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10 year statute of limitations ppp eidl fraud

You Got a PPP Loan. Now Your Worried About Federal Prison.

Look, here’s the thing. You took out a PPP loan during the pandemic. Maybe you needed it to keep you’re business alive. Maybe you made some mistakes on the application—inflated payroll numbers, overstated employee counts, used the funds for things that weren’t quite right. Or maybe your accountant filled out the paperwork and you just signed where they told you to sign.

Now your hearing about people going to federal prison for PPP fraud. Your seeing news stories about the goverment prosecuting business owners just like you. And your wondering: how long do they have to come after me?

The answer changed in 2022, and its not good news. Congress extended the statute of limitations for PPP and EIDL fraud from 5 years to 10 years. That means if you got your loan in 2020, federal prosecutors have untill 2030—or even longer—to bring charges against you.

This article explains what the 10-year statute of limitations actually means for your situation, when the clock starts running, what your really facing if prosecuted, and what you can do right now to protect yourself. I’ve represented clients in these exact situations, and I’m gonna give you the information you need without the legal jargon that makes most articles on this topic basicaly useless.

What Changed in 2022: The Laws That Extended Your Risk

In August 2022, President Biden signed two laws that dramatically changed the game for anyone who recieved a PPP or EIDL loan. The PPP and Bank Fraud Enforcement Harmonization Act of 2022 and the COVID-19 EIDL Fraud Statute of Limitations Act of 2022 both extended the prosecution window from 5 years to 10 years.

Why did Congress do this? I mean, think about it from their perspective. The original statute of limitations created a serious loophole that prosecutors was struggling with.

Here’s what was happening. Traditional bank fraud under 18 U.S.C. 1344 has always had a 10-year statute of limitations. But alot of PPP loans weren’t issued by traditional banks—they came from fintech lenders like Kabbage, BlueVine, and others. When the lender wasn’t a bank, prosecutors could only charge wire fraud under 18 U.S.C. 1343, which has a 5-year limit.

This meant that someone who committed the exact same fraud could face different prosecution windows based off which lender they happened to use. A business owner who got there loan from Bank of America would face a 10-year clock. But a business owner who got the exact same loan—with the exact same fraud—from a fintech lender would only face a 5-year clock. The evidence shows that prosecutors found this inconsistant and unfair, and honestly, they had a point.

Defendants who used fintech lenders was essentially getting a shorter clock then those who used traditional banks. Congress decided to fix this “loophole” by making all PPP and EIDL fraud subject to the same 10-year timeline.

So now, irregardless of whether you got your PPP loan from Bank of America, Chase, Wells Fargo, or from a fintech startup like Kabbage or BlueVine, the goverment has 10 years to bring criminal charges against you. They also have 10 years for civil enforcement actions under the False Claims Act. No more loopholes, no more distinctions based on lender type.

This matters more then you might think. The Pandemic Response Accountability Committee has identified tens of thousands of potentially fraudulent loans totaling several billion dollars. Their going through these systematically, and the extended timeline gives them plenty of time to get to yours.

The affect of these laws is clear: if you thought you were safe because 5 years had passed since your 2020 loan, you definately need to reconsider. The 10-year clock means prosecutors have untill 2030 or later to decide whether your case is worth pursuing. And with over 700 active investigations currently underway, their definately not slowing down.

When Does the Clock Start Running? This Is Where It Gets Complicated

Heres the part that catches most people off gaurd. The 10-year statute of limitations doesn’t start from when you applied for the loan. It starts from your LAST fraudulent act related to that loan.

Let me explain what this means for you’re situation—actually, let me back up and make sure this is clear, because its crucial to understanding your real exposure window.

Say you applied for a PPP loan in April 2020 and submitted false payroll documents. If that was your only fraudulent act, then the statute starts in April 2020 and prosecutors have untill April 2030 to charge you.

But here’s where it gets worse. Say you then spent those funds on unapproved expenses throughout 2020 and 2021. Each improper expenditure could be considered a seperate fraudulent act. Maybe you used PPP funds to buy a new car. Maybe you paid personal credit cards. Maybe you renovated your house. Each of these acts extends the timeline.

