Treasury Secretary Mnuchin Warns Businesses Could Face Criminal Liability for PPP Loans

As outrage over the execution of the Small Business Administration’s newly replenished Paycheck Protection Program continues to dominate headlines, Treasury Secretary Steven Mnuchin announced on Tuesday that the U.S. Treasury Department will audit every PPP loan over $2 million to ensure that only eligible companies receive payouts.

The announcement arrives the morning after the Los Angeles Lakers committed to returning a whopping $4.6 million loan the organization took out from the PPP. In an interview with CNBC, Mnuchin called the loan “outrageous.”

"This was a program designed for small businesses. It was not a program that was designed for public companies if they had liquidity," Mnuchin said.

The Lakers organization is only the most recent example of a decidedly-not-small business returning a loan to the Paycheck Protection Program, a CARES Act initiative intended to support small businesses affected by the coronavirus pandemic.

PPP loans are forgivable in full, essentially turning them into grants, if recipients use 75 percent or more of their loan to retain their employees, but Mnuchin said loans of $2 million or more will be audited before they are forgiven, and any companies found to have falsely claimed that the loan was necessary to continue operations could be liable to criminal penalties.

“So anybody that took the money that shouldn’t have taken the money, one it won't be forgiven, and two, they may be subject to criminal liability, which is a big deal,” Mnuchin told Fox Business.

To date, more than 200 publicly traded companies have applied for Paycheck Protection Program loans.