Criminal Defense Lawyers

Dallas PPP Loan Fraud Lawyers

If your a Dallas business owner who’s received a letter from the SBA, been contacted by FBI agents, or learned your under investigation for PPP loan fraud, you’re facing one of the most stressful situations imaginable. Your not alone. The Dallas-Fort Worth metroplex recieved over $8.2 billion in PPP loans during the pandemic, and federal prosecutors in the Northern District of Texas are now aggresively investigating thousands of these loans for potential fraud.

Here’s what you need to understand right away: their’s a huge difference between making an honest mistake on your PPP application during the chaos of 2020 and commiting actual fraud. The PPP program launched with minimal guidance, rules changed weekly, and even experienced accountants gave conflicting advice. Many Dallas business owners who were desperately trying to save there companies and keep employees on payroll made errors without any criminal intent.

This article explains everything you need to know about PPP loan fraud charges in Dallas, how the federal prosecution process works in the Northern District of Texas, what defenses are available, and how to choose the right attorney to protect your rights. Whether you’re facing an investigation, have recieved a target letter, or have already been charged, understanding the process is your first step toward the best possible outcome.

What Constitutes PPP Loan Fraud?

PPP loan fraud occurs when someone makes false statements or misrepresentations on their Paycheck Protection Program loan application or forgiveness application with the intent to deceive the lender or the Small Business Administration. The key word their is “intent”—federal fraud charges require prosecutors to prove you knowingly and intentionally lied, not just that you made a mistake.

Common allegations in PPP fraud cases includes:

• Inflated Payroll Numbers: Overstating the number of employees or their salaries to qualify for a larger loan
• Fake Employees: Creating ficticious employees who don’t actually exist or work for the buisness
• Non-Existent Businesses: Applying for loans using shell companies with no real operations
• Multiple Applications: Submitting seperate applications for the same business or using multiple businesses you control
• Misrepresentation of Business Type: Claiming to operate an eligible business when your actually in an ineligible industry
• False Revenue Figures: Fabricating income statements or tax returns to show higher revenue then you actually had
• Ineligible Business Activities: Using a legitimate business to obtain funds for an ineligible purpose
• Loan Proceeds Misuse: Spending PPP funds on personal expenses like luxury cars, jewelry, or vacations rather then payroll and qualifying expenses

However—and this is crucial—not every error on a PPP application is fraud. The PPP program rolled out in unprecedented chaos. Look, the SBA issued new guidance almost daily, lenders interpretted rules differently, and business owners faced impossible deadlines to apply. Many Dallas business owners relied on there accountants or attorneys for advice, and that advice wasn’t always correct.

I’ve seen cases where business owners genuinely believed they was calculating payroll correctly based on what their CPA told them. I’ve seen situations where the confusion about independent contractors versus employees led to honest errors. The question isn’t just “did you make a false statement?” The question is: “did you intend to commit fraud, or did you make a good faith mistake?”

In Dallas, we saw thousands of small businesses in hospitality, retail, and service industries facing complete collapse in March and April of 2020. Unemployment spiked to over 13%. Buisness owners were desperate to save companies they’d built over decades and protect there employees’ livelihoods. That desperation doesn’t justify fraud, but it does provide important context that federal judges in the Northern District of Texas understand.

What Are the Federal Penalties for PPP Loan Fraud?

PPP loan fraud can be prosecuted under several federal statutes, each carrying severe penalties:

18 U.S.C. § 1344 – Bank Fraud

This is the most serious charge your likely to face. Bank fraud carries a maximum sentence of up to 30 years in federal prison and fines up to $1,000,000. The statute applies because PPP loans were made through banks and credit unions, making false statements to obtain these loans constitutes bank fraud under federal law.

18 U.S.C. § 1343 – Wire Fraud

Since PPP applications was submitted electronically, wire fraud charges are common. Wire fraud carries up to twenty years in prison and substantial fines. Basically, any time you used email, the internet, or electronic banking in connection with the fraud, wire fraud applies.

18 U.S.C. § 1001 – False Statements

This statute criminalizes making false statements to federal agencies. It carries up to 5 years in prison. Many PPP prosecutions include this charge because applicants made certifications to the SBA that there statements were true.

18 U.S.C. § 1014 – False Statements to a Financial Institution

Similar to bank fraud but focused specifically on false statements. This charge carries up to thirty years in prison and fines up to $1 million dollars. Prosecutors often charge this along with bank fraud.

Now, here’s what you need to understand about these maximum penalties: they’re exactly that—maximums. In reality, federal sentencing is based on the U.S. Sentencing Guidelines, which calculate a recommended sentence based primarily on the loss amount involved in your case.

The loss amount is absolutley the most important factor in determining you’re sentence. We’ll discuss this in detail below, but here’s the basic breakdown:

• Under $150,000: You might recieve probation or 6-12 months
• $150,000 to $550,000: Typically 18 to 24 months
• $550,000 to $1.5 million: Usually 30-37 months
• Over $1.5 million: 41+ months as a base level

But here’s something most people don’t realize, and it’s critical: restitution can be more burdensome then prison time. Federal law requires judges to order full restitution to victims—in PPP cases, that means the SBA or the lender. You’ll be required to repay every dollar obtained through fraud, plus potentially interest.

Restitution orders are enforcable for 20 years. They survive bankruptcy. The federal government can garnish you’re wages, intercept your tax refunds, place liens on your property, and pursue collection for decades. I’ve seen clients who completed there prison sentences but are still paying hundreds of dollars per month in restitution 10 years later, with no end in sight.

