WASHINGTON–The Justice Department has sent grand jury subpoenas to big banks seeking records as part of a broader investigation into potential abuse of a $660 billion Paycheck Protection Program, according to Reuters.
The report noted the subpoenas issued by the department’s Washington fraud division do not necessarily indicate wrongdoing on the part of the banks, but they do add to worries by many lenders that they risk being swept up in a federal crackdown on Paycheck Protection Program fraud.
Charges Brought
As CUToday.info has reported, to date authorities have brought charges against two people alleging PPP fraud, and some analysts have suggested the pace at which the program was created and the funds disbursed would seem to indicate there is a high likelihood fraud has taken place.
“Due to their critical role in processing the loans, banks have reams of information that could point to other fraud,” Reuters noted.
“Right now, we don’t think banks are 100% the target,” one source told Reuters, before adding, “There are concerns that there will be a boomerang effect six months down the road on banks that they didn’t do enough.”
A third person with direct knowledge of industry interactions with the Justice Department told Reuters the agency wanted to scan banks’ records for possible wrongdoing by borrowers.
While the individual banks receiving the subpoenas were not identified, Wells Fargo said in a regulatory filing this month that it had received “formal and informal inquiries” from federal agencies regarding PPP loans, but did not elaborate, Reuters said.