JPMorgan Chase & Co. found that some of its employees improperly applied for and received Covid-relief money that was intended for legitimate US businesses hurt by the pandemic, according to a person with knowledge of the matter.

The bank discovered the actions, all of which were tied 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 prompted an unusual all-staff message from JPMorgan Tuesday that puzzled many across the industry for its candid admission of potentially illegal acts by some of its own while not describing what they had done.

The Small Business Administration’s disaster loan program had been expanded significantly after the pandemic led to rolling shutdowns across the country, leaving many small enterprises in need of a cash lifeline. Unlike with the Paycheck Protection Program, banks didn’t issue or underwrite the disaster loans and grants. Instead, loans or grants came directly from the SBA.

The findings of employee misconduct came in a broader sweep of individual accounts that received business aid, the person said, noting the bank fired people it believes improperly tapped the money. The SBA warned banks July 22 to be on the lookout for suspicious deposits or activity as part of the EIDL program.

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

A JPMorgan spokeswoman declined to comment.

The nation’s largest bank sent a memo to roughly 256,000 employees Tuesday in which senior leaders said they were probing whether any staffers helped people misuse aid programs including “Paycheck Protection Program Loans, unemployment benefits and other government programs.” The firm had said it identified conduct by customers that didn’t meet its principles and “may even be illegal” and that some employees had fallen short on ethical standards, too.

The firm’s leaders decided to send the memo to highlight the widespread abuse of relief programs they’d found, the person said, and the message asked employees to report any unethical activity they’d witnessed.

While the bank has identified rampant misuse of the EIDL program, only a small percentage of it has been tied to bank employees, said the person. The bank hasn’t found evidence of wrongdoing by employees related to the PPP program, the person said.

The Small Business Administration has been scrambling to clamp down on abuse of the loan program designed to mitigate business disaster, according to a watchdog report Wednesday. That assessment was based on internal emails obtained by the group, including one that noted “widespread presence of fraudulent applications.”

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(Updates to note employees were terminated in fourth paragraph)

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