Last Updated on: 11th October 2023, 06:44 pm

PPP and EIDL Loan Fraud Lawyers: Your Guide to Avoiding Trouble

The COVID-19 pandemic led to an unprecedented amount of government assistance for small businesses, including the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) funds from the Small Business Administration (SBA). While these programs threw a lifeline to many businesses impacted by the economic effects of the pandemic, they also opened the door to potential fraud and abuse. Allegations of PPP and EIDL fraud have been rising across the country. As a business owner who received PPP or EIDL funds, you may be worried about facing an audit or charges. Having an experienced lawyer can help you navigate any fraud investigations and protect your business. This guide covers key things to know about PPP and EIDL fraud issues and how a knowledgeable attorney can defend your interests.

Understanding PPP and EIDL Fraud

PPP loans were meant to help businesses keep employees and pay certain expenses during COVID shutdowns. These loans can be forgiven if the money is used for payroll, rent, utilities and other eligible costs. EIDL loans and grants provided working capital to businesses losing revenue due to the pandemic.The rushed loan process and minimal oversight created opportunities for fraud in applications and use of funds. Some common fraudulent activities include:

• Providing false info on applications like number of employees, payroll, expenses
• Claiming payroll for fake employees or inflating payroll
• Using PPP money for personal costs instead of business expenses
• Getting multiple PPP loans through different lenders (“loan stacking”)
• Making false statements to get loans forgiven
• Reselling PPP loan funds received
• Using stolen identities to apply for fraudulent loans

The Justice Department has increased prosecutions for COVID relief fraud, charging hundreds with PPP and EIDL fraud since 2020. Penalties can include fines up to $1 million and 30 years in prison for major cases. Even application mistakes can be considered fraud if false info was knowingly given.

Responding to SBA Audits or Investigations

Many cases start with an SBA audit of a PPP or EIDL application or forgiveness request. Red flags like inconsistent numbers, questionable documents, and odd spending may trigger an investigation.If contacted by SBA auditors or investigators, business owners should consult a lawyer immediately. An experienced attorney can help craft responses to information requests, assert rights and protections, and avoid self-incrimination.

Fighting PPP or EIDL Fraud Charges

If formally accused of COVID relief fraud, skilled legal counsel is essential. An attorney experienced with federal fraud cases can spot weaknesses in the prosecution’s case and build an aggressive defense. Some potential defenses include:

• Lack of intent – The prosecution must prove you knowingly gave false information to defraud. Mistakes or misunderstandings may rebut intent.
• No loss to the government – If PPP funds were used properly or repaid, there may have been no or minimal loss.
• Duress – External pressures like avoiding bankruptcy may have influenced bad choices.
• Entrapment – Aggressive sales tactics by lenders could potentially be raised as a defense.

For those facing convictions, minimizing consequences is critical. An experienced lawyer can advocate for:

• Diversion programs or deferred prosecution to avoid a criminal record
• Plea bargains to lesser charges to reduce penalties
• Minimal fines, restitution, and supervised release rather than prison
• Retaining eligibility for future SBA loans

In some cases, civil settlements with the DOJ can preclude criminal prosecution. Skilled negotiators may also be able to get suspension from federal loan programs rather than outright exclusion, preserving options for the future.

Avoiding Collateral Consequences

Beyond direct penalties, PPP or EIDL fraud convictions can significantly impact finances, career, and reputation. An attorney may help minimize consequences like:

• Loss of professional licenses and debarment from state and local contracts
• Difficulties getting business financing
• Exclusion from industry groups and associations
• Reputational damage and loss of customers
• Restricted international travel due to criminal record

Finding the Right Lawyer for Your Situation

Dealing with PPP or EIDL fraud charges can be overwhelming. Engaging an experienced federal criminal defense lawyer is prudent. They can objectively assess your situation, advise on risks, and build the strongest possible case.Look for an attorney who will coordinate with financial experts, accountants, consultants, and other professionals to cover all bases. A team approach combining the right expertise can make a big difference in getting charges reduced or dismissed.The lawyer should thoroughly examine the paper trail and financial records related to your PPP or EIDL application and usage of funds. This enables them to spot inconsistencies, mistakes, and weaknesses in the prosecution’s arguments.An effective attorney will also negotiate aggressively with prosecutors to get charges dropped or plead down to lesser offenses. They know how to craft settlements and alternative resolutions that avoid harsh penalties.For business owners worried about facing fraud allegations, the right lawyer can provide expert guidance and advocacy to resolve the situation with minimal damage. Don’t hesitate to consult an experienced federal defense attorney if you have any concerns about potential PPP or EIDL fraud issues. They have the skills and knowledge to protect your interests.

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