Big banks subpoenaed in federal probe of possible coronavirus loan fraud

May 18, 2020

Some big banks have received grand jury subpoenas as part of a federal investigation into possible fraud involving the $660 billion coronavirus emergency loan program for small businesses, according to a new report Saturday.

 

Two sources told Reuters that the Justice Department had sent subpoenas to major banks, but did not name the institutions. JPMorgan Chase & Co., Citigroup Inc, Bank of America Corp. and Wells Fargo & Co. are four of the mega-banks participating in the program.

 

Under the program, small businesses hit by the pandemic can apply for a government-backed loan that can be forgiven if at least 75% covers payroll costs. Lawmakers, however, have expressed concern that the money would attract fraudsters.

 

Companies found to have lied to secure loans could face prosecution, Treasury Secretary Steven Mnuchin has said. The Justice Department began investigating the program last month. Criminal charges have been brought against some borrowers.

 

“Right now, we don’t think banks are 100% the target,” a source told Reuters, but added: “There are concerns that there will be a boomerang effect six months down the road on banks that they didn’t do enough.”

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