Miami trial attorneys anticipate the influx of PPP fraud cases as the second round of lending begins


The federal government has launched its second round of the paycheck protection program to distribute approximately $ 284 billion in loans to small business applicants.

And Brian H. Bieber, a stockholder in Miami-based GrayRobinson who specializes in criminal and civil commercial defense litigation, said an influx of PPP fraud disputes is likely to hit the courtroom soon since after months of negotiation and grand Juries start opening corona closings.

“You can certainly rest assured that the government has not taken any foolproof security precautions with this very well-intentioned loan program,” said Bieber. “Unscrupulous individuals will do their best to take advantage of the system and they will succeed.”

The PPP is the U.S. government’s small business program created under the Coronavirus Aid, Relief, and Economic Security Act to help these companies or nonprofits keep their workers going despite the economic devastation caused by the COVID-19 pandemic to pay. Generally, the applicant must employ 500 or fewer workers and certify that “the current economic uncertainty makes this loan application necessary” to support ongoing operations.

But this latest capital payout comes from the last round when the Justice Department arrested hundreds of people it had accused of fraud and had reached some settlement agreements to ease the burden on the courts, Bieber said. These included the recent arrests of two Florida men accused of raising millions of PPP loan funds for their businesses and instead diverting those forgivable loans to buy expensive luxury vehicles.

This includes Don Cisternino from Bradenton, whom the DOJ allegedly used a portion of $ 7.2 million for its personal purchase advisory business, including a $ 251,000 Mercedes-Benz. And David T. Hines of Miami, who on Wednesday pleaded guilty to diverting a portion of the $ 3.9 million loan to its financial firms to avoid litigation to buy a $ 318,000 Lamborghini, the company said Department.

Now, Bieber, who is not involved in these cases, said that these cases will show how judges in Florida and across the country will rule.

“The vast majority are people with a tendency to commit cheating who saw a hole in this system like a full-back with an open field of 70 yards in front of him running for a touchdown,” said Bieber. “But it will be on a case-by-case basis. And certain cases, depending on how conspicuous the behavior was after the fraud, determine the actions of the judges. “

Michael Nadler, a partner at Stumphauzer Foslid Sloman Ross & Kolaya in Miami and a former federal prosecutor in the southern district of Florida for nearly a decade, said authorities are likely to find these cases either in a report or in follow-up investigations. So far, he suspected that the previous arrests were just a “drop in the ocean”.

“One person will call and say, ‘David Tyler Hines just bought a Lamborghini Hurricane and I know he got a PPP loan,'” said Nadler. “The DOJ has a task force for this and is probably keeping an eye on the worst offenders. As the task force and prosecutors become more sophisticated, it becomes easier to identify these types of fraud. “

Nadler said the attorneys who should be most aware of the potential pitfalls of the recent PPP cash round are the ones who have clients using those funds. It’s an opportunity to offer advice on how to manage these funds aside from the obvious avoidance of fraud.

When the US Congress originally created the program, at least 75% of the capital had to be used for payroll, while no more than 25% could be used for utilities, mortgage interest or rent in order for the loan to be waived. This amount has since been adjusted.

“Use the money as it was intended and have procedures in place to ensure you abide by the terms if the money is used for other purposes,” said Nadler. “The US government is providing a loan that is potentially 100% forgivable to keep you and your employees in business. This is a gift. It may be tax money, but it’s a gift. “

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