On December 7, 2022, the U.S. Department of Justice announced that a father and son were sentenced to prison for their roles in defrauding the Paycheck Protection Program (PPP). According to the government, Izzat Freitekh and his son, Tarik Freitekh, submitted several fraudulent PPP loan applications for four companies owned by Izzat. The loan applications misrepresented the number of employees used by the companies and payroll expenses. The fraudulent applications resulted in $1.7 million in PPP funds. The government noted that the Freitekhs also laundered money by making unlawful monetary transactions, including $30,000 in payments to family members. The father and son duo were convicted in North Carolina in March 2022. Izzat Freitekh was sentenced to four years in prison, while his son was sentenced to over seven years (87 months).
While the COVID-19 pandemic fades from mainstream media, the government continues to investigate, pursue, and prosecute individuals who defraud COVID-19 relief programs. Recently, the government successfully had COVID-19 conspirators extradited from Montenegro to serve their prison terms. The government’s enforcement actions will increase. And the government now has more time to bring civil and/or criminal enforcement actions. CG attorneys discussed how President Biden signed two bills into law that extend to ten years the statute of limitations for civil and criminal enforcement actions for fraud on the PPP and Economic Injury Disaster Loans (EIDL). The PPP bill (HR 7352) includes all PPP-related fraud, while the EIDL bill (HR 7334) includes both the initial EIDL advances and the targeted advances.
Recipients of COVID-19 relief funds must ensure continued compliance. CG attorneys provided PPP practice tips and noted that recipients should keep documentation on how the funds are used and evidencing eligible expenses to maximize the percentage of the PPP loan ultimately forgiven. Similar intentional compliance efforts should be taken for other COVID-19 relief programs.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with white-collar criminal investigations. If you need assistance with such a matter, please contact us today.
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