payroll funds. In this scam, someone in a business鈥檚 payroll or human-resources department receives an email purporting to be from an employee. The email asks to update direct-deposit information for that pay period, which then goes into an account controlled by a swindler.

The scams also have shifted from using spoofed emails, often sent from an address similar to one within the company, to the actual hacking of accounts, said an attorney who represents victims of the scheme.

鈥淭he email gets hacked, and the bad guys can step into the email threads,鈥� said the attorney and former cybercrime prosecutor. 鈥淭his is no longer a situation where some person who wasn鈥檛 paying close attention got duped.鈥�

Source: Wall Street Journal