For alot of defendants, the long-term financial devastation of restitution exceeds the impact of even a multi-year prison sentance. This is why negotiating the loss calculation and restitution amount is just as important as fighting the underlying charges.

How PPP Fraud Cases Are Investigated and Prosecuted in Dallas

Understanding how PPP fraud investigations work in the Northern District of Texas is critical to protecting you’re rights. These cases don’t start with an arrest—they start with data analytics and typically unfold over many months or even years. Here’s the stage-by-stage process:

Stage One: SBA Automated Review and Red Flags

The SBA uses sophisticated data analytics to identify potentially fraudulent loans. There algorithms flag applications with red flags like:

• Payroll numbers that don’t match IRS records
• Multiple applications from the same IP address or device
• Businesses that didn’t exist before the pandemic
• Loan amounts inconsistant with tax returns
• Suspicious patterns in forgiveness applications

If you’re loan gets flagged, it doesn’t mean your automatically under criminal investigation. Many flagged loans are resolved administratively with the SBA requesting additional documentation or asking for repayment.

Stage 2: SBA Office of Inspector General Investigation

If the SBA OIG believes fraud might of occurred, they’ll open there own investigation. At this stage, you might recieve a letter requesting documents, financial records, or an interview. This is a critical decision point: what you do at this stage can determine whether your case becomes criminal or gets resolved civilly.

Many business owners make the mistake of trying to explain themselfs directly to investigators without legal representation. Don’t. Anything you say can and will be used against you in a criminal prosecution. You have the right to decline the interview and consult with an attorney first.

Stage Three: FBI Dallas Field Office Referral

For larger cases or cases with clear indicators of fraud, the SBA OIG refers the matter to the FBI. The Dallas FBI field office, located at 1 Justice Way, has dedicated agents working PPP fraud cases. Once the FBI is involved, your definitley in a criminal investigation.

The FBI will obtain bank records, interview witnesses (including you’re employees, accountant, lender representatives), and build a case. This stage can take anywhere from a few months to over a year.

Stage 4: Target Letter

If the FBI believes they have enough evidence to prosecute, you might recieve a target letter from the U.S. Attorney’s Office for the Northern District of Texas. A target letter informs you that your the target of a federal criminal investigation and typically invites you (through an attorney) to present your side of the story.

This is both a warning and an opportunity. Some targets who present a strong defense or provide evidence of good faith mistakes can convince prosecutors not to file charges. However, you need an experienced federal criminal defense attorney to handle this—it’s not something to attempt on you’re own.

Stage Five: Federal Grand Jury Proceedings

If prosecutors decide to move forward, they’ll present evidence to a federal grand jury at the Earle Cabell Federal Building in downtown Dallas (1100 Commerce Street). Grand jury proceedings are secret, and you don’t have a right to be present or present evidence unless you’re called as a witness.

The grand jury will determine whether probable cause exists to indict you. In practice, grand juries almost always return indictments when prosecutors ask for them—the saying goes, “a grand jury would indict a ham sandwich if the prosecutor asked.”

Stage 6: Indictment or Criminal Information

An indictment is the formal charging document listing the specific crimes your accused of. In some cases, prosecutors file a “criminal information” instead, which is used when a defendant has agreed to plead guilty without going through the grand jury process.

Stage Seven: Arrest or Summons and Initial Appearance

Once charged, you’ll either be arrested (typically early morning at you’re home) or recieve a summons to appear in court. Most PPP fraud defendants in Dallas recieve summonses rather then dramatic arrests, especially if they’re represented by counsel.

You’re initial appearance will be at the Earle Cabell Federal Building before a U.S. Magistrate Judge. The magistrate will inform you of the charges, you’re rights, and set conditions of release. Most PPP fraud defendants are released on personal recognizance bonds or unsecured bonds, though some may face electronic monitoring or travel restrictions.

Stage 8: Arraignment in the Northern District of Texas

Arraignment is typically scheduled within a few weeks of you’re initial appearance. This is where you formally enter your plea—guilty, not guilty, or no contest. Unless you’ve already reached a plea agreement, you’ll plead not guilty at arraignment.

Stage Nine: Discovery

After arraignment, the prosecution must provide discovery—all the evidence they plan to use against you. In PPP fraud cases, this often includes thousands of pages of bank records, loan applications, emails, and witness statements. You’re attorney will review all this evidence to identify weaknesses in the government’s case and potential defenses.

Stage 10: Pretrial Motions

Your attorney may file motions to suppress evidence obtained illegaly, dismiss charges for legal insufficiency, or compel additional discovery. The Northern District of Texas has specific local rules governing motion practice, and experienced Dallas federal practitioners know how to navigate these procedures effectively.

Stage Eleven: Trial or Plea Agreement

The vast majority of federal criminal cases—over 95%—resolve through plea agreements rather then trials. This isn’t because defendants are all guilty; it’s because the federal conviction rate at trial exceeds 90%, and plea agreements typically offer reduced charges or sentencing recommendations in exchange for avoiding trial.

Your attorney will negotiate with the Assistant U.S. Attorney handling you’re case to seek the best possible resolution. This might include pleading to lesser charges, agreeing to a specific sentencing recommendation, or securing cooperation agreements if applicable.

If you go to trial in the Northern District of Texas, you’ll have a jury trial before a district judge. PPP fraud trials typically last 3-7 days, depending on the complexity of the case.

