Last Updated on: 1st March 2023, 09:36 am

Possible Criminal Charges for PPP Loan Fraud

If you’re charged with a PPP crime, call the Spodek Law Group today!
The Paycheck Protection Program(PPP) was created to allow small business owners to keep workers on their payroll without additional burdens on them financially. The program provided federally guaranteed loans to small businesses – with a maximum amount of $10 million for eligible businesses. More than 10 million loans, totaling more than $750 billion were issued under PPP. These funds were provided as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Needless to say, these loans truly played a major role in helping small business owners cover essentials like payroll, rent, utilities, and other expenses.
However, this free money attracted a lot of people individuals who tried to act unethically. Many con-artists were attracted to the PPP loans and tried taking the funds. Businesses who applied for a PPP loan are required to meet very specific requirements, and there are limits how the funds can be spent. Businesses who violated these requirements while obtaining a PPP loan – could be held liable for charges of PPP fraud. Below are some examples of ways businesses could be accused of committing PPP loan fraud:

• Making false statements on their PPP loan application
• Applying for PPP loan money, from multiple lenders at the same time
• Using PPP loan money for unapproved items
• Submitting a false certification for PPP loan forgiveness
• Being misleading during the PPP loan audit, or investigation

Consequences of PPP loan fraud | PPP loan punishment

If you lie on your PPP loan application, or omit information, you can face financial penalties, civil penalties, and criminal penalties. Some of the charges you might face include, but are not limited to:
Bank Fraud: If you lie on your PPP loan application, this is looked at as deceiving a financial institution for profit. You can be charged with bank fraud, under U.S. Code Title 18 U.S.C. 1344. Bank fraud is a white collar crime, and the penalty will vary based on the situation. Typically, bank fraud punishment can include up to one year in jail, and thousands of dollars in fines.
Wire Fraud: If you used a device, like telephone, internet, etc, to defraud an institution in order to gain funds from a PPP loan – you can be convicted of wire fraud. Penalties for wire fraud can include a prison sentence up to 20 years, and in addition – restitution to anyone impacted.
Conspiracy to Commit Fraud: If you lie on your PPP loan application with someone else, you are likely to get charged with conspiracy to commit fraud. This involves two, or more people, conspiring to commit any offense against the U.S.. The charge can come with up to 5 years in prison, and other financial fines.
False Statements to a Financial Institution: It is absolutely illegal to making false statements to a financial institution. If you lie on your PPP loan application, you could be charged with a federal crime. This act is a criminal offense under section 1014, and if you’re convicted can come with imprisonment of up to 30 years – or worse.

What to do if you’re under investigation for PPP loan fraud

If you’re under any investigation, at all, it’s important to be careful what you say. Do not say something you might regret later. Anything you say – can, and will, be used against you. In times like these, it’s in your best interest to hire a PPP loan fraud defense attorney who can advise you. You might think you’re telling the truth, or clearing your name, but in reality – you just incriminated yourself. If you lied on ppp loan application, saying anything to the SBA agents can be used against you. Any words you say – can get you in trouble for the PPP loan. The problem will not go away on its own – you will need the help of a firm like the Spodek Law Group. If you think you are facing PPP loan fraud charges, here are some of the steps we can take to help:

• We can help look at your business and personal records in order to help support your case
• We can communicate with the necessary government individuals involved in the case to gather information which will help us create a favorable outcome for your case.

If you’re arrested for PPP loan fraud, here are some of the best routes of defenses
Lack of intent: In order to charge you with PPP loan fraud and get you in trouble for PPP fraud – the government will need to prove you intentionally misrepresented facts on the PPP loan application to receive more money. It is natural that there might be mistakes on the PPP loan applications – because of how little guidance was initially offered.
PPP Loan was used legitimately: In order to change you with PPP loan fraud, the government has to prove that the funds were used incorrectly. If you requested, and received a PPP loan – you are required to use the funds for very specific purposes. If you signed a PPP loan application, you are required to certify that the funds are going to be used for “business-related,” purposes under the PPP loan requirements. If the government says you didn’t use the PPP funds appropriately – the main way to defend against this is to look at the usage of the funds to prove you used the PPP funds correctly.
Identity: Another fact that the government will be required to prove is that you are the person who committed the crime. PPP applications require that the business owner file specific applications. This requires the government to prove that the person who submitted the application – was in fact, the business owner. If we can prove that there is no evidence that you – the business owner – submitted the request, then it will make it easier to prove your innocence.

Am I in trouble for lying on my PPP loan application

Lying on PPP application is not a good thing. It is expected that mistakes might be made. When the PPP loan program was first unveiled everyone was in a hurry to fill out their application. There was no expert assistance. Everyone was stuck going to an online portal, and filling it out. Banks knew very little. As a result, mistakes were made by everyone. There were so many mistakes made due to poor guidance, that the SBA offered amnesty to allow people time to return the funds without any penalties.
What happens if you lie on your ppp loan?
Well if you took advantage of the amnesty program offered by the SBA – nothing. You returned the funds, and there was nothing more to worry about. There was no harm done.

