As the nation continues to navigate the tumultuous economic landscape wrought by the ongoing pandemic, our team of seasoned federal criminal defense attorneys has witnessed federal prosecutors relentlessly pursuing criminal charges against individuals and businesses engaging in a wide range of fraudulent conduct in relation to the Paycheck Protection Program (PPP).

One of the most prevalent forms of PPP fraud we have encountered is application fraud. The CARES Act, which established the PPP, mandated that businesses seeking loans provide accurate and truthful information on their applications. Businesses were also required to meet certain qualifications, such as having been negatively impacted by the pandemic and falling within certain size parameters, in order to be eligible for loan forgiveness. Under the act, providing false information on a PPP loan application can result in investigation and criminal charges. This includes, but is not limited to, falsely inflating the number of employees, payroll numbers, and revenues for the company and its employees, categorizing employees as independent contractors to qualify for the loan, and using someone else’s information to apply for a loan.

Another type of PPP fraud our attorneys have encountered is fraudulent use of loan funds. The PPP stipulated that funds could only be used for specific expenses, such as paying for rent and utilities, payroll expenses, and insurance premiums. Any use of funds for non-approved expenses, such as personal expenses or luxury items, could lead to investigation and criminal charges.

Additionally, we have seen a significant amount of fraud in the loan forgiveness certification process. The PPP offered the possibility of loan forgiveness, but only if certain requirements were met and accurate information was provided. Providing false information or documentation, attesting to statements that are not true, or failing to provide complete information on a forgiveness application can result in federal attention and potential criminal charges.

Lastly, obtaining multiple PPP loans from different lenders is another form of fraud that our attorneys have encountered. The PPP allowed for up to two loans for some businesses, but any business that applied for more than two loans with multiple lenders, for which they were not eligible, could be investigated and criminally charged. As the federal government keeps records of all PPP funds distributed, any business that borrowed from more than one lender should seek the immediate assistance of a criminal defense attorney.

In conclusion, it is imperative for business owners to be vigilant and aware of the various types of PPP loan fraud, and to seek the assistance of experienced criminal defense attorneys if they find themselves under investigation. With the government’s aggressive pursuit of fraudulent conduct related to the PPP, it is more important than ever to ensure compliance with all laws and regulations.

The Paycheck Protection Program (PPP) loan fraud, a federal crime under the Small Business Act, is a heinous act of obtaining money through false pretenses by exploiting the CARES Act. As of April 2020, small businesses affected by COVID-19 and with less than 500 full-time employees were eligible to receive up to $10 million in funds to cover their payroll, mortgages, rent, and utilities for eight weeks. The government promises to forgive the debt if the money is used for the designated “qualified expenses.”

However, some unscrupulous individuals and businesses have chosen to cheat the Small Business Administration (SBA) by falsifying information on their loan applications, overvaluing securities, and embezzling funds. These actions are not only morally reprehensible, but they also carry severe consequences, including potential prison time, fines, and repayment of the loan, as well as restitution.

But, it’s not always a clear cut case, as sometimes the defendants may argue that they had no intent to defraud or that the SBA made a mistake. For instance, an applicant may accidentally provide false information on a loan application, or the SBA may mistakenly approve a loan. In such cases, the prosecution must prove guilt beyond a reasonable doubt.

Additionally, in cases where the records are kept, like email communications, voicemails, bank statements, accounting notes, receipts, and bills, they may serve as valuable proof of the defendant’s innocence if falsely accused.

However, it’s important to note that most federal criminal records are unsealable, and non-citizens convicted of CARES Act fraud are vulnerable to deportation. Therefore, it is crucial for non-citizens facing criminal charges to consult with legal counsel as soon as possible.

The Paycheck Protection Program was created as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020. It offered businesses up to $2 million in loans, with no interest or principal due for the first 12 months. The loans were guaranteed by the U.S. Small Business Administration (SBA) and were to be used for payroll, rent, utilities, and other essential expenses.

The program was immensely popular, however, with an initial $350 billion endowment, it effectively ran out of funding within minutes. Congress authorized an additional $310 billion for the program one month later, but it was also quickly tapped out. With lenders overwhelmed by applications, little regulation in place, and many businesses left out in the cold, accusations of fraud soon followed.

To date, the SBA’s Office of Inspector General has issued 11 reports detailing widespread fraud and abuse in the PPP loan program. In one report, the OIG found that “the PPP is vulnerable to fraud because it lacks adequate controls to prevent, detect and punish misuse of funds.”

In another report, the OIG found that approximately 60% of the loans reviewed “may have had eligibility problems” and that “lenders did not always properly calculate or verify payroll costs.” The OIG has referred dozens of cases of suspected fraud to the Department of Justice for criminal prosecution.

In conclusion, PPP loan fraud is a federal crime that not only harms the government but also the small businesses that play by the rules and desperately need the aid. It’s imperative that we all do our part in preventing and reporting such fraud to ensure that the funds reach the intended recipients and to maintain the integrity of the program.