While most of the attention last month in Washington was focused on the Inflation Reduction Act, Pub. L. 117-169, a heavily negotiated act addressing climate change remediation efforts, tax enforcement funding, and health care, Congress quietly passed two bills which will have a significant impact on COVID-19 stimulus funding enforcement activities.
Signed into law on August 5, 2022, the two new statutes are the PPP and Bank Fraud Enforcement Harmonization Act of 2022, Pub. L. 117-166, and the COVID-19 EIDL Fraud Statute of Limitations Act of 2022, Pub. L. 117-165. The laws extend the government’s statute of limitations to 10 years after the offense was committed for “any criminal charge or civil enforcement action” alleging fraud related to the Paycheck Protection Program (“PPP”) or the Economic Injury Disaster Loan (“EIDL”) program.
While some fraud enforcement provisions already carry statutes of limitations of up to 10 years, others contain shorter periods. See 18 U.S.C. § 3282 (default of five years for federal criminal actions, unless otherwise specified). In addition, while the Department of Justice’s (“DOJ”) most powerful civil fraud enforcement tool, the False Claims Act, 31 U.S.C. § 3729, et seq., has a statute of limitations that can, in some circumstances, be extended to 10 years, such an extension is not automatic and can be a hotly contested issue between defendants and the DOJ. Congress has now removed that potential defense to False Claims Act matters related to PPP and EIDL by imposing an automatic 10 year statute of limitations.
These new laws portend an extended period of government scrutiny stemming from PPP and EIDL loans. In particular, PPP loans will continue to be an area of significant government focus—a focus that receipt of loan forgiveness does not abate. Extensive post loan forgiveness audits and investigations by the Small Business Administration (“SBA”) and the DOJ have commenced, and will continue for years to come. If audited or investigated by the SBA or the DOJ, it is important to involve experienced legal counsel early in that process.