Stage 12: Sentencing

If you plead guilty or are convicted at trial, the court will order a presentence investigation report (PSR) prepared by the probation office. The PSR calculates the recommended sentence under the federal sentencing guidelines based on the loss amount, enhancements, and mitigations.

Your attorney will have an opportunity to object to the PSR’s calculations and present mitigating evidence at the sentencing hearing. The judge will consider the guidelines recommendation but isn’t bound by it—judges have discretion to vary upward or downward based on the specific circumstances of you’re case.

Sentencing hearings in the Northern District of Texas are typically thorough, with judges carefully considering all factors before imposing sentence. Having an attorney who knows the tendencies of specific NDTX judges can be a significant advantage.

Stage Thirteen: Appeal (If Applicable)

If convicted at trial or if you believe the sentence was illegally imposed, you have the right to appeal to the Fifth Circuit Court of Appeals. Appeals must be filed within 14 days of the judgment.

Stage 14: Supervised Release

After completing you’re prison sentence, you’ll typically serve a period of supervised release (similar to probation). Supervised release for fraud cases typically ranges from 1-3 years and includes conditions like reporting to a probation officer, maintaining employment, and allowing searches of you’re home and finances.

Understanding this complete process helps you see that their are multiple intervention points where an experienced attorney can make a difference—from preventing charges in the pre-indictment stage to negotiating favorable plea agreements to fighting for lower sentences at the sentencing stage.

Understanding Federal Sentencing in PPP Fraud Cases

Federal sentencing for PPP fraud is primarily driven by the U.S. Sentencing Guidelines, specifically USSG §2B1.1, which covers fraud and theft offenses. While judges aren’t required to follow the guidelines exactly (they’re “advisory” after United States v. Booker), they remain highly influential.

The single most important factor in calculating you’re guideline range is the loss amount. Here’s how it works:

The Loss Table

So if the court determines the loss amount in you’re case was $300,000, you’d get a +14 level increase, resulting in a guideline range of approximately 15 to 21 months. But if you’re attorney can argue the loss was actually $140,000 (just under the next threshold), you’d get a +10 increase, resulting in only 6 to 12 months—a massive difference.

How Loss Is Calculated in PPP Cases

This is were things get complicated, and were a skilled attorney can make a huge difference. The loss amount isn’t simply “how much money did you get from the PPP loan.” It’s more nuanced then that.

Courts must determine whether to use intended loss or actual loss:

• Intended Loss: What you intended to get through the fraud. If you applied for $500,000 based on false payroll numbers, the intended loss is $500,000, even if you only recieved $300,000.
• Actual Loss: The actual financial harm to the victim. This is were the analysis gets interesting in PPP cases.

Here’s the key argument: If you obtained a $500K PPP loan through false statements but then used the entire amount for qualifying expenses (payroll, rent, utilities), what’s the actual loss? The SBA’s loan is secured by the government, and if the funds was used for authorized purposes, they would of been forgiven anyway. So arguably, the actual loss is zero or minimal.

Courts have taken different approaches to this. Some have said the loss is the full amount obtained through fraud, regardless of how it was used. Others have considered whether the funds was used for qualifying purposes in calculating actual loss. This is a developing area of law, and having an attorney who understands these arguments can dramatically affect you’re sentence.

Enhancements That Increase Your Sentence

Beyond the loss amount, certain factors can enhance (increase) you’re guideline range:

• Sophisticated Means (+2 levels): Using complex schemes, shell companies, or falsified documents
• Leadership Role (+2 to +4 levels): Organizing or leading a conspiracy involving multiple people
• More Than 10 Victims (+2 levels): Though in PPP cases, courts debate whether their’s one victim (SBA) or multiple (each lender)
• Abuse of Position of Trust (+2 levels): Rarely applies in PPP cases unless you worked for the lender

Mitigations That Decrease Your Sentence

Fortunately, several factors can reduce you’re sentence:

• Acceptance of Responsibility (-3 levels): If you plead guilty and accept responsibility for you’re actions early in the process, you can reduce you’re offense level by three levels. This is one of the most significant mitigations available.
• Minor Role (-2 to -4 levels): If you was a minimal or minor participant in a scheme led by someone else
• Minimal Planning (-2 levels): If the offense involved minimal planning

The acceptance of responsibility reduction is huge. For example, if you’re base offense level is 20 and you get -3 for acceptance of responsibility, you drop to level 17. With a criminal history category of I (no prior record), that changes you’re guideline range from 33-41 months to 24-30 months—a potential savings of nine months or more.

Realistic Sentencing Outcomes

Based on actual PPP fraud sentences in the Northern District of Texas and nationwide, here’s what you can realistically expect:

• Under $100K with acceptance of responsibility: Probation or 0-12 months, often with home confinement
• $100K-$250K with acceptance of responsibility: 12-18 months, sometimes with halfway house time
• $250K-$500K: 18-30 months, typically in low-security federal prison
• $500K-$1M: 24-48 months
• Over $1M: 48+ months, with potential for longer sentences if aggravating factors exist

First-time offenders generally receive sentences at the lower end of the guidelines range. Defendants with significant mitigating factors (cooperation, extraordinary family circumstances, community ties, charitable work) may recieve downward variances below the guidelines.

Restitution: The Penalty That Keeps On Taking

Seperately from prison time, the court will order restitution—repayment of the full amount of loss. Under the Mandatory Victims Restitution Act (18 U.S.C. § 3663A), restitution is mandatory in fraud cases.

