CARES Act Aid Will Spur Federal Enforcement Efforts

Applications for federal stimulus package aid should be made with care.  Those receiving federal aid should ensure compliance programs are updated to comply with the CARES Act and future regulations. 

Federal aid distribution decisions will be made relying on recipients’ representations that they meet and will continue to meet various conditions. Distributions will also be made on condition that the federal aid is used for specific purposes.  Significant civil and criminal liability may result from making misrepresentations when applying for CARES Act funding or failing to comply with spending requirements.

The CARES Act establishes the Office of the Special Inspector General for Pandemic Recovery. The Act earmarks $25 million to this Office to “conduct, supervise, and coordinate audits and investigations of the making, purchase, management, and sale of loans, loan guarantees, and other investments made by the Secretary of the Treasury.”  

The Troubled Asset Relief Program (TARP) also established an Office of the Special Inspector General. Last year alone, that Office recovered nearly $900 million as a result of its enforcement efforts.  Given the relative size of the CARES Act and the restrictions established to limit abuse encountered with TARP, we expect rigorous enforcement efforts with respect to the CARES Act.

Companies and individuals should devote resources to understanding the application process and establishing policies to ensure compliance with the new law and future regulations.  Honigman can review CARES Act related applications and help establish any necessary compliance programs to mitigate risk in this area. Please contact Honigman’s Investigations and White Collar Defense practice group or your relationship attorney if you have any questions.