Fraudulent Applicants for Paycheck Protection Program (PPP) and a Surge in Criminal Referrals from Small Business Administration

The U.S. Small Business Administration (SBA) made more criminal referrals to federal prosecutors at the Department of Justice in FY 2020—a total of 91—than any year in the past two decades. See Figure 1 below. Referrals began increasing in April 2020 after efforts began to identify those who submitted fraudulent bank loans under the Paycheck Protection Program (PPP) established by the CARES Act. SBA referrals also remained higher than usual during the first three months of FY 2021 (October - December 2020). In fact, between April 2020 and the end of December 2020, a total of 102 new referrals were made.

Figure 1: Number of Criminal Referrals from Small Business Administration to Federal Prosecutors
FY 2001-2020
(Click for larger image)

Just what proportion of recent referrals reflect alleged fraud under the CARES Act is uncertain since specific details of these referrals will only become public once prosecutions actually are filed. But the timing of this upsurge in referrals as well as details on cases already being filed[1] suggest that alleged fraud in applications for COVID relief was a major driving force. These early results are based on case-by-case government records on SBA referrals obtained and analyzed by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University after successful litigation that required their release.

TRAC makes the underlying data for this report available through subscriptions to its TRACFed information services. Click here to get started or email for more in­for­ma­tion about how you can get access to the same data used by leading news outlets like the Associated Press, The New York Times, The Washington Post, The Wall Street Journal and scho­lar­ly researchers from leading universities around the country.

Paycheck Protection Program (PPP) Attracts Fraudulent Applicants

In March 2020, in response to the economic devastation caused by the COVID-19 pandemic, Congress passed the CARES Act, which, at $2.2 trillion dollars, was the largest stimulus package in US history. A key part of the CARES Act was the Paycheck Protection Program (PPP), a program implemented by the U.S. Small Business Administration, which put $659 billion towards what the agency describes as helping "businesses keep their workforce employed during the Coronavirus (COVID-19) crisis." The federal funds provided for low-interest loans with the possibility of partial or total forgiveness if certain conditions were met, such as maintaining employee wages and not firing employees.

The CARES Act was passed and signed into law at the end of March, but already by the end of April, Assistant Attorney General Brian Benczkowski at the Department of Justice was in charge of a criminal probe into fraudulent applications under the program. Benczkowski described the fraudulent activity as follows: "There are unfortunately businesses that are sending in loan applications for large amounts of money that are overstating their payroll costs, overstating the number of employees they've had, overstating the nature of their business." For instance, in one case filed in Chicago, Illinois, in June 2020, the Small Business Administration along with other agencies announced that a local business had fraudulently applied for a $400,000 loan under the Paycheck Protection Program.

The rise in fraudulent applications for the Paycheck Protection Program (PPP) appear to be reflected in TRAC's data on the numbers of criminal referrals from the Small Business Administration to federal prosecutors. Typically, referrals from the SBA remains low, an average of just 46 per year since 2001, which is even lower at an average of just 30 per year when just the decade before 2020 is taken into account. In 2019, the SBA referred only 11 cases for criminal prosecution. In this context the 91 criminal referrals by the SBA in 2020 stands out sharply with only the number of cases in 2007 and 2008 coming close. See Table 1 below.

Referrals from the SBA to federal prosecutors were concentrated in a few key judicial districts:

  • nine (9) each in the Northern and Southern Districts of Texas;

  • eight (8) in the Southern District of Georgia and five (5) in the Northern District of Georgia;

  • six (6) in the Northern District of Florida and four (4) in the Southern District of Florida; and

  • five (5) in the Northern District of Illinois.

Just five states—Texas, Georgia, Florida, Illinois, and California—make up 63 percent of all referrals. See Figure 2. In total, 35 out of 94 federal judicial districts recorded a referral from the SBA. See Table 2 below.

Figure 2: Criminal Referrals by Small Business Administration in FY 2020 by State
(Click for larger image)
Table 1: Criminal Referrals from Small Business Administration to Federal Prosecutors
FY 2001-FY 2020
Fiscal Year Total Referrals
2001 54
2002 51
2003 45
2004 48
2005 53
2006 50
2007 89
2008 84
2009 50
2010 40
2011 42
2012 43
2013 17
2014 32
2015 23
2016 19
2017 43
2018 34
2019 11
2020 91
Table 2: Criminal Referrals from Small Business Administration to Federal Prosecutors
in FY 2020 by Federal Judicial District
Federal Judicial District Total Referrals
Texas, N 9
Texas, S 9
Ga, S 8
Fla, N 6
Ga, N 5
Ill, N 5
Cal, C 4
Fla, S 4
Wash, W 4
Montana 3
Virg, E 3
Cal, N 2
Iowa, N 2
La, E 2
N Car, E 2
Nevada 2
Ohio, S 2
R. I. 2
Ala, S 1
Cal, E 1
Fla, M 1
Ga, M 1
Idaho 1
Ill, C 1
Ill, S 1
Ind, N 1
Kansas 1
La, W 1
Minnesota 1
Mo, E 1
N. Y., E 1
Ohio, N 1
Okla, N 1
Oregon 1
Utah 1


[1] Recent press releases issued by the Department of Justice on prosecutions taking place involving COVID fraud prosecutions are available here.

TRAC offers free monthly reports on program categories such as white collar crime, immigration, drugs, weapons and terrorism and on selected government agencies such as the IRS, FBI, ATF and DHS. For the latest information on prosecutions and convictions, go to In addition, subscribers to the TRACFed data service can generate custom reports for a specific agency, judicial district, program category, lead charge or judge via the TRAC Data Interpreter.