Here’s what you need to know about restitution:

• It’s enforcable for 20 years from the date of release from prison
• It survives bankruptcy—you can’t discharge federal restitution in bankruptcy
• The government can garnish you’re wages (typically up to 25%)
• They can intercept federal and state tax refunds
• They can place liens on you’re property
• Interest accrues on unpaid balances
• Failure to pay can result in violation of supervised release, leading to additional prison time

For many defendants, a $250,000 restitution order means decades of monthly payments. If you’re ordered to pay $500 per month, it’ll take over 41 years to pay off $250K, and that’s without accounting for interest. The long-term financial impact can be more devastating then a 2-year prison sentence.

This is why negotiating restitution amounts is critical. In some cases, defendants have been able to negotiate partial restitution by arguing the actual loss was less then the loan amount, or by making lump-sum payments in exchange for reduced total restitution.

How to Defend Against PPP Loan Fraud Charges

If your facing PPP fraud allegations, you might feel hopeless—but defenses do exist, and many of them are stronger then you might think. The key is understanding which defenses apply to you’re specific situation.

The Good Faith Mistake Defense

This is the most important defense for many Dallas business owners, and it’s more viable then the government wants you to believe. Federal fraud requires proof of criminal intent—prosecutors must prove beyond a reasonable doubt that you knowingly and intentionally made false statements with the intent to deceive.

If you made errors on you’re PPP application because you genuinely misunderstood the rules, relied on incorrect professional advice, or faced confusing and contradictory guidance, you may have a strong good faith defense.

Remember, the PPP program launched in complete chaos:

• The CARES Act passed on March 27, 2020
• The SBA released initial guidance on March 31—just four days later
• Applications opened on April 3rd
• Rules changed almost daily for the first 90 days
• Different lenders interpretted requirements differently
• The SBA issued over 15 interim final rules with changing guidance

In this environment, many business owners made honest errors without criminal intent. Maybe you was unsure whether independent contractors counted as employees. Maybe you’re accountant calculated payroll one way, and it turned out to be wrong. Maybe you relied on guidance from you’re lender that was later changed.

To establish a good faith defense, you’ll need contemporaneous evidence showing:

• Emails or communications with you’re CPA or attorney asking for guidance
• Documentation of the confusing or contradictory guidance you recieved
• Evidence that you attempted to comply with the rules as you understood them
• Lack of sophisticated concealment or elaborate schemes
• Use of the funds for legitimate business purposes

Look, if you created fake employees named “John Smith” and “Jane Doe” who never existed, or if you submitted fabricated tax returns, the good faith defense won’t work. But if you made a calculation error about which expenses qualified, or misunderstood the employee count requirements, good faith might be viable.

Lack of Criminal Intent

Related to good faith but slightly different: prosecutors must prove you had the specific intent to defraud. Negligence isn’t enough. Recklessness isn’t enough. They must prove you knowingly made false statements with intent to deceive.

If the evidence shows you was careless or made mistakes but didn’t have criminal intent, that’s a defense. This is were the context of the pandemic matters: business owners facing imminent closure and desperate to save there companies may have cut corners or been less careful then they should of been, but that’s different from deliberately defrauding the government.

Reliance on Professional Advice

If you relied in good faith on advice from you’re accountant, attorney, or other professional, that can negate criminal intent. This defense works best when:

• You fully disclosed all relevant facts to the professional
• You recieved specific advice about how to complete the application
• You followed that advice
• The advice was reasonable under the circumstances, even if ultimately incorrect

It’s important to note that simply saying “my accountant told me to do it” isn’t enough. You need documentation—emails, texts, contemporaneous notes—showing you actually asked for and recieved specific guidance.

Insufficient Evidence

The government has the burden of proving every element of the offense beyond a reasonable doubt. In some PPP cases, the evidence is circumstantial or based on inferences. A skilled defense attorney can challenge:

• Whether the government can prove you personally made the false statements
• Whether the statements was actually false (maybe you’re payroll calculation was correct under one interpretation of the rules)
• Whether you had the requisite intent
• Whether the government’s financial analysis is accurate

Constitutional and Technical Defenses

In some cases, procedural or constitutional defenses may apply:

• Fourth Amendment violations (illegal searches or seizures of evidence)
• Fifth Amendment violations (coerced statements)
• Sixth Amendment violations (denial of right to counsel)
• Statute of limitations defenses (generally 5 years for federal fraud, but can be extended)
• Venue challenges (whether the Northern District of Texas is the proper venue)

Mitigation Strategies

Even if you can’t defeat the charges entirely, mitigation strategies can significantly reduce you’re sentence:

• Voluntary Repayment: Repaying the loan before charges are filed shows good faith and reduces the loss amount
• Cooperation: Providing substantial assistance to the government in investigating others can result in significant sentence reductions
• Early Acceptance of Responsibility: Pleading guilty early and accepting responsibility earns a 3-level reduction
• Demonstrating Good Character: Letters from community members, employers, family showing your otherwise law-abiding character
• Family Circumstances: Demonstrating that incarceration would cause extraordinary hardship to dependents
• Health Issues: Serious medical conditions that would make incarceration particularly difficult

The reality is, most PPP fraud cases don’t go to trial. But that doesn’t mean you should just plead guilty to whatever the government offers first. An experienced attorney can negotiate for reduced charges, argue for lower loss calculations, and present mitigation evidence to secure the best possible outcome.