How can you get in trouble with PPP loan?
The main way you can get in trouble is if you lied on your PPP loan application in a big way. For example, if you said you had 15 employees – yet you only have 1 employee. These are examples of things which can get you in trouble – because the number of employees you have is listed on your previous tax returns. It is easy for the SBA to find this information.

Can you go to jail for $20000 ppp loan
Depending on whether you lied to get the PPP loan – you could go to jail. Did you lie about the number of employees you had? Did you lie about your business expenses? Did you misuse the funds? Can you go to jail for doing the ppp loan fraudulently is a popular question, and one that many people are asking. The charges for ppp loan fraud can be severe.

Can you go to jail for SBA loan fraud
The answer is yes. Jail is one of the consequences – of the several federal crimes you could be committed with. Most federal crimes, such as wire fraud, bank fraud, etc, have jail sentences attached to them. Bottom line, you can go to jail for SBA loan fraud. If you are caught lying on SBA loan applications – the penalty can be severe. Any attempts at defrauding the SBA can be considered PPP loan fraud. Many PPP loan fraud cases $20k and above, are being audited and investigated. Many people ask, “Are people going to jail for the ppp loan,” and the question is yes – they are, if they did fraud.

Could Your Company Be Prosecuted for Paycheck Protection Program (PPP) Loan Fraud?

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. The act aimed to help individuals and companies who were adversely affected by the COVID-19 pandemic. One of the significant relief measures was the Paycheck Protection Program (PPP), which was endowed with almost $350 billion in federal funds. This program was designed to provide much-needed financial support to small and medium-sized businesses that were facing financial difficulties due to the economic impacts of the COVID-19 crisis.

Despite its significant size, the Paycheck Protection Program quickly ran out of funds within minutes of its launch. Lenders that were participating in the program were swamped with applications, and many eligible companies were unable to secure the loans. Whenever there is a federal program that offers financial relief, questions about fraud arise. The disorganized nature of the application rollout, and the rapid depletion of the program funds has put many companies that received PPP loans under heavy scrutiny from federal authorities.

Various Fraud Concerns Related to PPP

In response to concerns about fraud, the U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC) is seeking input from lenders about how to improve future programs and address the issues that have arisen from the PPP. This effort is likely to focus on fraud identification because similar federal relief programs have had their share of fraudsters.

Several other fraud concerns are related to the PPP, and while the U.S. Treasury Department may be looking ahead, other agencies are looking back to identify companies that unlawfully received funds from the PPP. Companies that received funds from multiple lenders may become early targets in the government’s efforts to prosecute PPP fraud. These companies may face heavy penalties, and it’s crucial for them to engage experienced federal counsel like Spodek Law Group and Attorney Todd Spodek to mitigate the risk of prosecution.

What Constitutes PPP Loan Fraud?

Various acts and omissions have the potential to lead to allegations of federal fraud in relation to the Paycheck Protection Program. This includes not only intentional misrepresentations (which can lead to criminal fraud charges), but also inadvertent mistakes that still resulted in the improper receipt of federal funds.

The following are possible allegations of fraud in relation to the PPP:

1. Loan “Stacking”: An applicant receiving PPP loans from multiple lenders.
2. PPP Loan Application Fraud: Misrepresenting information on loan applications to fraudulently claim eligibility.
3. Fraudulent Loan Certification: Making bad-faith certifications for securing PPP loans.
4. Using PPP Funds for Ineligible Business Purposes: Using PPP funds for any other purpose is impermissible and has the potential to lead to allegations of fraud.
5. Using PPP Funds for Fraudulent Purposes: The U.S. government intends to prosecute individuals who are personally involved in fraudulent activities.
6. Fraudulent Loan Forgiveness Certification: Requesting loan forgiveness by providing false information about using the PPP funds for authorized expenses.
7. Misrepresenting or Concealing Information During a PPP Audit or Investigation: Making false statements or withholding information required to disclose to federal authorities.

How to Prove Compliance with PPP Requirements?

It is not entirely clear what companies need to do to prove their compliance with the PPP requirements. Minimally, however, companies that received PPP funds must document the source of payment for all eligible and non-eligible expenses. This documentation will help demonstrate compliance in the event of a federal audit or investigation.

Experienced Counsel for PPP Fraud Cases

Given the significant risk of prosecution for PPP loan fraud, it’s crucial

for companies that received PPP loans to engage experienced federal counsel like Spodek Law Group and Attorney Todd Spodek. The firm has a deep understanding of the law and can exhibit professionalism to handle the legal situation. They have the necessary experience to handle PPP fraud cases and can help companies mitigate the risk of facing substantial penalties.

Conclusion

The Paycheck Protection Program (PPP) was created to provide financial relief to small and medium-sized businesses that were facing financial strain due to the economic impacts of the COVID-19 crisis. However, concerns about fraud have arisen due to the rapid depletion of program funds and the disorganized nature of the application rollout. Companies that received PPP loans must be aware of the various fraud concerns related to the program and take steps to prove their compliance with PPP requirements.

In case of allegations of PPP loan fraud, companies must engage experienced federal counsel like Spodek Law Group and Attorney Todd Spodek. The firm can help companies mitigate the risk of facing substantial penalties and show that they have the necessary experience to handle the legal situation.