Last Updated on: 28th July 2023, 07:21 pm

Feeling Edgy about Your SBA Loans Potentially Landing You in the Bank Fraud Hot Seat?

Picture this. You’re knee-deep in paperwork, trying to score some much-needed funding via federal loan programs like the Paycheck Protection Program (PPP) or the Economic Injury Disaster Loan (EIDL). It’s a hassle, and in the frenzy, the COVID-19 pandemic is not making things any easier. It’s vital to keep an eye on every detail you’re providing for these government loans; it’s got to be truthful, complete, and above all, accurate.

You see, even a simple misstep or — heaven forbid — a deliberate lie on your application could set you up for an unfriendly encounter with federal bank fraud charges. Well, you don’t want that, do you?

Falling into the SBA Loan Application Trap

“Honesty is the best policy”. You’ve heard it, right? Especially when you’re dealing with PPP or EIDL funding. One of the deadliest blunders businesses often fall into is fibbing about their eligibility criteria to tick every box on the program requirements.

Applicants providing crooked figures or false information—despite a desperate need for approval—risk plunging into the suspicious eyes of criminal prosecution. If you find yourself being scrutinized over your loan application, be smart, and seek legal counsel pronto!

Dabbling with Multiple Loans or Loan Stacking

Picture this: it’s the peak of the pandemic catastrophe, PPP/EIDL funds are scarce, and the loan processing is as clear as mud. Many a small-business owner, donned in their desperation hats, dashed to several lenders for assistance, getting involved in loan stacking. We’re talking submitting multiples applications, accepting money from multiple sources concurrently.

You see where I’m going here, don’t you? This maneuver sets alarm bells ringing for eagle-eyed investigators and snoopy prosecutors. They’re ready and waiting to connect Stackin’ Joe with violations of the fraud statutes concerning PPP/EIDL programs. Quoting from the good old 18 U.S Federal Code Title 18 Section 1343 Wire Fraud; also Section 1344 Bank Fraud, Section 1014 False Statements, and rounding it off with Section 1349 Conspiracy To Commit Fraud & Other Offenses. It’s no walk in the park, folks; it’s a jumble of legal jurisdictions.

Avoiding SBA Loan Fraud Indictment

Just like adding too much salt can ruin a stew, sprinkling your application with lies and errors, though unintentional, can make Uncle Sam’s fraud sensors spring into action. The stakes are always high when you’re dealing with money matters, whether it’s borrowing some from the PPP or applying for EIDL funds.

Material Misrepresentation on SBA Loan Applications: Truth or dare, anyone? Put your daredevil desires on the backburner and stick with the truth when it comes to SBA loans. Filing false information—however tempting—is a dangerous game. If Lady Luck ditches you, you’re looking at heavy prosecution. And let me tell you, it ain’t pretty! To keep the law enforcement wolves at bay, get in touch with your trusted lawyer and get your defenses up.

Multiple Loans or Loan Stacking: Plunge into Peril

What’s riskier than a shark-infested ocean? Trying to secure multiple loans through different lenders during a pandemic. Whether out of ignorance or complicity, it’s a quick step from business as usual to a potential run-in with PPP loan fraud investigators.

Decoding PPP Loan Fraud and Its Investigation

Ready for a quick game of “Did you know”? Filing a false loan application under the PPP scheme counts as fraud. If found to be guilty, the fraudsters are in for a wild ride with prosecutors and federal agents who have the job of deciding if their violations make criminal charges the next order of business.

What foul play can land them in hot water? Misrepresentations on loan applications (like pretending that employees are independent contractors or using funds for unapproved purposes. Deliberate or not, you’re lining up the dominoes for the authorities, setting your business on a path to criminal charges. In audit reviews conducted by federal agents, even incorrect answers can brew trouble.

You could also face additional penalties under 18 U.S Code 1343 – wired fraud charges for using electronic sources to pull in money using false statements/promises. Top it off with bank fraud charges under 18 U.S Code 1344 if the violations occur at banks or other financial institutions. So, think and step carefully, my friends. Let’s not fall into the fraud trap. Remember, when it comes to loans, it’s better to be safe than sorry. Now, go forth and prosper, responsibly. Can I get an Amen to that?