How PPP Loan Forgiveness Creates Additional Criminal Exposure

Here’s something critical that many business owners don’t realize: the PPP loan forgiveness application creates a second opportunity for fraud charges, and it’s often were investigations actually begin.

When you applied for you’re PPP loan in 2020, you made certain certifications about you’re business, payroll, and need for the funds. But then, anywhere from 8 to 24 weeks later (depending on the covered period you chose), you had to apply for loan forgiveness by documenting how you used the funds.

The forgiveness application required you to certify, under penalty of perjury:

• The amount of the loan proceeds spent on payroll costs
• The amount spent on covered mortgage obligations, rent, and utilities
• Detailed payroll records for employees
• That the information provided was true and correct

Many PPP fraud investigations started not from the initial application but from the forgiveness application. Here’s why:

Forgiveness Required Detailed Documentation

The initial PPP application was relatively simple—basic information about you’re business and payroll. But the forgiveness application required detailed documentation: payroll tax filings, bank statements, cancelled checks, detailed employee records. When lenders and the SBA reviewed these documents, discrepancies became obvious.

For example, maybe you claimed 25 employees on you’re application, but you’re payroll records only showed 18 actual employees. Maybe you claimed $300K in annual payroll, but you’re tax filings showed $180K. These discrepencies triggered fraud investigations.

The “Two-Bite” Prosecution Problem

Here’s the trap many business owners fell into: they made errors on there initial application in April 2020. Then, when it came time to apply for forgiveness in late 2020 or early 2021, they faced a choice:

1. Correct the errors, which might mean admitting to false statements on the original application
2. Continue with the false information on the forgiveness application

Many chose option two, figuring they was already committed. This was a catastrophic mistake. Now prosecutors can charge you with both application fraud (the initial false statements) and forgiveness fraud (the subsequent false statements).

Even worse, making false statements a year or more after the initial application completely undermines any “good faith confusion” defense. In April 2020, you could plausibly claim you was confused by rapidly-changing rules and acting in desperation. But by December 2020 or March 2021, when you filed for forgiveness, you’d had months to review the rules, consult professionals, and get it right. Continuing to lie looks like deliberate fraud, not honest confusion.

The Statute of Limitations Resets

Federal fraud charges generally have a 5-year statute of limitations. If you made false statements on you’re initial application in April 2020, the government would of had until April 2025 to charge you. But if you then made false statements on you’re forgiveness application in January 2021, the statute of limitations runs from January 2021—giving prosecutors until January 2026.

Each false statement is potentially a seperate crime. This means the forgiveness application can extend the government’s window to prosecute you.

What to Do If Your Initial Application Had Errors

If you already obtained a PPP loan and realize there was errors on you’re application, you face a critical decision about whether to apply for forgiveness. Here’s the honest truth: their’s no perfect answer, and you need an attorney to help you analyze you’re specific situation.

Generally speaking, your options are:

1. Don’t Apply for Forgiveness: Simply repay the loan. This avoids compounding false statements but raises red flags (why wouldn’t you apply for forgiveness?) and doesn’t eliminate liability for the initial application.
2. Voluntary Disclosure Before Forgiveness: Consult with an attorney about whether voluntary disclosure to the SBA might resolve matters civilly before filing for forgiveness.
3. Correct the Errors on the Forgiveness Application: File an accurate forgiveness application, even if it contradicts you’re initial application. This takes courage, but it shows good faith and might prevent criminal prosecution.
4. Apply for Partial Forgiveness: If you used some funds properly and some improperly, apply for forgiveness only for the qualifying expenses and repay the rest.

What you absolutely should NOT do is compound the false statements by providing false documentation for forgiveness. That eliminates any good faith defense and gives prosecutors an easy case against you.

If your already in the middle of an investigation or have recieved an SBA inquiry, do not file for forgiveness without consulting an attorney first. Filing false forgiveness documents while under investigation is extraordinarily damaging to you’re case.

What to Look for in a Dallas Federal Criminal Defense Attorney

Not all criminal defense attorneys are qualified to handle federal PPP fraud cases in the Northern District of Texas. This is a specialized area requiring specific knowledge and experience. Here’s what to look for:

Northern District of Texas Experience

Federal court is different from state court, and each federal district has its own culture, procedures, and unwritten rules. The Northern District of Texas has specific local rules governing everything from discovery to motion practice to sentencing procedures. An attorney who primarily practices in state court or in other federal districts won’t be as effective as someone who regularly appears in the Earle Cabell Federal Building.

Ask potential attorneys:

• How many cases have you handled in the Northern District of Texas?
• Are you familiar with the NDTX local rules and standing orders?
• Which NDTX judges have you appeared before?
• How often do you practice at the Earle Cabell Federal Building?

Federal White-Collar Crime Specialization

PPP fraud is a white-collar crime involving complex financial analysis, federal sentencing guidelines calculations, and nuanced legal defenses. You want an attorney who specializes in federal white-collar cases, not a general criminal defense attorney who mostly handles DWIs and drug cases.

Ask:

• What percentage of you’re practice is federal white-collar crime?
• Have you handled PPP fraud cases specifically?
• How many federal fraud cases have you taken to trial?
• What’s you’re familiarity with federal sentencing guidelines for fraud?

