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Federal Ppp Loan Fraud
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Federal PPP Loan Fraud: COVID-19 Relief Fraud Defense
The Paycheck Protection Program seemed like a lifeline during COVID-19. Now its become a prosecution target. Federal prosecutors have charged thousands with PPP fraud, and the investigations continue years later. If your facing PPP fraud allegations, you need to understand that these cases carry 20-30 years in federal prison when charged as bank fraud, wire fraud, and money laundering. The government is not treating pandemic relief fraud lightly.
How PPP Fraud Becomes Federal Crime
PPP loans went through banks—federally insured banks. That means false PPP applications trigger:
Bank fraud (18 USC 1344) – Up to 30 years
Wire fraud (18 USC 1343) – Up to 20 years
False statements (18 USC 1014) – Up to 30 years
Money laundering (18 USC 1956) – Up to 20 years
CARES Act violations – Additional exposure
Many defendants are shocked that their “PPP case” carries more prison time than drug trafficking.
Common PPP Fraud Schemes
Inflated payroll – Overstating employee counts or wages
Non-existent businesses – Applications for fake companies
Multiple applications – Applying through several lenders
Misuse of proceeds – Using PPP funds for non-payroll expenses
False documentation – Fake tax returns, payroll records
Identity theft applications – Using others’ information
What Prosecutors Are Looking For
Red flags that trigger investigation:
Business created shortly before application. No employees in payroll databases. Proceeds immediately moved to personal accounts. Luxury purchases after funding. Multiple applications with same EIN. Inconsistencies between application and tax records.
Defense Strategies
Good Faith Reliance
PPP rules were confusing and changed constantly. If you relied on accountant, attorney, or lender guidance—even if that guidance was wrong—thats a defense.
No False Statement
Prosecutors must prove statements were actually false. If your employee count was accurate based on how you understood the rules, there may be no falsity.
No Intent to Defraud
Many PPP “fraud” cases involve misunderstanding of complex, rapidly-changing rules. Mistake isnt fraud. Intent matters.
Legitimate Business Use
If funds were used for legitimate business purposes (even if not strictly PPP-compliant), this can mitigate both liability and sentencing.
Act Now
PPP fraud investigations are ongoing. If you’ve received any inquiry—subpoena, agent contact, audit notice—you need defense counsel immediately. And if you think there might be a problem with your PPP application, proactive consultation may help before investigators come calling. Contact a federal criminal defense attorney today.