But, if you’re more risk-aggressive — or, you know, YOLO! — here’s how to have the U.S. Department of Justice all up in your business.
Here’s what you can’t do with PPP money.
On Wednesday, the DOJ announced that it had charged a reality TV personality with bank fraud in connection with a PPP loan obtained for the business. Do you want to know the details?
Yeah, you do.
To maintain the secrecy of the reality TV personality, I’ll refer to this person as “📺🌟🤨.” But, if you want to cheat and learn 📺🌟🤨’s true identity, you can read the press release. (Hint: It’s not—, nah, no hints!)
- April 15, 2020: 📺🌟🤨 applies for a $3.73M PPP loan, certifying that 📺🌟🤨’s business would use the loan proceeds to “retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments, as specified under the Paycheck Protection Program Rule.” The bank ends up funding a loan of just over $2,000,000.
- Within days: 📺🌟🤨 “allegedly used more than $1.5 million of the PPP loan proceeds to purchase $85,000 in jewelry, including a Rolex Presidential watch, a diamond bracelet, and a 5.73-carat diamond ring for [📺🌟🤨], to lease a 2019 Rolls Royce Wraith, to make loan payments, and to pay $40,000 for child support.”
The press release notes that “[s]uch payments are not an authorized use of PPP funds under the CARES Act.”
- May 6, 2020: Federal agents interview 📺🌟🤨, who admits to filing the PPP application. However, 📺🌟🤨 claims to have used all of the PPP loan proceeds to pay payroll and other business expenses and denied using any of the PPP loan proceeds to pay personal debts and expenses.
- May 11, 2020: Agents search 📺🌟🤨’s home and find about $80,000 in cash, including $9,400 in 📺🌟🤨’s pockets! They also find the jewelry 📺🌟🤨 purchased with the PPP funds. Agents also executed seizure warrants for three bank accounts that 📺🌟🤨 owned or controlled and seized approximately $503,000 in PPP funds.
The feds charge 📺🌟🤨 with bank fraud. Now, the indictment only contains charges. The defendant is presumed innocent of the charges, and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
Here’s what you can do with PPP money.
Basically, your business has eight weeks from receipt of loan proceeds to spend 75% of it on payroll and the remaining 25% (existing as of February 15, 2020) on interest payments on mortgages, rent payments, leases, and utility service agreements.
That’s the elevator speech and a short ride at that. Trust me, it’s more complicated. Just ask anyone that owns a restaurant.
Fortunately, the Treasury has a useful fact sheet and a FAQ that was last updated on 5/13. But, it still owes us more guidance. Additionally, a colleague of mine forwarded this sweet FAQ that an accounting firm prepared. If nothing more, I love the plain English.
See you at Noon EDT on Zoom.
We’ll talk a little bit more about PPP at noon today on Zoom. But, my special guest Jeff Nowak and I are going to focus our hour on ‘Classic’ FMLA and how it will impact businesses as more employees return to the workplace this Spring and Summer.
We’d love to have you join us. Click here to register.
And if you have any last-minute FMLA questions, you can ask them here.