Relationships with Dallas Assistant U.S. Attorneys

Federal criminal defense in Dallas involves regular interaction with Assistant U.S. Attorneys from the Northern District of Texas U.S. Attorney’s Office. Attorneys who have established relationships and credibility with the AUSAs are better positioned to negotiate favorable plea agreements.

This doesn’t mean your attorney should be friends with the prosecutors—zealous advocacy is critical. But an attorney who’s known for being professional, honest, and prepared will get better results then someone the AUSAs don’t know or don’t trust.

Knowledge of Federal Sentencing

Understanding how federal sentencing guidelines work, how loss amounts are calculated, what enhancements and mitigations apply, and how to argue for variances is absolutely critical. Many criminal defense attorneys don’t handle federal cases regularly enough to truley understand this complex system.

Ask:

• Can you explain how the loss amount will be calculated in my case?
• What enhancements might apply to my offense level?
• What mitigations should we argue for?
• Have you successfully argued for downward variances in fraud cases?

Multi-Agency Investigation Experience

PPP fraud investigations typically involve multiple federal agencies—the FBI, SBA Office of Inspector General, IRS Criminal Investigation, and sometimes others. Understanding which agency is leading the investigation, how they coordinate (or don’t coordinate), and what that means for you’re case is important.

An attorney who’s dealt with FBI investigations, SBA OIG inquiries, and multi-agency task forces will be more effective then someone who’s never handled these specific types of cases.

Questions to Ask During Consultations

When you’re interviewing potential attorneys, ask:

1. What’s you’re experience with PPP fraud cases specifically?
2. How many federal fraud cases have you handled in the Northern District of Texas?
3. What do you think the government’s strongest evidence against me is?
4. What defenses might apply to my case?
5. What’s a realistic range of outcomes I should expect?
6. What’s you’re strategy for minimizing the loss calculation?
7. Should we consider early intervention before charges are filed?
8. What are you’re fees, and how does payment work in federal cases?

Be wary of attorneys who guarantee specific outcomes or promise they can “make the charges go away.” Federal prosecutions are serious, and while good attorneys can achieve excellent results, no ethical attorney can guarantee outcomes.

Immediate Steps to Take If You’re Facing a PPP Fraud Investigation

If your under investigation, time is critical. Here’s what you need to do right now:

1. DO NOT Talk to Investigators Without an Attorney

This is the single most important rule. If FBI agents show up at you’re home or business, or if you recieve a call from the SBA OIG, do NOT agree to an interview without consulting an attorney first.

You have the absolute right to decline the interview and speak with an attorney. Politely say: “I’d like to consult with an attorney before speaking with you. Please provide me with your contact information and I’ll have my attorney reach out.”

Don’t try to talk you’re way out of it. Don’t try to explain. Don’t think “I’ll just tell them the truth and they’ll understand.” Anything you say can and will be used against you, and investigators are trained to elicit incriminating statements even from innocent people.

2. Preserve All Documents

Do NOT destroy any documents related to you’re PPP loan, even if you think they’re incriminating. Destruction of evidence is a seperate federal crime (obstruction of justice, 18 U.S.C. § 1519) that carries up to 20 years in prison.

Preserve everything:

• PPP loan applications and forgiveness applications
• Bank records and statements
• Payroll records, tax returns, W-2s, 1099s
• Emails with your accountant, attorney, or lender
• Business formation documents
• Any communications about the PPP loan

Even if documents seem harmful, destroying them will make your situation far worse. Your attorney can evaluate how damaging they really are and develop strategies to address them, but only if they still exist.

3. Do NOT File for Loan Forgiveness During an Investigation

If your already under investigation or have recieved any inquiry from the SBA, FBI, or other agency, do NOT file for loan forgiveness without consulting an attorney first.

Filing false forgiveness documents while under investigation is extraordinarily damaging and will be used as evidence of consciousness of guilt and ongoing fraud. Even filing accurate forgiveness documents might be strategic error depending on the circumstances of you’re case.

4. Contact an Experienced Federal Criminal Defense Attorney Immediately

Don’t wait. Don’t think it’ll blow over. Don’t assume that because you haven’t been arrested, it’s not serious. Federal investigations move slowly, but once charges are filed, you’re options become much more limited.

Early intervention by an attorney can sometimes prevent charges from being filed entirely. Your attorney might be able to:

• Present evidence of good faith to prosecutors before indictment
• Negotiate civil resolution with the SBA instead of criminal prosecution
• Arrange voluntary repayment to minimize loss calculations
• Prepare a defense before charges are filed, so your ready if charges do come

Once your indicted, these options disappear. The time to act is now, while your still in the investigation stage.

5. Understand the Urgency: The Window Is Closing

Here’s something that isn’t widely discussed: in 2020 and 2021, federal judges and prosecutors were sympathetic to the chaos and desperation of the pandemic’s early days. Defendants who could show they was struggling business owners trying to save there companies in an unprecedented crisis often recieved more lenient treatment.

But by 2024 and 2025, that sympathy is fading. Courts now have more distance from the crisis, and there’s less tolerance for pandemic-era excuses. The “pandemic defense” window is closing, and defendants who delay resolution may find judges less sympathetic then they would of been two years ago.

This creates urgency to resolve cases now, while pandemic context still carries some weight, rather then dragging things out into 2026 and beyond when judges may view PPP fraud as just another fraud case.

