Explain Like I'm Five

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ELI5 How did people steal PPP loans? Was it really easy or did they just know how to get around the red tape and stuff? (self.explainlikeimfive)

submitted 4 months ago by Don_Dickle to c/explainlikeimfive

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I ask because a couple in a state next to me just pled guilty for stealing not one PPP loan at 2.1 million and a second at 1.6 million? Did I miss out on something by being above board?

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[–] [email protected] 60 points 4 months ago (5 children)

It was really easy. The Paycheck Protection Program wasn't administered by the government directly. Instead, it authorized banks and financial institutions to issue PPP loans using government money. These institutions were told they wouldn't be found at fault if they gave money to a fraudulent applicant. So they were authorized to give out money that wasn't theirs and couldn't be found at fault even if they gave it to a fraudster. There was zero reason to check if the application was real or filled with fake information. It's estimated that, of the 21 million PPP loans issued, 10% were fraudulent.

[–] radix 14 points 4 months ago

Yeah, it's not that the fraudsters got past the red tape, there just wasn't any to begin with.

It was all honor system, and with billions of dollars at stake, honor is the first thing to go.

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