Company executives could face jail sentences for keeping coronavirus loans

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Officials of large companies could be sent to the slammer for taking out loans to help small businesses in the coronavirus crisis.

Amid increasing scrutiny of its $ 349 billion paycheck protection program, the U.S. Treasury Department on Thursday asked dozens of publicly traded companies that had received millions of dollars in government-backed loans to return the money within two weeks.

The warning came again Orientation aid Public companies with “significant market value and access to capital markets” are unlikely to qualify for the program as they cannot say “in good faith” that they need the loans to keep operating amid the pandemic.

Federal authorities said they would assume such companies were acting in good faith if they repay their loans by May 7. But companies that withhold the money could face dire consequences if officials discover they have broken the “good faith” rule.

Company officials face up to 30 years in prison or a $ 1 million fine for false information to a federally insured bank in order to obtain a guaranteed loan from the U.S. Small Business Administration, which manages the program, according to a federal rule published last week. The Treasury Department also has said The government will bring criminal charges against borrowers who use their loans for “fraudulent purposes”.

The Fed’s guidance on Thursday came after revelations that large bailout loans to traders on Main Street were going to some large public companies with thousands of employees. These included restaurant chains like Shake Shack and Ruth’s Chris Steak House, as well as Ashford Hospitality Trust, a hotel company whose subsidiaries received more than $ 30 million.

But many small traders had to wait for help after the program ran out of money last week. Congress approved an additional $ 310 billion this week.

Shake shack and Ruth’s Chris have already announced that they will repay the loans they have received totaling US $ 30 million. They are joined by privately run companies, including a chain of salad restaurants Sweet green and direct sales company It works out!, which were approved for $ 10 million and $ 2.7 million, respectively.


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