JPMorgan Chase has said it is investigating the misuse of COVID aid funds from its customers as the bank looks to crack down on customers taking advantage of COVID-19 stimulus funds.
It comes after word of a potential crackdown from Federal authorities investigating the misuse of the $650 billion worth of funds intended for COVID-19 business relief, which authorities suspect was
The news comes after details of an internal memo sent to 250,000 of the bank’s staff was released, signed by JPMorgan Chase’s CEO, Jamie Dimon who said that the misuse of COVID-19 aid money by its customers “did not live up to our business and ethical principles – and may even be illegal.”
According to the memo which was verified by ABC News, this conduct “includes instances of customers misusing PayCheck Protection Program loans, unemployment benefits and other government programs.”
The memo goes on to explain that “some employees have fallen short too,” while adding that “we are doing all we can to identify those instances, and cooperate with law enforcement where appropriate.”
The investment bank has set up a conduct hotline, asking its employees to report any potential misconduct to the hotline for further investigation.
Bloomberg, who broke the story is writing that “the program’s scale and efforts to rush funds out quickly may have also made it vulnerable to fraud, according to a watchdog report in June.”
According to a report from Reuters “the JPMorgan memo is one of the first signs that lenders and their staff may be swept up in federal efforts to police pandemic-related aid programs. In May, Reuters reported that the U.S. Justice Department had subpoenaed Wall Street banks to seek records on PPP lending as it kicked off its enforcement efforts, but it was unclear if the banks themselves were targets at the time.”
The Paycheck Protection Program has issued USD $659-billion worth of loans, which were initially sent to major banks who would allocate funds to businesses that were struggling amid the pandemic accordingly.
The Small Business Administration, who was responsible for overseeing the PPP program, has said that in July, JPMorgan was the largest recipient of PPP loan money, stating the bank had issued more than 270,000 loans valued at $30 billion.
The SBA has said previously that there were “strong indicators of widespread potential fraud,” while rolling out funds en masse in a relatively short span of time.
Earlier this year, we reported that the Bank of America was hit by a potential data breach involving 305,000 recipients of PPP loans that were processed, according to a filing with the California Attorney General’s Office.
Bank of America issued a statement saying that “during testing, we discovered information included in your application may have been visible for a limited time period to a limited number of other lenders and their vendors authorized by the SBA to participate in the program.”