UPDATE: Sept. 10, 2020:
JPMorgan Chase fired several employees who improperly applied for and received coronavirus relief funds through the Economic Injury Disaster Loan (EIDL) program, Bloomberg and the Financial Times reported Wednesday, citing an anonymous source.
JPMorgan Chase noticed suspicious amounts of money had been deposited into checking accounts owned by bank employees, a person familiar with the matter told Bloomberg.
The discovery came more than a month after the Small Business Administration (SBA) warned banks to investigate suspicious activity tied to the EIDL program. The agency’s inspector general in late July called for closer oversight of the program over fraud concerns.
Unlike Paycheck Protection Program (PPP) loans, which were facilitated by banks, EIDL grants of up to $10,000 were given out directly by the SBA.
Last month, Bloomberg identified $1.3 billion in suspicious payments tied to the EIDL program because the number of grants in 52 congressional districts exceeded the number of eligible small businesses.
The SBA’s inspector general has identified more than $250 million in aid given to potentially ineligible recipients, in addition to $45.6 million in possibly duplicate payments, Bloomberg reported.
JPMorgan employees who fraudulently obtained EIDL loans had not been acting in their work capacity, according to the Financial Times. But breaking the law was a violation of the bank’s code of conduct. The bank declined to comment.
Only a small percentage of EIDL misuse JPMorgan found has been tied to bank employees, Bloomberg’s source said, adding that the bank hasn’t found evidence of wrongdoing by employees connected to PPP.
- JPMorgan Chase is investigating the role of employees and clients in the potential misuse of coronavirus relief funds, the bank’s operating committee said Tuesday in a memo to more than 250,000 staff members first reported by Bloomberg.
- Although the pandemic has brought out the best in many workers, the bank has “seen conduct that does not live up to our business and ethical principles — and may even be illegal,” the memo said. “This includes instances of customers misusing Paycheck Protection Program loans, unemployment benefits and other government programs. Some employees have fallen short, too.”
- The nation’s largest bank facilitated the greatest amount of PPP money of any lender — $29.4 billion among more than 280,000 loans, according to Small Business Administration (SBA) data.
Government agencies and lawmakers both have warned of the risk of fraud associated with the program. The Government Accountability Office (GAO) in June said the number of PPP loans approved, the speed with which they were processed, and limited safeguards left the program open to “significant risk that some fraudulent or inflated applications were…