JPMorgan Investigates Employees Over Abuse of Coronavirus Stimulus Fund

TOP LINE

In an internal memo on Tuesday, JPMorgan Chase said it had found evidence of employees and customers misusing coronavirus relief funds and would cooperate with authorities to investigate the potentially illegal activity.

Jamie Dimon, President and CEO of JPMorgan Chase & Co.

Misha Friedman / Getty Images

HIGHLIGHTS

The bank’s operating committee, chaired by CEO Jamie Dimon, sent an internal memo to more than 250,000 employees on Tuesday morning, announcing it had found evidence of wrongdoing, Bloomberg first reported.

“Unfortunately, we’ve also seen conduct that falls short of our business and ethical principles – and may even be illegal,” the bank’s committee said.

JPMorgan said it found “cases of clients misusing Paycheck Protection Program (P3) loans, unemployment benefits and other government programs,” according to the memo.

The bank also announced that “some employees have also failed” when it comes to the misuse of federal funds intended to help small businesses and other customers affected by the coronavirus pandemic, although the report gives no details. on specific employee misconduct.

U.S. lawmakers and investigators have for months warned of widespread abuse and fraud in the PPP, with several perpetrators accused of embezzling funds to purchase Lamborghinis and other luxury items.

JPMorgan, which is the largest US lender in terms of assets, was also the largest issuer of PPP loans, distributing nearly $ 30 billion through the program, according to the Small Business Administration.

Crucial quote

“We are doing our best to identify these instances [of wrongdoing], and cooperate with law enforcement as appropriate, ”JPMorgan said.

Key context

Fraud experts have warned that the federal government’s massive $ 2.2 trillion coronavirus relief program, which included the over $ 650 billion paycheck protection program for small businesses, was conducive to abuse given its scale. Despite this fact, the program is widely believed to have worked as it was supposed to, saving more than 50 million jobs in the short term, according to the Trump administration. The US Department of Justice has already launched enforcement efforts, previously citing Wall Street banks for P3 loan files, Reuters reported in May. As recently as last week, a congressional panel said it had identified tens of thousands of multi-billion dollar PPP loans that may have been object of fraud or abuse, some ineligible companies receiving funds or breaking the rules by taking multiple loans, according to Reuters.

What to watch

Lawmakers in Congress have been deadlocked for weeks over expanding the pandemic relief program. Democrats and Republicans have repeatedly failed to compromise on the size or provisions of the upcoming coronavirus stimulus bill, with the GOP arguing for a smaller, narrower relief plan.

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