Then, say you filed for loan forgiveness in early 2022 and submitted additional false documentation claiming you spent the money properly. Your forgiveness application may have created entirely NEW fraud exposure.

In that scenario, the clock doesn’t start from April 2020. It starts from when you submitted your fraudulent forgiveness application—maybe January or Febuary 2022. That means prosecutors would have untill 2032 to charge you. Your already two years past when you thought the clock started.

This is why so many business owners are in a worse position then they realize. The forgiveness application is a seperate federal crime under 18 U.S.C. 1001 (False Statements to Federal Agencies). If you lied on your initial application AND lied on your forgiveness application, you’ve commited multiple offenses with multiple statute of limitations periods. Each lie extends your exposure.

Bottom line: you cant just count 10 years from when you got the loan. You need to figure out when your last potentially fraudulent act occured. For most people, that’s going to be there forgiveness application date. For some, it might be even later—maybe when you submitted additional documentation requested by your lender, or when you made representations during an SBA review.

Let me give you some specific examples so you can calculate you’re own exposure:

Example 1: You recieved a PPP loan in April 2020. You spent it properly on payroll. You applied for forgiveness in June 2020 with accurate documentation. Your statute expires April 2030 (based on the original loan application, since the forgiveness was accurate).

Example 2: You recieved a PPP loan in April 2020. You inflated some expenses on the application. You spent funds on some unapproved items through December 2020. You applied for forgiveness in March 2021 with documentation that overstated payroll costs. Your statute expires March 2031—because the forgiveness application was your last fraudulent act.

Example 3: You recieved multiple PPP loans—one in April 2020 and another in January 2021 (the “second draw”). You applied for forgiveness on both, with the second forgiveness application submitted in September 2021. Your statute expires September 2031 at the earliest. And if you submitted any additional documentation after that, it could be even later.

Example 4: You recieved a PPP loan and an EIDL loan. The EIDL loan has ongoing repayment obligations. If you made false statements in connection with the EIDL loan in 2022 or later—maybe to avoid default or get a modification—your statute might not expire until 2032 or beyond.

There’s also something called “tolling” that can pause the clock. If your under active investigation, or if you flee the jurisdiction, or if theirs certain legal proceedings pending, the statute can be extended even farther. So 10 years is really the minimum—it could be longer depending on your circumstances.

Civil vs Criminal: Two Different Threats Your Facing

When people think about PPP fraud prosecution, they usually think about criminal charges and going to prison. But their’s actually two completley different ways the government can come after you, and you need to understand both because they operate independantly of each other.

Criminal Prosecution: This is the scary one that keeps people up at night. Criminal charges mean federal prosecutors—the U.S. Attorney’s office—files charges against you in federal court. The potential charges include wire fraud (18 U.S.C. 1343), bank fraud (18 U.S.C. 1344), money laundering (18 U.S.C. 1956), and false statements (18 U.S.C. 1001). Convictions can result in prison time, and we’re talking serious time—more on that in a minute.

Civil Enforcement: This is the one people forget about, but it can be just as devastating to your life. The False Claims Act allows the government to pursue civil penalties for fraud against government programs. Real talk—the civil penalties can be financially devastating even without a single day in prison.

Here’s what makes civil cases so dangerous. Under the False Claims Act, the government can recover triple damages—thats three times the amount of the fraud—plus penalties of over $11,000 for each false claim you submitted. If you took a $150,000 PPP loan through fraud, you could be looking at $450,000 in damages plus per-claim penalties. And they dont need to prove your guilt “beyond a reasonable doubt” like in criminal court—civil cases use the lower “preponderance of the evidence” standard.

And heres something else most people don’t know about. The False Claims Act has something called qui tam provisions. This allows private citizens—we’re talking employees, ex-partners, accountants, former spouses, basically anybody with knowledge of your fraud—to file lawsuits on behalf of the government. For all intensive purposes, they become bounty hunters who get paid when you lose.

