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Which Federal Agencies Investigate PPP Loan Fraud?

March 12, 2022 Federal Criminal Attorneys

Do you think you might be at risk of a PPP loan fraud investigation? The Spodek Law Group is a top rated nationwide, federal criminal defense law firm who can help with any PPP fraud investigation issues. As the scope of the PPP investigations increase, multiple agencies are trying to take lead in investigating and prosecuting fraud. The SBA is auditing any company that received more than $2 million in PPP or more. Many other agencies are conducting their own civil and criminal fraud investigations. It is not unlikely, for companies who committed PPP fraud – to have multiple simultaneous investigations going on.

For all companies who received forgivable PPP loans – it’s important to know that you must be in compliance with the PPP loan. If a federal investigation is about to begin, compliance is what will ensure it does not turn into a federal case. You have to know what the federal agents are looking for which could lead to prosecution. When you face a PPP loan fraud investigation, knowing which agencies are involved –  and what they’re looking for, and their procedures, will result in a successful defense strategy.

Which Federal Agencies Investigate PPP Loan Fraud?

There a few agencies currently in charge of conducting loan fraud investigations. Below we’ll discuss them. Each agency is collecting evidence using subpoenas, filing criminal complaints, and more. Each agency is trying to create cases based on different charges. The goal is the same – figure out which companies unlawfully obtained PPP funds — and determine if those funds were spent incorrectly.

SBA Office of Inspector General

This is the accountability arm of the SBA. The SBA is tasked with auditing and investigating any SBA loans issued. The Auditing and Investigations Division each administer their respective activities throughout the country. The SBA OIG conducts audits of anyone who is issued a SBA loan. Most are conducted in conjunction with the U.S. Attorney’s Office. The SBA-OIG auditing division is involved in all audits of recipients who got PPP loans of $2 million or more. The Investigations Division is handling allegations of PPP loan fraud, on a case-by-case basis. If an investigation shows evidence of fraud, this can lead to prosecution by the local U.S. Attorney’s office. The SBA-OIG is not a law enforcement agency. But, it’s critical to realize that if the SBA-OIG conducts an investigation, you must be prepared to defend yourself of federal criminal charges.

The FBI

The FBI is investigating all types of federal fraud. The White Collar division is responsible for investigating corporate entities, especially anyone who is benefiting from program fraud. The FBI is getting tips of people from all sorts of life, and is taking action on verifiable information. Specifically, when it comes to PPP loan fraud, the FBI is targeting anyone who submitted false information, or fraudulent certification in support of their PPP applications. The FBI is targeting anyone who used PPP loan for unlawful purposes. The structure of the PPP rollout made it easy for ANY company to get funding under the program. There were no stringent enforcement mechanisms, and limited guidance for who could get the funding. This led to allegations of fraud, and many companies violated the PPP requirements – without even knowing it.

The DOJ

The DOJ is targeting and prosecuting anyone who is suspected of fraud under the PPP. The DOJ has started filing PPP related criminal complaints. It continues to file cases against business owners, and scammers who fraudulently applied for and received PPP funds. The DOJ has filed charges such as bank fraud, wire fraud, identity theft, and more. The list will only continue to grow, as the scope of the investigations grow – and as more and more agencies start to cooperate.

The IRS

The IRS is taking an active role in PPP loan fraud investigations. If someone is underreporting or underpaying their federal tax liabilities, then the IRS is taking a role in the case. The IRS Criminal Investigation division is the criminal enforcement arm of the IRS, and it is targeting individuals and companies who are suspected of tax evasion and fraud. The IRS is looking at failing to report income, fraudulently claiming losses, and other misappropriations of business deductions.

How do I know if my business is under PPP loan fraud investigation?

There are many ways to know if your company is under investigation. For investigations that are civil, agencies will give you notice in the form of a target letter, or a civil investigative demand. If your company gets one of these notifications, it’s critical you hire a federal criminal attorney. Even if you’re not facing an investigation, the penalties can be huge, and if they aren’t handled – it can lead to a criminal investigation.

It is possible that SBA audits lead to federal fraud investigations.

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