This week, reports emerged that JPMorgan, in an internal memo, stated they’re investigating their own employees for “misusing Paycheck Protection Program loans.” The memo came in the same week that the Department of Justice announced an indictment in its 50th PPP case. Yet, with last week’s preliminary Congressional report identifying 10,856 fraudulent PPP loans totaling more than $1 billion, law enforcement will certainly have their hands full. Which begs the question, could the $1B+ in fraudulent loans have been prevented? Were there any glaring red flags that could have alerted financial institutions?
Some think so...
In fact, an earlier Congressional report identified “red flags linked to another 11,000 loans totaling $2.98 billion and hundreds of approved loan applications missing identifying information, including names and addresses.” More so, a joint investigation by the Miami Herald and the Anti-Corruption Data Collective released this week identified more than 75 PPP recipients that were newly registered and didn’t appear to exist prior to this spring.
Reflecting on the PPP fraud cases to the Miami Herald, a former FBI agent stated, “this is going to be the biggest fraud in government history, the magnitude of which we will not know for many years to come.” While we may not know the full extent of PPP fraud today, the advances made by regulatory technology companies can be leveraged to both investigate current cases and avoid future cases. In the coming weeks, Sigma will be releasing its own analysis of other PPP fraud cases through the lens of the Sigma Terminal. Stay tuned.