6. Gather Information for Your Attorney

Before you’re first consultation with an attorney, gather:

• Any letters or communications from the SBA, FBI, or other agencies
• Your PPP loan application and all documentation submitted
• Your loan forgiveness application (if filed)
• Bank statements showing how loan proceeds was used
• Payroll records and tax returns
• Any emails or communications with your accountant or lender about the loan
• A timeline of events as you remember them

The more information you’re attorney has up front, the better they can assess you’re situation and develop a strategy.

7. Do NOT Discuss Your Case With Others

Don’t talk about you’re case with business partners, employees, family members (other then a spouse, which may be protected by marital privilege), or friends. Anything you say to them can be used against you—they can be subpoenaed and forced to testify about what you told them.

The only person you can speak freely with is you’re attorney, because of attorney-client privilege. Keep your case confidential.

Can You Face State Charges for PPP Fraud in Texas?

While PPP fraud is primarily prosecuted in federal court, many Dallas business owners don’t realize they might also face state criminal charges under Texas law. This creates what’s called “dual sovereignty” exposure—you can be prosecuted by both the federal government and the state of Texas for the same conduct.

Texas State Statutes That Apply to PPP Fraud

Several Texas Penal Code provisions can be used to prosecute PPP fraud:

• Theft by Deception (Texas Penal Code § 31.03): Obtaining property (money) through deception or false statements. Depending on the amount, this can range from a misdemeanor to a first-degree felony.
• Fraudulent Use of Identifying Information (§ 32.51): Using false business information or tax ID numbers
• Forgery (§ 32.21): Creating or using forged documents like fake tax returns or payroll records
• Securing Execution of Document by Deception (§ 32.46): Deceiving someone into executing a document (like a loan agreement)

When Do State Prosecutors File PPP Fraud Charges?

Texas state prosecutors—typically the Dallas County District Attorney’s Office—generally defer to federal prosecutors on PPP fraud cases. However, state charges might be filed when:

• The loan amount is relatively small (under $50,000), making it less of a priority for federal prosecutors
• The case involves other state crimes (like identity theft or forgery) in addition to the loan fraud
• Federal prosecutors decline to pursue the case, but state prosecutors believe charges are warranted
• The defendant has strong ties to the local community and state prosecution is seen as more appropriate

State vs. Federal: Comparing Penalties and Procedures

In some cases, state court prosecution might actually be preferable to federal prosecution, depending on the specific circumstances and potential penalties. However, you don’t get to choose—that decision is made by prosecutors.

Can You Be Prosecuted by Both?

Yes. The dual sovereignty doctrine allows both federal and state governments to prosecute you for the same conduct. This is because federal and state governments are seperate sovereigns, each with there own laws.

In practice, this rarely happens with PPP fraud. Usually, federal and state prosecutors communicate and decide who will handle the case. It’s inefficient to prosecute the same person twice for the same conduct. But technically, it’s possible.

Strategic Considerations

If your facing potential charges, your attorney should consider:

• Whether federal or state prosecution is more likely based on the amount and circumstances
• Which forum might produce better outcomes
• Whether to attempt to negotiate with one jurisdiction to prevent charges in the other
• How to handle dual investigations if both agencies are involved

An experienced Dallas attorney needs to be licensed in both state and federal court and understand both systems to effectively represent you.

Frequently Asked Questions About PPP Loan Fraud in Dallas

How do I prove PPP loan fraud was an honest mistake?

To prove an honest mistake, you need contemporaneous evidence showing you lacked criminal intent. This includes emails with you’re accountant asking for guidance, documentation of the confusing or contradictory guidance you recieved, evidence that you attempted to comply with rules as you understood them, and proof the funds was used for legitimate business purposes. The fact that the PPP program launched in chaos with rapidly-changing rules supports good faith arguments. However, if you created fake employees or submitted forged documents, the good faith defense won’t work—those actions demonstrate intent to deceive rather then honest confusion.

What happens if I fraudulently obtained a PPP loan?

If you fraudulently obtained a PPP loan, you could face federal criminal charges including bank fraud (up to 30 years), wire fraud (up to 20 years), and false statements (up to 5 years). The actual sentence depends primarily on the loss amount calculated under federal sentencing guidelines. You’ll also be required to repay the full amount as restitution. However, early intervention by an attorney can sometimes result in civil resolution, reduced charges, or favorable plea agreements. The worst thing you can do is ignore the problem or continue making false statements on forgiveness applications.

Can I go to prison for PPP loan fraud?

Yes, prison time is possible for PPP loan fraud, but not inevitable. Sentencing depends primarily on the loss amount. For loans under $150,000 with acceptance of responsibility, many first-time offenders recieve probation or home confinement rather then prison. For amounts between $150,000 and $550,000, sentences typically range from 12-24 months. Larger amounts result in longer sentences. Factors like cooperation, early repayment, and strong mitigation can reduce or eliminate prison time. An experienced attorney can argue for alternatives to incarceration, especially for first-time offenders with strong ties to the community.

How is the loss amount calculated in PPP fraud cases?

Loss calculation in PPP cases is complex and heavily disputed. Courts consider whether to use “intended loss” (what you intended to obtain) versus “actual loss” (actual harm to the victim). If you obtained $500,000 through false statements but used the entire amount for qualifying payroll expenses, there’s an argument the actual loss is minimal since the funds would of been forgiven anyway. However, some courts calculate loss as the full amount obtained through fraud regardless of how it was used. This is were skilled attorneys make a huge difference—successfully arguing for a lower loss calculation can reduce your sentencing range by years. The difference between a $140,000 loss and a $160,000 loss is the difference between 6-12 months and 15-21 months.

