Link if video doesn't load: https://www.youtube.com/watch?v=e1LgpljDc7k&t=22s
If you applied for the PPP loan and got it, be ready to defend yourself in court. Criminal Court. Because Federal Prosecutors announced to Bloomberg News the government changed the rules on PPP Loans and decided it would start prosecuting small businesses the government deems defrauded the program. To the amazement of lawyers like me: the rule change makes almost anyone who got the loan a fraudster. To understand the rule change, let's remember how we got here?
A month ago local, state, and federal governments were urging all business owners to apply for the Payroll Protection Plan Loan through the Small Business Administration. So many small businesses did. The only criteria was you had to swear under oath that the COVID-19 pandemic affected your business. Here is the problem.. Many not so small businesses took advantage of the program and when the news media broke the story of how fancy steakhouses, chain burger joints, and some other not so small businesses were getting millions of dollars in free money- money that should have went to actual small businesses- the government decided to change the rule. In doing so, all the government is doing is creating criminals out of good intentioned people.
But here is the rub, BIG BUSINESSES are getting legal advice to give the money back because the government is changing the PPP Loan rules. You know who isn't getting that advise- small businesses. Which is who the government will end up prosecuting.
Actual small business owners are the ones who will get swept up in this rule change because they are the ones who can't afford a legal defense team so they are easy targets for prosecutors.
If you think I am crazy or trying to drum up fear, understand these types of dysfunctional prosecutions are already happening. As citizens are taking the guidance from one part of the government only to find out another branch or agency doesn't like and disagrees with the guidance. Let me give you a perfect example.
Recently, a Doctor in California, a graduate of SIU was charged with mail fraud and other acts of fraud for marketing a COVID-19 cocktail to his patients. What were the facts leading to the charge of this doctor? He sent emails to his prospective patients touting informing of his belief these over the counter medications cure Covid-19. Here's the catch: He was marketing the same drugs President Trump held out as miracle drugs at an official press conference of the White House. The doctor used the head of the federal government's approval-The President in his advertising. This doctor is being prosecuted because it turns out that information is wrong or at least it is perceived wrong by one agency of government. The FBI, who answers directly to the President, created a criminal probe of a Doctor saying what the president said. The FBI sends an undercover agent to record the doctor. The doctor says literally the same thing President Trump said. The doctor is indicted and facing 20 years in prison. So how does some Doctor in California relate to the PPP Loan Fraud. Let me bring this thing home for you.
When the PPP Loan application was created, the small business needed to swear under penalty of perjury that the business was impacted by the COVID-19 Pandemic. Now, the government is issuing new guidance that the business must exhaust other avenues of liquidity that would enable the business to support ongoing operations. In other words, burn through your savings before applying-otherwise you are a fraudster. Now do you understand why Big Business is giving the money back? It's got nothing to do with the kindness of corporations. It's all about enforcement.
The government is changing the rules to placate the media and angry constituents. And many small business owners are unknowingly becoming fraudsters because of this rule change.
Did the needs of small businesses change? No. This “guidance” was not part of the loan application, but the federal government is now changing the rules.
So What can we do, other than just get angry.
You going to hear news stories very soon, just like the Doctor in California I mentioned. Maybe even about someone in your community. Before you rush to judgment against your neighbor or the pizza joint in town, remember this video.
Support real small businesses. The way you do that in this situation is by letting your government know, we aren't going to stand for mom and pop small business owners going to jail because they didn't nearly go bankrupt before applying for the relief. Write to your elected officials demanding a more sensible rule and guidance. Share this message regardless if you share this video.
When you see the government issuing press releases and holding press conferences about PPP “fraudsters”, remember how we got here…Small Businesses didn't create this problem- the government did.