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JPMorgan finds some workers improperly pocketed relief funds

Bank positions of JPMorgan Chase & Co. ahead of earnings data

Photographer: Mark Kauzlarich / Bloomberg

According to a person familiar with the matter, JPMorgan Chase & Co. has found that some of its employees have improperly applied for and received money for Covid subsidies for legitimate US companies injured by the pandemic.

The bank uncovered the shares, all linked to the Economic Injury Disaster Loan program, after noticing that suspicious amounts of money had been deposited into checking accounts owned by bank employees, said the person, who asked not to be identified because the information is private. The findings sparked an unusual message from all staff from JPMorgan on Tuesday that puzzled many across the industry over its candid admission of potentially illegal acts by some of them without describing what they had done.

The Small Business Administration̵

7;s disaster lending program was significantly expanded after the pandemic led to continued closures across the country, leaving many small businesses in need of a lifeline. Unlike the Paycheck Protection program, banks did not issue or underwrite loans and grants in case of disasters. Instead, loans or grants came directly from the SBA.

The results of employee misconduct came in a broader overview of individual accounts that received business aid, the person said. The SBA warned banks on July 22 that they were looking for suspicious deposits or assets as part of the EIDL program.

The agency’s inspector general has since reported evidence of fraud in the program, saying it has identified more than $ 250 million in aid granted to potentially ineligible recipients, as well as $ 45.6 million in possibly duplicated payments. A Bloomberg Businessweek analysis of SBA data last month identified $ 1.3 billion in suspicious payments.

Read more: Ghost companies received more than $ 1 billion in aid

A spokesperson for JPMorgan declined to comment.

On Tuesday, the nation’s largest bank sent a reminder to some 256,000 employees in which senior executives said they were investigating whether it has helped people misuse aid programs, including “Payroll Protection Program Loans, Unemployment Benefits, and Other Government Programs.” The company said it had identified customer behavior that did not abide by its principles and “may even be illegal” and that some employees also fell short of ethical standards.

Company leaders decided to send the reminder to highlight the widespread abuse of relief programs they had found, the person said, and the message asked employees to report any unethical activity they had witnessed.

Although the bank identified rampant misuse of the EIDL program, only a small percentage has been linked to bank employees, the person said. The bank found no evidence of wrongdoing by employees in connection with the PPP program, the person said.

The Small Business Administration was scrambling crack down on abuse of the loan program designed to mitigate the corporate disaster, according to a watchdog report Wednesday. This assessment was based on internal emails obtained by the group, including that one noticed “Widespread presence of fraudulent applications.”

Do you have advice on how funds are used or misused to alleviate viruses? Email us at ppptips@bloomberg.net or follow the instructions to send an anonymous suggestion to https://www.bloomberg.com/tips/

– With the assistance of Zachary Mider

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