The incentive is huge. Qui tam whistleblowers can recieve 15-30% of whatever the government recovers. If the government recovers $500,000 from you, the whistleblower could get $75,000 to $150,000 just for turning you in. With 979 qui tam lawsuits already filed related to pandemic fraud, it’s clear that plenty of people are taking advantage of this financial incentive to report their former employers, business partners, and associates.

The practical affect of all this? You face two different 10-year clocks running simultaneosly. Criminal prosecutors have 10 years. Civil enforcement has 10 years. And either one can seriously effect your life. Some defendants face both—criminal charges that result in prison, followed by civil penalties that wipe out whatever assets they have left. Getting hit with both is like getting run over by a truck, backing up, and getting run over again.

What Your Actually Facing: The Consequences Nobody Wants to Talk About

Look, I’m not gonna sugarcoat this—and I mean that, seriously. The consequences of PPP fraud prosecution are severe, and if your reading this article, you need to understand exactly what your dealing with. No point in sugarcoating it or pretending everything will be fine.

Let’s start with the numbers that should scare you. The federal conviction rate is 97%. Read that again. Once federal prosecutors decide to charge you, they almost always win. The feds don’t bring cases they might lose—they bring cases they know they’ll win. About 90% of federal defendants plead guilty because fighting and loosing usually means a longer sentance, and most people realize the odds are stacked against them.

The SBA Office of Inspector General has estimated that $64 billion was stolen through PPP fraud. That’s billion with a B. Theirs over 70,000 potentially fraudulent loans that have been flagged for investigation. The goverment has made prosecuting these cases a major priority—their bringing new charges basicaly every week. And the DOJ COVID-19 Fraud Enforcement Task Force has over 700 active cases right now.

So what are the actual prison sentences people are getting? Here’s where it gets real:

Wire fraud carries a maximum penalty of 20 years in federal prison for each count. Bank fraud carries a maximum of 30 years. If prosecutors add money laundering charges—which they often do when you spent the funds on personal items like cars, houses, or luxury goods—that’s another 20 years. And if they charge conspiracy, that adds even more potential time. Stack multiple charges together and your looking at potential sentences that effectivley amount to life in prison.

I mean, seriously—we’re talking about sentences that can effectivley be life sentences for older defendants. A 55-year-old who gets 15 years might never come home. And these aren’t theoretical maximums that never happen. People are actually getting sentenced to 5, 10, even 15+ years for PPP fraud. These are real sentences being handed down right now in federal courts across the country.

But wait, there’s more. (And I mean that—their’s always more when it comes to federal sentencing. It never stops.)

The federal sentencing guidelines have specific enhancements that apply to fraud cases. If prosecutors can show you used “sophisticated means”—like fake tax documents, fabricated bank statements, multiple identities, or coordinated schemes with other people—your sentence goes up significantly. If you had a leadership role in a scheme involving others, your sentence goes up. If the fraud amount exceeded certain thresholds ($150,000, $250,000, $1 million, etc.), your sentence goes up.

These enhancements can add 2, 4, even 6+ years to your sentence. Someone who might of gotten 3 years for a basic fraud could end up with 7-8 years because of enhancements. The sentencing judge has some discretion, but there constrained by the guidelines and the government pushes hard for enhancements in PPP cases.

And even if you somehow avoid prison—which is extremley unlikely for anything more then a very minor fraud with significant mitigating circumstances—your still facing:

• Restitution: You’ll be ordered to pay back everything you took, plus interest. The government doesn’t forgive this debt.
• Fines: Up to $250,000 or more depending on the offense and your ability to pay
• Supervised release: Years of federal probation after any prison time with strict conditions
• Felony conviction: This follows you forever—no voting, no firearms, limited employment options in many fields
• Professional consequences: Loss of professional licenses, certifications, and career opportunities
• Immigration consequences: If your not a citizen, deportation is extremley likely after a fraud conviction
• Collateral damage: Your family, employees, and buisness partners all get effected by your prosecution

Now, heres a mute point that actually isn’t mute at all: not everyone whose flagged gets prosecuted. The goverment has limited resources and their prioritizing the most egregious cases first—the ones where someone took multiple loans under false pretenses, used obviously fake documents, stole large amounts, or showed clear criminal intent. If you made relatively minor errors on a smaller loan, you might not be at the top of there list.

