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The Spodek Law Group understands how delicate high-profile cases can be, and has a strong track record of getting positive outcomes. Our lawyers service a clientele that is nationwide. With offices in both LA and NYC, and cases all across the country - Spodek Law Group is a top tier law firm.

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Arkansas PPP and EIDL Loan Fraud Lawyers

By Spodek Law Group | February 15, 2023
(Last Updated On: October 12, 2023)

Last Updated on: 12th October 2023, 06:23 pm

Arkansas PPP and EIDL Loan Fraud Lawyers

The Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program were supposed to be a lifeline for small businesses struggling during the COVID-19 pandemic. But these federal programs ended up being a hot mess, with tons of fraud and abuse. If you got caught up in this in Arkansas, you need an experienced lawyer on your side.

This article will break down everything you need to know about PPP and EIDL fraud issues in Arkansas. We’ll look at:

  • The background on these COVID relief programs
  • How the rushed rollouts led to massive fraud
  • Specific scams people tried to pull in Arkansas
  • What charges you can face for PPP or EIDL fraud
  • Defenses that skilled lawyers use to fight the allegations
  • How an attorney can help if you’re under investigation
  • What potential whistleblowers should know

We’ll also link out to key resources and legal precedents so you can dig into the details. Let’s get started!

Background on the PPP and EIDL Programs

When COVID-19 hit in early 2020, the government created new relief programs in a hurry to help businesses survive. The main ones were:

PPP Loans – These loans through the Small Business Administration (SBA) were designed to cover payroll and expenses during COVID shutdowns. The loans convert to grants if used properly on eligible costs, meaning you don’t have to pay them back.

EIDL Loans – The SBA’s Economic Injury Disaster Loans provided working capital funds to cover losses caused by the pandemic. These loans have favorable terms but do need to be repaid.

Hundreds of billions were disbursed through these hastily set up programs. But the rushed rollout without proper oversight led to widespread abuse.

Massive Fraud Plagued the COVID Relief Rollout

With so much money flowing out fast and loose, fraudsters had a field day. The Department of Justice has busted hundreds of scammers who did things like:

  • Apply using fake or stolen identities
  • Make up fake employees to get bigger loans
  • Create shell companies to apply multiple times
  • Collude with shady bankers to get loans approved
  • Spend the money on themselves instead of their business

While all government programs have some fraud, the PPP was an epic disaster. Experts estimate over 80% of PPP funds went to fraudsters or ineligible recipients.

With billions in free money on the table and little vetting upfront, it was a fraudster’s dream come true!

Specific PPP and EIDL Scams in Arkansas

Arkansas saw its fair share of shady applications and misuse of funds. Here are some of the COVID relief scams that people tried to pull:

  • A farmer near Little Rock was charged with creating fake employees to get $1.1 million in PPP loans. He spent the money on personal purchases.
  • An Arkansas woman admitted submitting 18 fraudulent PPP and EIDL loan applications totaling over $4 million under fake business names.
  • The owner of a tax prep firm in Pine Bluff obtained $1.2 million in PPP loans and bought luxury vehicles and club memberships.
  • A chiropractor in Hot Springs falsified payroll records to get $660,000 in PPP loans, then spent funds on personal purchases.

As you can see, scammers found many ways to exploit these emergency programs. But now the feds are cracking down hard through criminal investigations.

Potential Charges for PPP and EIDL Fraud

The Department of Justice is aggressively pursuing COVID relief fraud cases, so you could face serious penalties if caught scamming these programs. Potential federal charges include:

  • Wire fraud – Up to 20 years imprisonment
  • Bank fraud – Up to 30 years imprisonment and $1 million fine
  • False statements – Up to 5 years imprisonment
  • Aggravated identity theft – 2 year mandatory minimum prison sentence
  • Money laundering – Up to 20 years imprisonment
  • Conspiracy – Same penalties as underlying crime

The feds can also hit you with huge financial penalties like treble damages and civil fines under the False Claims Act if you defrauded these federal programs.

You want an experienced federal criminal defense lawyer on your side if facing PPP or EIDL fraud charges. The penalties can be severe.

Possible Defenses to COVID Relief Fraud Charges

Skilled criminal defense attorneys know how to fight federal fraud accusations through legal defenses such as:

  • No intent – If you made an honest mistake or had no intent to defraud, this could defeat charges that require willfulness.
  • Statute of limitations – There are deadlines on how long after an alleged crime the government can charge you. If missed, the charges could get tossed.
  • Duress – If you were somehow improperly pressured into committing fraud, this may provide a defense.
  • Entrapment – If you can show that government agents induced you to commit a crime you otherwise wouldn’t have, this may invalidate the charges.

An attorney can also proactively work with prosecutors to try to avoid charges being filed if you are under investigation. Don’t wait until it’s too late.

What to Do If You’re Under Investigation for PPP/EIDL Fraud

Here are some tips if you find out you are being investigated for potential COVID relief fraud:

  • Don’t panic – Many investigations don’t end up leading to formal charges.
  • Get legal help immediately – Invoke your right to counsel if contacted by federal agents.
  • Don’t answer questions – Politely decline to be interviewed without your lawyer present.
  • Gather records – Documents may help prove your innocence if charges are filed.
  • Consider proactive outreach – Your attorney may be able to engage prosecutors to avoid charges being filed.

The risks are too high to go it alone if the feds come knocking about possible PPP or EIDL fraud. Consult a lawyer asap.

Potential Whistleblower Awards for Reporting Fraud

The federal government offers big incentives for whistleblowers who report fraud against government programs like the PPP and EIDL initiatives. Under the False Claims Act, whistleblowers can get 15% to 30% of any government recovery over $1 million.

Before reporting fraud, consult with an attorney to understand your rights and how to properly file a whistleblower lawsuit under seal to qualify for an award. You generally need an original source of information and should not have been involved in the fraud yourself.

Whistleblower cases take time, but the rewards can be well worth it, sometimes totaling millions of dollars. Just make sure you have experienced counsel guiding you.

Work with a Lawyer to Handle PPP/EIDL Investigations

With federal prosecutors aggressively pursuing COVID relief fraud, you need skilled legal help if caught up in a PPP or EIDL investigation in Arkansas. Don’t wait to get counsel involved.

Connect with a top lawyer in Arkansas to protect your rights. They can guide you through the process, build defenses against potential charges, and try to work with prosecutors to avoid indictment if possible.

Having an experienced attorney on your side can make all the difference in achieving the best possible outcome if accused of PPP or EIDL program fraud. Don’t go it alone against the feds.

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