A new report from the Government Accountability Office on June 25 found that in a rush to disburse funds, the Small Business Administration (SBA) allowed private lenders to “rely on borrower certifications,” to determine their eligibility for loans.

After the first $349 billion in PPP loans was depleted in under two weeks, the requirements to apply were loosened by the SBA.

Because the underwriting from lenders was then “limited to actions such as confirming receipt of borrower certifications and supporting payroll documentation” the program has been “susceptible to fraudulent applications,” according to the GAO.

The SBA has promised to review loans greater than $2 million but has not said -- as of June 15 -- how it would go about doing those reviews.

As of June 16, the FBI was already investigating more than $42 million in fraudulent loans from the program.

Meanwhile, all across the US, law enforcement is making arrests against those suspected of defrauding the PPP program. According to CRN, nearly a dozen people were arrested for crimes related to coronavirus relief funds as of their June 24 report. In one early case, a businessman who was charged over an attempt at fraud of hundreds of thousands of dollars in May apparently cut off his GPS monitoring device and has gone missing.

Some examples of arrests that have been widely reported or announced by various law enforcement agencies include:

• In Massachusetts, a CEO of an IT company was charged by the Department of Justice (DoJ) for submitting fraudulent applications for $13 million in relief loans. He allegedly lied about the number of people he employs and about payroll expenses, among other things.

• Another owner of several IT companies allegedly tried to defraud the lender of $441,138, the DoJ announced on June 16.

• An owner of a Texas-based wedding planning company allegedly lied about having 120 employees when he didn’t actually have any in an apparent attempt to defraud $3 million, Dallas News reported on June 23.
• A reality TV star was indicted by a grand jury on June 24 for misusing funds for his trucking business to lease a Rolls Royce and buy jewelry.
• A Virginia couple was arrested at the airport en route to Poland after allegedly filing 18 loan applications. Four were successful and through them the couple raked in more than $1.4 million, the Associated Press reported on June 24.
• Another June 24 case involved a body shop owner in California who misled lenders for about $1.7 million.
• On the 30th, charges were announced against a Seattle-based doctor who “fraudulently sought over $3 million from in Payment Protection Program loans.” Yet again, employees numbers and payroll expenses were misrepresented.