But—and this is important—”not being a priority” is not the same as “being safe.” The 10-year window means they have plenty of time to work through there backlog and get to smaller cases eventually. Just because they haven’t knocked on you’re door yet doesn’t mean they won’t. Many people lived comfortably for years thinking they got away with it, only to get indicted years later when investigators finally got to their file.

The DOJ COVID-19 Fraud Enforcement Task Force has made clear that pandemic fraud prosecutions will continue through atleast 2030. They have over 700 active cases right now, and their adding more every month. Your case could be one of them—maybe not today, maybe not this year, but eventually.

Who Might Report You: The Qui Tam Incentive and Other Threats

Here’s something that should peak your interest—and not in a good way. The biggest threat to you might not be some federal investigator reviewing loan files in a cubicle somewhere. It might be someone you know personally.

We already talked about qui tam whistleblowers and the 15-30% financial incentive. But let me be specific about who might report you, because this catches alot of people off gaurd. They think they just need to worry about the government finding them. They don’t realize their bigger risk might be someone in their own life.

Current or former employees: Did anyone at your company know about the false payroll numbers you submitted? Did anyone see you buying personal items with PPP funds? Did you brag about how you “worked the system” during the pandemic? A disgruntled ex-employee with knowledge of fraud has a massive financial incentive to report you. They could make six figures just by filing a qui tam lawsuit. And if you fired them or they left on bad terms, they have both motive and means to turn you in.

Accountants and bookkeepers: Your CPA has access to all your financial records. They prepared your tax returns. They might of even prepared your PPP application. If they now beleive they were involved in fraud—even unknowingly—they might report you to protect themselves from liability. And here’s the thing—if your CPA or loan preparer made errors on your application, that doesn’t automaticaly shield you from prosecution. The “reliance on professional advice” defense requires you to prove you gave them accurate information AND reasonably relied on there advice. If you told them to inflate numbers or provided them false documents, you can’t blame them later.

Business partners: Did you have partners or co-owners who knew about the fraud? If your relationship sours (and this happens alot in business), they might decide that reporting you is worth the potential payout. Partnership disputes, buyout disagreements, or just personal falling-outs have led to many fraud reports. Your partner from 2020 who you no longer talk to knows where the bodies are buried.

Ex-spouses: Divorce proceedings are ugly, and financial fraud is often exposed during asset discovery. Divorce attorneys dig through everything—bank accounts, tax returns, business records. If your ex-spouse learns about PPP fraud during a divorce, they have both the motive and the information to report you. And the qui tam incentive gives them a financial reason to do so even beyond just hurting you in the divorce.

Lenders themselves: Banks and fintech lenders are under pressure to identify and report fraudulent loans to protect themselves from liability. If they discover irregularities in your application—maybe during a routine audit or review—their legally obligated to report to authorities. And there going through there records systematically looking for exactly these irregularities.

Competitors: Yes, really. If a competitor suspects you of fraud—maybe because you seemed to have more money during the pandemic then you should of, or because you were spending lavishly while they were struggling—they can file a qui tam lawsuit. (I’ve seen it happen. Seriously. Business rivals have turned each other in for the bounty.)

The affect of all these potential reporters is that you can’t just fly under the radar and hope nobody notices. Too many people have too much incentive to turn you in. Even if the goverment never finds you on there own through their systematic review, someone else might point them in your direction. And once the government gets a tip, they investigate.

What To Do Right Now: Your Options Moving Forward

Okay, so you’ve read all of this and your probably feeling pretty anxious right now. Thats understandable—you should be concerned. But anxiety without action doesn’t help—you need to know what you can actually do to protect yourself.

