JPMorgan Probing Staff, Customers Over COVID-19 Stimulus

By Al Barbarino
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Law360 (September 8, 2020, 9:30 PM EDT) -- JPMorgan Chase & Co. is investigating instances of potentially illegal conduct by both customers and staff related to government COVID-19 stimulus efforts, including the Paycheck Protection Program loan program and unemployment benefits, according to an internal memo sent Tuesday and seen by Law360.

The memo from the bank's operating committee, signed off on by 12 company executives including Chairman and CEO Jamie Dimon and Chief Risk Officer Ashley Bacon, says the bank is "doing all we can to identify" instances of misconduct and will "cooperate with law enforcement where appropriate."

After lauding the efforts of employees who have performed "their very best" during the pandemic, the executives said, "Unfortunately, we've also seen conduct that does not live up to our business and ethical principles — and may even be illegal."

"This includes instances of customers misusing Paycheck Protection Program loans, unemployment benefits and other government programs," the memo reads. "Some employees have fallen short, too. We are doing all we can to identify those instances, and cooperate with law enforcement where appropriate."

It goes on to state that "we need everyone to be vigilant," pointing employees to its "business principles" and "code of conduct" policies as well as an internal hotline for employees to report any concerns.

"While we know that we are working through a period of unprecedented turmoil, it is precisely during difficult times like these that it is most important to continue to hold ourselves to the highest standards of conduct," the memo states.

The Coronavirus Aid, Relief and Economic Security, or CARES, Act launched in March authorized up to $349 billion in forgivable loans under the PPP program, with Congress authorizing an additional $300 billion in funding in April. The PPP offers two-year forgivable loans up to $10 million to cover payroll expenses in addition to health care benefits, mortgage interest payments, rent and more.

The program faced considerable scrutiny out of the gate, both for undeserving smaller companies that needed the funds most and for the potential for fraud in doling out the massive stimulus in short order.

House Democrats asked the inspectors general of the U.S. Small Business Administration and the U.S. Department of the Treasury last week to review the government's handling of the relief package. They cited instances of apparent violations where companies appeared to receive multiple loans, loans to companies that should have been blocked from federal contracts, and applications missing names, addresses and other basic data.

The JPMorgan internal memo did not specify what type of misuse may have occurred, and a company spokesperson declined to comment. Bloomberg News first reported about the memo.

--Additional reporting by Chris Villani and Andrew Kragie. Editing by Breda Lund.

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