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

Understanding White-Collar Crimes: PPP Loan Fraud

Ideally initiating an honest conversation about PPP, or Paycheck Protection Program fraud, a potentially ruinous white-collar crime often orchestrated by folks high up the business or government ladder. Although these illegal shenanigans rarely involve any physical harm, the aftermath can be devastating, nonetheless.

Imagine being under investigation for PPP fraud. If the Department of Justice chooses to slap charges against you for federal wrongdoings like bank fraud or wire fraud, you’re potentially looking at up to thirty years behind bars and a one million-dollar fine! Frightfully enough, the penalties don’t stop at the legal level. A federal fraud indictment can lash out at your reputation, destabilize your career, and rupture your personal bonds.

Fraud and the PPP: What You Need to Know

Within the PPP realm, a fraudulent loan application is among the leading causes of landing in legal soup. When entrepreneurs apply for PPP funds, they’re bound to certify a few things. That the business is indeed eligible for a loan, that the current economic uncertainty makes this loan quite necessary for regular operations, and that the loan money will ensure that the organization’s workforce remains employed. Also, that all the information put up in the application is legitimate and accurate. Therefore, any PPP certifications made with mala fide intentions may catapult the applicant into federal fraud charges which Todd Spodek and the esteemed Spodek Law Group can help you navigate.

Growingly, even business owners who faithfully applied for PPP loans and judiciously spent the money are now reaching out, worried sick about their vulnerability to federal investigations and criminal reprisals for PPP fraud. Considering the continuously evolving guidelines for the PPP loans, it’s quite reasonable to have such concerns. Remember, it’s always best to involve an accomplished PPP fraud attorney.

Expert PPP Fraud Attorney – In Your Corner

Our highly experienced PPP attorneys have an enviable track record of working with federal investigative and prosecutorial processes. We’ve been the legal guardians for hundreds of clients dealing with federal level cases. Armed with the right legal plan, we might be able to help you steer clear of criminal charges completely! Ring us right away and let’s understand your situation during our complimentary PPP fraud consultation.

PPP and EIDL Loan Fraud in Las Vegas

The PPP has its roots in the Coronavirus Aid, Relief, and Economic Security or CARES Act. Presented as a financial savior for smaller businesses grappling with survival during the pandemic, the PPP allowed loans up to $2 million with no interest or principal due for a year and was guaranteed by the U.S. Small Business Administration or SBA. The idea was simple, to help business folks retain their workforce during the COVID crisis.

However, right from when the PPP program took off, financial outfits were inundated with loan applications. With the initial funding of $350 billion depleting quickly, many businesses found themselves hung out to dry, and fraud allegations started pouring in. Presently, the SBA’s Office of Inspector General has already rolled out 11 reports documenting extensive fraud and misuse in the PPP loan program, with tens of cases transferred to the Department of Justice for criminal prosecution.

PPP loan fraud can take several shapes, whether it’s incorrectly classifying full-time employees as contractors to sneak under the 500-employee limit or misrepresenting payrolls to secure unjustified funding. It could also involve using the loan money for purposes outside the ones specified in the CARES Act, or loan stacking, or even falsely declaring eligibility to qualify for unemployment benefits.

Regardless, let’s not forget that the PPP has been instrumental in helping small businesses, working as a lifeline to keep millions of employees employed while tiding over these challenging times. Consequently, while it’s crucial to punish fraudulent activities, PPP remains a central tool to fight the economic destruction triggered by the pandemic.

How Fraudulent Tactics Have Crept into PPP Loans

PPP loan fraud is a despicable crime, feeding off the vulnerable and exploiting the CARES Act’s benevolent lifeline meant to protect small enterprises and their employees from the economic wreckage caused by the COVID-19 pandemic. Disappointingly, some individuals have blatantly pilfered funds they’re clearly not deserving of.

Fraud can manifest through several tactics. A business could falsely claim to employ fewer than 500 individuals to qualify for the loan or untruthfully affirm that the pandemic crisis has severely hampered their operations, in order to qualify for the PPP loan. A business could even exaggerate their average monthly payroll costs to draw more funding or falsely assert that the entire loan amount is being directed towards permissible expenses. Furthermore, a business could stay mum about an employee leaving to cash in on a more substantial loan forgiveness.

Thankfully, to counter this, the CARES Act established the @Special Inspector General for Pandemic Recovery office, which bears the responsibility of investigating these fraud accusations, while any charges are prosecuted by the Department of Justice (DOJ).

The penalties for PPP loan fraud are rather severe, with it being recognized as a federal crime under the Small Business Act. For instance, submitting fraudulent statements or overvaluing securities could attract a fine of $5,000 and/or two years in a federal prison, while embezzlement could lead to a $10,000 fine and/or five years of imprisonment. Furthermore, the guilty party would have to pay restitution as well.

Anyone being tried for PPP loan fraud could argue that they lacked fraudulent intent, or that the SBA erred. A business owner might have accidentally provided incorrect information on their loan application, possibly due to stress or confusion. Hence, it’s critical to maintain all records like email correspondences, voicemails, bank statements, accounting records, receipts, and bills, in case proof of innocence is required.

Given that most federal criminal records cannot be sealed, the immigration repercussions for PPP loan fraud can be daunting. Fraud involving an amount higher than $10,000 is considered an ‘aggravated felony,’ and any fraud is seen as a crime denoting ‘moral turpitude.’ Therefore, non-citizens convicted of CARES Act fraud could potentially be deported. If non-citizens are facing criminal charges, they should promptly consult counsel, seek advice, examine their options, or possibly manage to get the charges dismissed or lowered to a non-deportable offense.