JPMorgan Investigating Employees Over Alleged Fraud Involving PPP Funds

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JPMorgan Chase & Co. is investigating several employees for their role in the alleged abuse of Paycheck Protection Program (PPP) loans and other COVID-19 relief programs.

In an internal memo, America’s largest bank told staff to be “vigilant” after it had discovered that some of its customers and staff broke federal rules by misusing loans, unemployment benefits, and other government programs meant to help small businesses and individuals who have been affected by COVID-19 shutdowns. The company also mentioned that it is working to identify all instances of abuse and is cooperating with law enforcement where appropriate.

The memo, which was released in early September of 2020, did not mention whether charges have been filed, or if any disciplinary action had already been taken against JPMorgan employees.

In March of 2020, the US Congress and the White House approved a $2 trillion stimulus package to aid struggling workers and small businesses amid the pandemic.

Not long after, lawmakers and independent watchdogs warned of widespread abuse and fraud in the PPP, a $659 billion program to distribute government-backed funds to small businesses.

In May, the US Justice Department subpoenaed large Wall Street banks to obtain records on PPP lending. A few months later, around a dozen individuals were accused by the Justice Department of taking part in a “large scale” and “organized” effort to abuse PPP funds.

In July, a man in Miami was charged with bank fraud for allegedly lying on his PPP loan applications. He reportedly spent the money he received on a $318,497 Lamborghini as well as thousands of dollars worth of clothes and jewelry. He also spent more than $11,000 at two Miami-area hotels.

In early September, a congressional panel identified several thousand PPP loans worth billions of dollars that may have been subject to abuse and fraud, including by some companies that were either ineligible or had taken multiple loans.

The Small Business Administration (SBA), which manages the PPP, said that JPMorgan has funded around $30 billion in loans through the program, more than any other bank.

In April, JPMorgan, along with Wells Fargo, Bank of America, and US Bank, were hit with lawsuits accusing them of harming thousands of small businesses by prioritizing emergency loan requests from large customers so they could earn bigger fees.

Bank of America and US Bank denied the accusations, while JPMorgan and Wells Fargo declined to comment.