Why PPP fraud investigations, including the $53M Texas recycling ring, are surfacing now

Charges against 14 people in a $53 million Payroll Protection Program fraud scheme are the latest in a slew of cases federal prosecutors in Texas are pursuing against business owners who took advantage of the federal government's pandemic relief program.

What was PPP?

The Paycheck Protection Program was an $800 billion emergency loan program created in March 2020 – the height of the pandemic – as part of the nation's $2 trillion Coronavirus Aid, Relief and Economic Security Act. The Trump administration signed the CARES Act into law in March 2020 and the government quickly began distributing money the following month.

PPP provided forgivable loans to help businesses maintain payrolls, hire back laid-off employees and cover overhead costs.

Juan Gonzalez, U.S. attorney in the Southern District of Florida, told NBC News that the Trump administration knew bad actors would slip through the cracks in an application process made intentionally simple.

"Some fraud is inevitable. That's the price that the government was willing to pay to get the money as quickly as possible into the hands of those that really needed it," Gonzalez said.

The easy application process, with little vetting tied to it, effectively invited business owners to apply for the money. In extreme cases, recipients used the loan proceeds to buy sports cars and fancy homes, rather than to retain employees.

In 2021, Dinesh Sah, 55, of Coppell, was sentenced to 11 years in prison after he applied for a $24.8 million PPP loan and received over $17 million. He applied using 15 businesses, many of which did not have employees and were registered after the CARES Act was passed.

Prosecutors said Sah used the money to buy homes in Texas, pay off mortgages for his homes in California and purchase a Bentley convertible, a Corvette Stingray and a Porsche Macan. He was forced to pay nearly $17.3 million in restitution, forfeit eight homes, six cars and more than $9 million.

In 2020, Dallas televangelist Marcus Lamb purchased a "multimillion-dollar" private jet just two weeks after receiving a federal PPP loan. Lamb used the jet for beach and golf trips for him and his family. Daystar Television Network was forced to return its $3.9 million PPP loan after investigators became suspicious of the timing of the jet's purchase.

McKinney's Austin St. John, who played the Red Power Ranger on the 1990s television show Mighty Morphin Power Rangers, was one of 18 defendants charged for his role in a fraud scheme that raked in $3.5 million PPP loan. St. John, whose legal name is Jason Lawrence Geiger, transferred the money into his personal account and spent it on "personal items," prosecutors said.

Why are fraud cases coming up now?

The Small Business Administration, which administered the PPP and related-pandemic relief programs, estimated last month that over $200 billion was disbursed in potentially fraudulent loans – about 17% of the overall $1.2 trillion handed out under the programs.

SBA's Office of the Inspector General reported that it has seized or retrieved about $30 billion of the fraudulent loans. The office's investigations have resulted in 1,011 indictments, 803 arrests, and 529 convictions through May. Over two dozen cases have been filed in Texas.

"OIG is working on tens of thousands of investigative leads on alleged fraud, waste, and abuse of taxpayer resources," according to its report. "Thousands of investigations will ensue for years to come."