Ppp and Bank Fraud Enforcement Harmonization Act of 2022
Floor Speech
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Ms. VELAZQUEZ. Madam Speaker, I move to suspend the rules and pass the bill (H.R. 7352) to amend the Small Business Act to extend the statute of limitation for fraud by borrowers under the Paycheck Protection Program, and for other purposes.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 7352
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited as the ``PPP and Bank Fraud Enforcement Harmonization Act of 2022''. SEC. 2. FRAUD ENFORCEMENT HARMONIZATION.
(a) Paycheck Protection Program.--Section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)) is amended by adding at the end the following new subparagraph:
``(W) Fraud enforcement harmonization.--Notwithstanding any other provision of law, any criminal charge or civil enforcement action alleging that a borrower engaged in fraud with respect to a covered loan guaranteed under this paragraph shall be filed not later than 10 years after the offense was committed.''.
(b) Paycheck Protection Program Second Draw Loans.--Section 7(a)(37) of the Small Business Act (15 U.S.C. 636(a)(37)) is amended by adding at the end the following new subparagraph:
``(P) Fraud enforcement harmonization.--Notwithstanding any other provision of law, any criminal charge or civil enforcement action alleging that a borrower engaged in fraud with respect to a covered loan guaranteed under this paragraph shall be filed not later than 10 years after the offense was committed.''.
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Ms. VELAZQUEZ. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I thank all the members on the Small Business Committee for their work and support of the bills before us.
The legislation we are considering is, once again, a product of our committee's bipartisanship and shows that we are committed to our Nation's entrepreneurs.
The seven bipartisan bills we are considering will promote economic growth on our Main Streets in numerous ways.
The first two reaffirm our commitment to being good stewards of taxpayer dollars, and the importance of holding pandemic fraudsters accountable for their crimes.
The second pair of bills under consideration will help small firms attract and retain qualified employees by boosting apprenticeships and career and technical education programs.
Finally, we will consider three bills to improve the Federal procurement process and promote opportunities for small businesses to secure contracts from the Federal Government.
The first bill under consideration today is H.R. 7352, the PPP and Bank Fraud Enforcement Harmonization Act of 2022, introduced by myself and our ranking member from Missouri (Mr. Luetkemeyer).
H.R. 7352 sets the statute of limitations for all cases of PPP fraud at 10 years, consistent with the statute of limitations for bank fraud.
Under current law, bank-originated PPP fraud is being prosecuted as bank fraud, which has a 10-year statute of limitations.
At the same time, PPP loans originated by nonbank lenders, including fintech companies, are often prosecuted as wire fraud, which carries a 5-year statute of limitations.
To address this difference, the bill extends the time for prosecutors to bring charges to 10 years for all cases of PPP fraud, regardless of whether the lender was a bank or fintech company.
SBA's Office of Inspector General identified over 70,000 PPP loans totaling over $4.6 billion in potentially fraudulent PPP loans, many of which originated with fintechs.
According to researchers at the University of Texas at Austin, fintech companies handled 75 percent of PPP loans connected to fraud by the DOJ, despite originating only 15 percent of the loans overall.
As of March 10, the DOJ's efforts have resulted in criminal charges against over a thousand defendants with alleged losses exceeding $1.1 billion and over 240 civil investigations into more than 1,800 individuals and entities for alleged misconduct in connection with pandemic relief loans totaling more than $6 billion.
Given the extent of potential fraud, especially among the subset of PPP loans originated by nonbank lenders, we must ensure prosecutors have enough time to fully investigate and bring fraud charges.
As of now, the statute of limitations for nonbank PPP loans secured in April 2020 will expire in 2025 in most cases, less than 3 years away. That is not enough time given the complexity of these fraud schemes.
As the chair of the Small Business Committee, I take my role over the SBA and its program very seriously. That is why I sponsored this bill to give the DOJ, FBI, and State and local law enforcement the resources and time they need to bring these bad actors to justice.
Madam Speaker, I thank Ranking Member Luetkemeyer for joining me in leading this effort, and to the members of the Small Business Committee for their support.
Madam Speaker, I urge my colleagues to support this bill, and I reserve the balance of my time.
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Ms. VELAZQUEZ. Madam Speaker, I yield myself the balance of my time.
Madam Speaker, we must continue supporting the work of our Federal, State, and local law enforcement agencies as they investigate and prosecute pandemic loan fraud. It appears the bulk of PPP loan fraud was originated by nonbank lenders and fintech companies, which may not be prosecuted as bank fraud and is therefore subject to a much shorter statute of limitations.
This presents the possibility that pandemic loan fraudsters may get off the hook because the statute of limitations expired. We simply cannot let this happen. This bill would give law enforcement agencies the time needed to hold fraudsters accountable and bring them to justice.
Once again, I thank our ranking member, Mr. Luetkemeyer, for working with me to lead this important effort, and all the members of the Small Business Committee for their bipartisan work on this bill.
Madam Speaker, I urge my colleagues to vote ``yes,'' and I yield back the balance of my time.
Ms. JACKSON LEE. Madam Speaker, I rise in support of H.R. 7352--the ``PPP and Bank Fraud Enforcement Harmonization Act of 2022'' extends the statute of limitation and provides a timeframe in which criminal charges can be filed against those accused of fraud in connection with the ``Paycheck Protection Program'' and ``Paycheck Protection Program Second Draw Loans'' program.
The Paycheck Protection Program commonly known as the ``PPP'' loan was created as a part of the CARES Act--the Covid Aid, Relief, and Economic Security Act--of March 2020.
The PPP loan was established to help small businesses survive through the COVID-19 pandemic of 2020, so that they may be able to pay their employees and keep their businesses operating during the tumultuous challenges imposed by COVID-19.
I urge everyone to remember the times before the recent reemergence of a ``business as usual'' stance that many have now taken, and remember the omnipresent news reports about the horrific and ever- increasing death toll.
Any person who was willing, for their own financial gain, to take advantage of that situation and the emergency funding that was intended for those who needed it most during the gruesome pandemic deserves to be punished for their heinous actions.
H.R. 7352 would extend the statute of limitation for prosecution of loans classified within the PPP and Economic Injury Disaster Loan (EIDL) categories under the Small Business Act.
As it stands now, bank-originated PPP fraud is being prosecuted as bank fraud which carries a 10-year statute of limitations.
In contrast, loans that originated through financial technology avenues--known as Fintech--are currently subject to only a 5-year statute of limitations because they are governed by wire fraud laws.
H.R. 7352 will ensure that we are doing our duty to uphold justice and gather all necessary information and evidence, while extending the reach of the law against these violators.
PPP fraud comes at the expense of all Americans, tax-paying Americans who work hard for the money they earn.
H.R. 7352 will ensure that there's ample time allotted for special attention to the complex nature of PPP loan fraud.
Ensuring that the timeframe is fair and commensurate with the severity of the nature of loan fraud, H.R. 7352 will make sure that justice is served in every regard.
I ask that each of my colleagues joins me in support of H.R. 7352.
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