Option 1: Voluntary Disclosure

This is the option that nobody talks about, and it might be you’re best move depending on your situation. Coming forward voluntarily—before you recieve a subpoena or target letter—can dramatically improve your situation in ways most people don’t realize.

When you voluntarily disclose fraud to the goverment, prosecutors have discretion in how they respond. In some cases, voluntary disclosure results in civil resolution instead of criminal charges. Instead of prison, you might end up paying restitution and penalties but keeping you’re freedom. The government views voluntary disclosure as a sign of acceptance of responsibility, which factors into their charging decisions.

The key is timing. Voluntary disclosure only works if you come forward BEFORE your under investigation. Once you’ve recieved a subpoena, target letter, or visit from federal agents, voluntary disclosure loses most of its value. At that point, your not volunteering information—your responding to an investigation that’s already underway. The government already knows about you, so coming forward isn’t really “voluntary” anymore.

Is voluntary disclosure right for you? It depends on your specific situation—the amount of fraud involved, the strength of the evidence against you, your criminal history, whether others were involved, and other factors. This is defintely something you need to discuss with a federal criminal defense attorney before taking any action. Do not attempt voluntary disclosure without legal counsel guiding you through the process.

Option 2: Prepare Your Defense

If voluntary disclosure doesn’t make sense for your situation—or if your already under investigation or have been contacted by authorities—you need to start preparing your defense immediately. Time is not on your side.

This means:

• Preserve all documents. Do not destroy anything related to your PPP or EIDL loan. This includes applications, bank statements, tax documents, emails, text messages, and any communications with lenders or accountants. Destruction of evidence is a seperate federal crime (obstruction of justice) that can be charged even if the underlying fraud can’t be proved. People have gotten longer sentences for destroying evidence then they would of gotten for the original crime.
• Stop talking. Don’t discuss your loan situation with employees, partners, friends, family members, or anyone else who might become a witness. Don’t post anything on social media about your business, your finances, or your legal situation. Don’t respond to any goverment inquiries without an attorney present. Anything you say can and will be used against you.
• Hire a federal criminal defense attorney. Not a general practice attorney, not a buisness lawyer, not your cousin who handles divorces—a lawyer who specializes specifically in federal criminal defense and has experiance with fraud cases. Federal court is a completley different world from state court, and you need someone who knows how it works. This is absolutley critical.
• Document everything going forward. Keep records of any contact from investigators, any unusual activity with your bank accounts, any communications from your lender, anything that might be relevant to your situation.

Option 3: Do Nothing and Hope

Plain and simple—this is the worst option, but it’s what alot of people choose because it’s the easiest in the short term. They figure the goverment has bigger fish to fry, they’ll probably slip through the cracks, the 10 years will eventually run out and then they’ll be safe.

Maybe. But maybe not. And living with that anxiety for a decade isn’t a plan—its just denial. Every time you see a news story about PPP fraud, every time the phone rings with an unknown number, every time someone knocks on your door unexpectedly—you’ll wonder if this is the day.

If you did commit fraud, the smart move is to deal with it proactivley rather than waiting for the knock on the door. If you didn’t commit fraud but made honest mistakes on your application, you should still consult with an attorney to understand you’re exposure and build your defense strategy.

The Bottom Line: Don’t Wait

The 10-year statute of limitations for PPP and EIDL fraud means the goverment has until 2030-2031 or later to prosecute loans from 2020-2021. That’s not a long time to hope they don’t notice—that’s a long time for investigators to systematicaly work through tens of thousands of flagged loans and eventually get to yours.

If your worried about your PPP loan, you should be. A 97% conviction rate, prison sentences measured in years and sometimes decades, financial penalties that can exceed triple damages—this isn’t something to ignore and hope goes away.

Call a federal criminal defense attorney. Call today. Right now. Most consultations are confidential under attorney-client privilige, so you can discuss you’re situation honestly without fear that your words will be used against you later.

Don’t wait until your already under investigation. Don’t wait untill you’ve recieved a subpoena. Don’t wait until federal agents show up at you’re door or your workplace.

The clock is running. The government is working. Make you’re move.