Large political donations came after paycheck protection program loans
Because the loan application “itself does not collect specific documents or data that prove that the loan was necessary due to economic uncertainty,” Bacon said, “only in the perspective of prosecuting this criminally, it It will be difficult after the fact to claim that there was false information provided beyond indicating that there was economic uncertainty.
“One could arguably suggest that a company with increased revenues (…) was not facing economic uncertainty,” he said, but “I can’t say how badly this argument is. would be acceptable to a federal prosecutor “.
“I am not so far familiar with specific criminal referrals that have been based on economic uncertainty,” he said.
Yet, if a loan recipient has abused money primarily intended to pay workers and made false claims to obtain the funds, it does not matter whether he is spending the money on Lamborghinis or making lavish contributions to the community. countryside. And the SBA’s economic necessity review is just getting started, which could explain the lack of criminal references. As a Crowell & Moring LLP law firm noted last week, “The SBA begins to undertake an information-gathering effort to enable SBA loan examiners to review a borrower’s certification that economic necessity made the loan application necessary.” A SBA Questionnaire asks recipients of PPP loans over $ 2 million if the business owner or anyone else in the business has received compensation greater than $ 250,000. This suggests that the SBA may consider whether the beneficiaries needed a PPP loan or a rebate if the owners have sufficient financial resources.
But unless there is evidence that a loan recipient was not acting in good faith when certifying that they faced economic uncertainty, a recipient is likely immune from penalties. criminal.
And even if a recipient acts in bad faith, POGO Review of Paycheck Protection Program Fraud Cases in the First Six Months brought by the Department of Justice shows that usually another element of apparent fraud is present when the Department has laid charges, such as forged tax records or forged payroll documents.
“I do not care.
At least one loan recipient who made campaign donations to members of Congress after receiving millions of dollars from the Paycheck Protection Program has been charged with fraud, although Justice Department court documents do not mention neither the contributions nor the charges relate to them. Post-PPP loan contributions are also less than $ 25,000. The criminal complaint against Martin Kao, CEO and “99%” owner of Navatek LLC (recently renamed Martin Defense Group), alleges he cited correspondence with members of Congress and their staff when he contacted a bank while trying to secure a $ 10 million loan in the under the Paycheque Protection Program.
“I just got a few calls with [a U.S. Senator and Member of Congress]. the [sic] specifically asked about the status of our PPP loan application and were very adamant about intervention if our application was blocked, ”Kao sent to the Central Pacific Bank (CPB) on April 7. according to the criminal complaint. He continued to quote his communications with Congress, asking for the name of the person who made the loan approval decisions at the bank. “Who are the people at CPB? Is he ready to make a call with Congress? They will be happy to state unequivocally what the rules are ”, he wrote in an April 10 email.
The Justice Department file does not name the senator or the other congressman, and does not indicate whether Kao was actually in communication with Congress about his loan or whether it was just blustering. Other emails from Kao cited in the complaint refer to the senator and “a senior executive of a U.S. senator. “