Should I repay my PPP loan if I’m under investigation?

Whether to repay you’re PPP loan during an investigation is a strategic decision you should make only after consulting with an attorney. Voluntary repayment can demonstrate good faith and reduce the calculated loss amount, which directly impacts sentencing. However, repayment might also be seen as an admission of wrongdoing. In some cases, partial repayment or negotiated settlement is better then full repayment. Your attorney needs to evaluate you’re specific situation, including whether criminal charges are likely, what defenses you have, and how repayment would affect you’re case. Don’t make this decision unilaterally—it has significant strategic implications.

What is the statute of limitations for PPP loan fraud?

Federal fraud charges generally have a 5-year statute of limitations. This means the government must indict you within five years of when the offense was committed. For PPP loan fraud, the clock starts when you made the false statements on you’re application. However, if you later made additional false statements on a forgiveness application, that creates a seperate offense with it’s own 5-year limitations period. So an application filed in April 2020 would have a limitations deadline of April 2025, but a forgiveness application filed in January 2021 extends the deadline to January 2026. Additionally, certain actions can toll (pause) the statute of limitations, including being outside the United States or the government being unaware of the offense.

Can I be charged with both state and federal crimes?

Yes, you can potentially be charged with both state and federal crimes for the same conduct under the dual sovereignty doctrine. PPP fraud violates federal statutes (bank fraud, wire fraud, false statements) and can also violate Texas state statutes (theft by deception, forgery, fraudulent use of identifying information). In practice, federal and state prosecutors usually coordinate, and one jurisdiction handles the case while the other defers. It’s inefficient to prosecute the same person twice for the same conduct. However, dual prosecution is legally permissible. Your attorney should communicate with both federal and state prosecutors to understand which jurisdiction is pursuing charges and attempt to prevent dual prosecution if possible.

What’s the difference between the Northern District of Texas and state court?

The Northern District of Texas is a federal court system that handles violations of federal law, while Texas state courts handle violations of state law. They have different procedures, rules, judges, and prosecutors. Federal PPP fraud cases are prosecuted by Assistant U.S. Attorneys and heard before federal judges at the Earle Cabell Federal Building in Dallas. State cases would be prosecuted by the Dallas County District Attorney and heard in Dallas County criminal courts. Federal sentencing follows the U.S. Sentencing Guidelines and tends to be more severe. Federal convictions carry more collateral consequences and federal restitution is more aggressively enforced. Federal cases also have different procedural rules, discovery requirements, and appeal processes. An attorney needs to be licensed in both systems to handle cases in both forums.

How long does a PPP fraud investigation take?

PPP fraud investigations vary widely in length, from a few months to over two years. The timeline depends on the complexity of the case, the number of defendants, whether multiple agencies are involved, and prosecutorial resources. Generally, the process includes: SBA review (1-3 months), SBA OIG investigation (3-12 months), FBI investigation (6-18 months), grand jury proceedings (1-3 months), and then indictment. From investigation to sentencing can take 2-4 years total. However, some simple cases with cooperating defendants move faster, while complex conspiracy cases with multiple defendants can take much longer. The good news is that a lengthy investigation provides more time for your attorney to intervene before charges are filed.

What if my accountant told me to do it?

Reliance on professional advice can be a defense to PPP fraud charges, but only if certain conditions are met. You must of fully disclosed all relevant facts to you’re accountant, recieved specific advice about how to complete the application, followed that advice, and the advice was reasonable under the circumstances even if ultimately incorrect. Simply saying “my accountant told me to do it” isn’t enough—you need documentation like emails or contemporaneous notes showing you actually asked for and recieved specific guidance. Additionally, if you lied to you’re accountant or withheld information, the reliance defense won’t work. If you’re accountant told you to create fake employees or submit forged documents, that’s evidence of conspiracy, not a defense. However, if you’re accountant made a good-faith error in calculating qualifying payroll expenses, and you relied on that calculation, it can negate criminal intent.

Conclusion: Protecting Your Rights in Dallas PPP Fraud Cases

PPP loan fraud charges in the Northern District of Texas are serious, but there not insurmountable. Many Dallas business owners who made honest mistakes during the chaos of the 2020 pandemic have viable defenses based on good faith, lack of criminal intent, or reliance on professional advice. The key is understanding the difference between deliberate fraud and errors made in desperate circumstances.

What matters most is acting quickly and strategically. The earlier you involve an experienced federal criminal defense attorney, the more options you have. Early intervention can sometimes prevent charges from being filed entirely. Even after charges are filed, skilled negotiation can result in reduced charges, lower loss calculations, and sentences that avoid prison time.

Understanding how the Northern District of Texas federal court system works, how loss amounts are calculated under the sentencing guidelines, and how restitution can effect you for decades is critical to making informed decisions about you’re case. The window for leveraging pandemic-related defenses and mitigation is closing as courts move further from the crisis, making timely action even more important.

If your facing a PPP fraud investigation or have already been charged in Dallas, don’t wait. Contact an experienced federal criminal defense attorney who knows the Northern District of Texas, understands PPP fraud cases specifically, and can protect you’re rights throughout this process. The stakes are to high to navigate this alone.

With the right legal representation and strategy, many defendants achieve outcomes far better then they thought possible—including civil resolutions, probation instead of prison, and significantly reduced sentences. But the time to act is now, while your options remain open and while pandemic context still carries weight with prosecutors and judges.