H.R. 324 (IH) – PPP Shell Company Discovery Act
Introduction
On February 8, 2025, a new bill was introduced in the United States House of Representatives: H.R. 324 (IH), known as the “PPP Shell Company Discovery Act.” This bill aims to address concerns about the misuse of Paycheck Protection Program (PPP) funds by shell companies.
Background
The PPP, established in response to the COVID-19 pandemic, provided loans to small businesses to help them retain employees and cover operating expenses. However, there were allegations of widespread fraud and abuse, including the creation of shell companies—companies established solely to obtain PPP loans—that siphoned off funds meant for legitimate businesses.
Provisions of the Bill
H.R. 324 seeks to enhance the government’s ability to investigate and prosecute PPP loan fraud by:
- Expanding the definition of “shell company”: Amending the definition to include companies with no employees, no physical presence, and no business operations prior to the pandemic.
- Requiring additional documentation: Mandating that businesses provide proof of their eligibility for PPP loans, such as tax returns and payroll records.
- Strengthening oversight: Creating a dedicated task force within the Department of Justice to investigate PPP fraud and an office within the Small Business Administration (SBA) to oversee loan applications.
- Increasing penalties: Establishing stiffer penalties for individuals and businesses found guilty of PPP fraud, including fines and imprisonment.
- Establishing a whistleblower program: Offering rewards to individuals who provide information leading to the recovery of fraudulently obtained PPP funds.
Significance
This bill represents a significant effort by Congress to crack down on PPP loan fraud and protect taxpayer funds. By targeting shell companies and strengthening oversight, it aims to ensure that those responsible for misusing these loans are held accountable.
Current Status
H.R. 324 is currently in the early stages of the legislative process. It has been referred to the House Committee on Small Business for further consideration and hearings. The bill faces an uncertain future, as it will likely face scrutiny and potential opposition from those seeking to protect fraudulent actors. However, its introduction demonstrates the government’s commitment to addressing the issue of PPP fraud.
Conclusion
The PPP Shell Company Discovery Act (H.R. 324) is a comprehensive bill that seeks to address concerns about PPP loan fraud. By expanding the definition of shell companies, requiring additional documentation, strengthening oversight, and increasing penalties, this bill aims to protect taxpayer funds and ensure that those responsible for misuse are held accountable. The bill’s future remains uncertain, but its introduction signals the government’s determination to combat PPP fraud.
H.R. 324 (IH) – PPP Shell Company Discovery Act
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