Bill Overview
Title: PPP and Bank Fraud Enforcement Harmonization Act of 2022
Description: This bill establishes a 10-year statute of limitations for criminal charges and civil enforcement against a borrower who engages in fraud with respect to a Paycheck Protection Program loan.
Sponsors: Rep. Velazquez, Nydia M. [D-NY-7]
Target Audience
Population: Individuals involved in fraud related to PPP loans
Estimated Size: 500000
- The Paycheck Protection Program (PPP) was established to provide loans to help businesses keep their workforce employed during the COVID-19 crisis.
- Fraudulent activities related to PPP loans involve individuals or businesses falsely claiming eligibility or misusing the loan funds.
- The statute of limitations extension impacts those involved in such fraudulent activities by allowing legal actions to be initiated for up to 10 years after the fraud occurred.
- Although the bill directly targets fraudulent borrowers, the overall impact involves lenders, law enforcement agencies, and judicial bodies involved in processing fraud cases as well.
- Around 11.8 million PPP loans were approved by the end of the program, providing a scope of potential fraudulent activities.
Reasoning
- The policy impacts a very specific group of individuals—those who have engaged in fraud related to PPP loans. These individuals are expected to number in the hundreds of thousands, considering the wide distribution of PPP loans and the potential for fraud.
- The establishment of a new statute of limitations allows for extended prosecution and legal responsibility, which could deter future fraudulent activity and have a psychological impact (increased anxiety or stress) on those currently involved in or considering such actions.
- For most people outside of this group, the policy will have minimal to no impact on their wellbeing.
- Given the fiscal constraints, only a fraction of the population involved in PPP fraud cases can expect direct legal challenges, focusing mostly on high-value cases.
- The extension of the statute period logically benefits future good governance and trust in governmental financial assistance programs but doesn't involve extensive direct intervention or welfare improvement components.
Simulated Interviews
Small Business Owner (Florida)
Age: 45 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- I received a PPP loan to pay my employees, but was penalized for some mistakes in documentation.
- This bill seems like extra stress, knowing they can come after me for 10 years.
- I have no intention of committing fraud, but the extra scrutiny is unsettling.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 4 | 5 |
| Year 3 | 5 | 6 |
| Year 5 | 5 | 6 |
| Year 10 | 6 | 7 |
| Year 20 | 6 | 7 |
Accountant (New York)
Age: 36 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- As an accountant, I did my best to ensure all my clients were honest with their applications.
- This new act worries me because it extends the time I could potentially be called upon for past work.
- I wish the focus was more on supporting businesses rather than extending punitive measures.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 6 | 7 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 8 |
Owner of a large restaurant chain (California)
Age: 52 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- I am being investigated for how we used PPP funds which has made running our business more difficult.
- This bill means the investigation could drag on even longer.
- I hope this means they'll focus on clear fraud rather than honest mistakes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 3 | 5 |
| Year 2 | 4 | 6 |
| Year 3 | 4 | 6 |
| Year 5 | 5 | 6 |
| Year 10 | 5 | 7 |
| Year 20 | 6 | 7 |
Solo-preneur (Texas)
Age: 29 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 7/20
Statement of Opinion:
- The PPP support helped me survive during the pandemic. I used it correctly, so I don't worry about this change.
- I think it's important to go after the fraudsters because they make it worse for people like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Federal Prosecutor (Ohio)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 2/20
Statement of Opinion:
- This policy gives us more time to build strong cases against fraudulent actors.
- It should help in convincing honest businesses that the system is respecting their challenges by punishing abusers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 8 |
Legal Advisor for a business association (Virginia)
Age: 42 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 5/20
Statement of Opinion:
- Our members followed guidance to be compliant, but long statute of limitations can create anxiety about potential errors.
- While it's good to deter fraud, this might discourage some from seeking aid in future crises.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 6 | 7 |
| Year 10 | 6 | 7 |
| Year 20 | 7 | 8 |
Software Developer in a startup (Illinois)
Age: 33 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 6/20
Statement of Opinion:
- I'm glad we had the PPP to keep jobs during tough times.
- I trust our CFO to have done things by the book, so not too worried personally.
- This bill seems like a good step for preventing people from taking advantage of future programs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Judge (Nevada)
Age: 50 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 1/20
Statement of Opinion:
- An extended statute gives us more breathing room in complex cases.
- This can lead to a better outcome in pursuing justice but requires efficient case management to avoid backlog.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 9 |
| Year 5 | 8 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Freelancer applied for PPP during COVID-19 (Oregon)
Age: 27 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 9/20
Statement of Opinion:
- I benefited legitimately from PPP and have no worries about policy impacts for myself.
- Seeing more prosecutions might validate honest actors, but I think more support for businesses is needed.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Economics Professor (Massachusetts)
Age: 39 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 1.0 years
Commonness: 3/20
Statement of Opinion:
- This policy extension allows for a more thorough examination of fraud prevalence, projecting future loan efficiency.
- However, its narrow target group means limited impact for those not involved in fraud.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Cost Estimates
Year 1: $50000000 (Low: $30000000, High: $70000000)
Year 2: $51000000 (Low: $30600000, High: $71400000)
Year 3: $52020000 (Low: $31212000, High: $72828000)
Year 5: $53060400 (Low: $31836240, High: $74284560)
Year 10: $60000000 (Low: $36000000, High: $84000000)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Assessing legal costs associated with extending the statute of limitations for fraud.
- Potential for increased civil recovery of fraudulent PPP funds.
- Determining whether funds will need to be up-fronted for enforcement or reappropriated from existing budgets.