Last Updated on: 25th February 2023, 05:33 pm

Conspiracy & Attempt to Commit PPP Loan Fraud: Understanding the Stakes

As the COVID-19 pandemic devastated the economy, the US government quickly launched the Paycheck Protection Program (PPP) loan to help businesses keep their employees on the payroll. Unfortunately, the rushed nature of the program led to an estimated $76 billion in fraudulent PPP loans. The federal government is now cracking down on suspected fraudsters, and those who allegedly attempted to commit PPP loan fraud may now face federal charges.

Attorney Todd Spodek and the Spodek Law Group are here to help you navigate these difficult times. Our federal criminal defense lawyers will examine the statutes in more detail, and we will provide you with the best legal representation possible.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was primarily designed to help people and businesses affected by the coronavirus pandemic. The PPP, a forgivable loan intended to minimize layoffs, was a critical part of the CARES Act. However, the unprecedented speed with which the government rolled out the program, combined with the lack of oversight, allowed fraudsters to take advantage of the system. Now, the federal government is conducting comprehensive investigations to identify loan fraud and pursue criminal charges against those who defraud the program.

Overview of 18 U.S.C. 371: Conspiracy to Commit PPP Loan Fraud

Federal prosecutors and agents will target individuals or businesses that violated the terms and conditions of the PPP program by submitting false information on a PPP loan application, applying for a PPP loan from several lenders (loan stacking), using PPP funds for an unapproved purpose, or lying to federal agents during a PPP loan fraud audit. To be convicted of this crime, the government must prove that you agreed with one or more other people to commit an illegal act and that you took some action towards carrying out that plan.

Our experienced lawyers will examine this statute more closely to identify the best legal strategy to defend against this charge. We will show you how to protect your legal rights and help you make informed decisions.

Overview of 18 U.S.C. 1349: Attempt and Conspiracy to Commit PPP Loan Fraud

This law applies to any fraud in Chapter 63 of the Federal Criminal Code. Attempting to commit federal fraud carries the same penalty as actually succeeding. The law has a broader reach than U.S.C. 371 because it covers conspiracies between two or more people and individuals who attempt fraud on their own.

If you are under investigation for PPP loan fraud, don’t speak to federal agents without first consulting a criminal lawyer. Spodek Law Group and Attorney Todd Spodek have the experience and expertise to represent you and protect your rights. We can help you review all the crucial information and documentation to determine whether you have a strong defense against the fraud accusations. With our help, you can avoid criminal charges being filed and work out a resolution that doesn’t involve formal criminal charges.

The Types of PPP Loan Fraud

PPP loan fraud is becoming an increasingly common issue, and the consequences can be severe. The Spodek Law Group and Attorney Todd Spodek are here to help if you are facing charges related to PPP loan fraud. Our experienced Philadelphia federal criminal defense attorneys have seen federal prosecutors aggressively bring criminal charges for a wide variety of conduct relating to the Paycheck Protection Program. Investigations and indictments often relate to the following types of alleged conduct:

PPP Application Fraud: Under the CARES Act, businesses that applied for PPP loans were required to provide accurate and truthful information on their applications. Providing false information as part of a loan application could result in an investigation or criminal charges. The federal government is particularly interested in false information relating to the number of employees working for the company, accurate employee payroll numbers, companies that categorized employees as independent contractors to qualify as eligible applicants, salary and revenue numbers for the company and its employees, and using someone else’s information to apply for a loan.

Fraudulent Use of the PPP Loan Funds: The Paycheck Protection Program provided limits on the use of the funds from the PPP loans. The funds were not supposed to be used for other purposes, and the use of the funds for other purposes would result in the funds not being eligible for loan forgiveness. Therefore, if the funds were used for personal expenses or luxury items rather than legitimate business expenses, those expenditures could attract the attention of federal prosecutors in the United States Attorney’s Office or Department of Justice.

Fraud in the Loan Forgiveness Certification Process: Providing false information in connection with a forgiveness application could lead to criminal charges. If a borrower submitted fraudulent or inaccurate documents, attested to statements that were not true, or provided incomplete information, those submissions could attract federal attention.

Obtaining Multiple PPP Loans From Different Lenders: Companies that applied for more than one loan with multiple lenders for which they were not eligible could be investigated by the government and criminally charged.

Potential Criminal Charges Relating to PPP Loan Fraud

The potential criminal charges relating to PPP loan fraud are severe. Federal prosecutors could bring charges under several federal statutes, including bank fraud, aggravated identity theft, false claims act, and wire fraud. If you lie to the investigating agents while being questioned, you could be charged with a false statements charge. It is also common to see money laundering charges in connection with these investigations.

Bank Fraud

A fraudulent application for a PPP loan could qualify as an attempt to defraud a lending institution using a false representation under 18 USC § 1344. A violation of § 1344 can result in a prison term of up to 30 years and/or a fine of up to one million dollars. The statute provides that whoever knowingly executes or attempts to execute a scheme or artifice to defraud a financial institution or obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

Aggravated Identity Theft

Under 18 USC § 1028(A), an individual accused of using someone else’s information to apply for a PPP loan could face a charge of aggravated identity theft. Aggravated identity theft is a serious charge which can carry a two-year mandatory minimum prison term in federal prison.