The most common types of PPP fraud cases we see in Houston includes:

• Application Fraud: This is when prosecutors allege you provided false information on your PPP loan application. That might mean inflated employee counts, fake payroll documentation, fabricated tax returns, or misrepresenting your business operations. Sometimes its obvious fraud. Other times, its a judgement call that went the wrong way.
• Multiple Applications (Loan Stacking): Some business owners applied for loans through multiple lenders, used different business names but the same EIN, or submitted applications for affiliated companies without disclosing the relationship. The SBA’s affiliation rules was incredibly confusing, and many legitimate business owners violated them without realizing.
• Misuse of Funds: PPP loans was supposed to be used for payroll and certain business expenses. If you used the money for personal purchases—cars, real estate, luxury items—prosecutors will likely charge you with fraud. Even if you had good intentions at first, later misuse can still lead to charges.
• Identity Theft Schemes: These are the most serious cases. Using stolen Social Security numbers or EINs, creating fake businesses, submitting applications for non-existant companies. If your involved in this type of scheme, your facing significant prison time.

The FBI’s Houston Field Office created a dedicated task force for PPP fraud investigations back in 2020. They’ve been working through thousands of potentially fraudulant loans, and they show no signs of slowing down. In fact, because the statute of limitations is 5-10 years depending on the charges, we’re seeing a surge in prosecutions right now.

Federal Criminal Statutes Used in PPP Fraud Cases

Prosecutors in the Southern District of Texas typically charge PPP fraud under several federal statutes. Understanding these charges is important because each carries different penalties:

Bank Fraud (18 U.S.C. § 1344): This is the big one. Bank fraud carries up to 30 years in federal prison and fines up to $1 million. Prosecutors use this statute when they allege you defrauded the financial institution that processed your PPP loan. The government has to prove you had intent to defraud, which becomes a key defense issue.

Wire Fraud (18 U.S.C. § 1343): Because PPP applications was submitted electronically, prosecutors often add wire fraud charges. Each email, each electronic form submission, each wire transfer can be a seperate count. Up to 20 years per count. The charges can stack up quickly.

False Statements (18 U.S.C. § 1001): This statute makes it a crime to lie to the federal government. If you made false statements on your application—even if the loan wasn’t ultimately approved—you can be charged. Up to 5 years in prison. Often added as a “lesser included offense” for plea negotiation purposes.

Money Laundering (18 U.S.C. § 1956): If you moved the fraudulently obtained PPP funds around—transferred them between accounts, used them to purchase assets, sent them out of the country—prosecutors might add money laundering charges. This is there way of enhancing penalties. Up to 20 years per count.

Conspiracy (18 U.S.C. § 371): If more then one person was involved, expect conspiracy charges. Your business partner, your spouse, your accountant—anyone who knowingly participated can be charged. Conspiracy is particularly dangerous because your responsible for everything your co-conspirators did in furtherance of the scheme.

The bottom line is this: PPP fraud charges in Houston are federal crimes with serious penalties. The U.S. Attorney’s Office in the Southern District of Texas has significant resources, and they’re using them. If your under investigation or facing charges, you need an attorney whose handled these cases in this specific jurisdiction.

Don’t wait. Call [PHONE] now for immediate legal guidance.

What Triggers a PPP Fraud Investigation?

In Houston, PPP fraud investigations typically begin in one of several ways:

SBA Audits: The Small Business Administration automatically audits all PPP loans over $2 million. For loans under that amount, they use data analytics to flag suspicious applications. If you recieved a loan and something doesn’t match up with IRS records, state employment data, or other databases, you might get an audit letter. That letter is often the first step toward a criminal referral.

Not every audit leads to criminal charges. Many are resolved administratively or through civil proceedings. But if the SBA Office of Inspector General believes fraud occured, they’ll refer the case to the FBI or other federal investigators.

Bank Suspicious Activity Reports (SARs): The lenders who processed PPP loans are required to file SARs if they suspect fraud. Maybe your application had inconsistencies. Maybe you withdrew large amounts of cash immediately after receiving the loan. Maybe you purchased a luxury vehicle or transferred funds offshore. Banks file thousands of these reports, and federal investigators review them.

Once a SAR is filed, your bank isn’t on your side anymore. They’ll cooperate fully with investigators, provide all your records, freeze your accounts if asked. I’ve seen cases where clients had no idea a SAR was filed until there accounts was frozen.

Whistleblower Tips: Under the False Claims Act, individuals can file qui tam lawsuits if they know about fraud against the government. That might be a disgruntled employee, a business partner you had a falling out with, or even a competitor. Whistleblowers can receive a percentage of recovered funds, so there’s financial incentive to report suspected fraud.

We’ve also seen cases start from anonymous tips—someone calls the FBI hotline, sends an email, or reports suspected fraud through the SBA website. Investigators take these tips seriously, especially if they include specific details.

Data Analytics and Cross-Referencing: This is probably the most common trigger. The SBA, IRS, and other agencies have been cross-referencing there databases to identify discrepancies. If your PPP application claimed 50 employees but your 2019 tax return showed payroll for 10 people, that’s a red flag. If you claimed economic necessity but your business revenue actually increased in 2020, that’s another red flag.

The government has sophisticated data analytics tools, and they’re using them. Thousands of cases have been identified this way.

Who Investigates PPP Fraud in Houston?

Several federal agencies investigate PPP fraud, and they often work together:

FBI Houston Field Office: Located at 1 Justice Park Drive, the FBI is the lead agency for most PPP fraud investigations. They have a dedicated white collar crime unit that handles these cases. In my experience, FBI agents on these cases are thorough. They’ll pull bank records, interview witnesses, review electronic communications, and build there case methodically before making contact.

IRS Criminal Investigation (CI): The IRS gets involved when tax fraud is suspected or when financial transactions need to be traced. IRS CI agents are forensic accountants who can follow money trails that would be invisible to most people. If your case involves complex financial transactions, expect IRS CI to be involved.

SBA Office of Inspector General: The SBA OIG conducts audits and refers cases for criminal prosecution. They also sometimes work alongside FBI on investigations, particularly in the early stages.

Other Agencies: Depending on the case, you might also see involvement from the Secret Service (particularly in identity theft cases), Postal Inspection Service (if mail fraud is alleged), or other federal agencies.

The Investigation Timeline

Here’s what a typical Houston PPP fraud investigation looks like, from start to finish:

Months 1-3: Initial red flag identified. SBA audit letter sent, or SAR filed, or database discrepancy flagged. If you recieve an audit letter, this is your first warning sign. How you respond matters enormously. Many people try to handle this themselves—big mistake. The way you respond can determine whether this stays administrative or becomes criminal.

Months 4-9: If the SBA believes fraud occured, they refer the case to FBI or other investigators. Agents begin gathering evidence—bank records, tax returns, business documents. They’ll interview witnesses who might have information. Your employees, your accountant, your business partners. They’re building there case before you even know your under investigation.

Months 10-15: Investigators may execute search warrants, subpoena documents, or conduct surveillance. In Houston, the FBI often conducts morning raids—showing up at 6:00 AM with a search warrant for your home or business. This is usually when defendants first learn there under investigation, even though its been going on for months.

Months 16-18: If investigators believe they have enough evidence, the case is presented to a federal grand jury. The grand jury process is one-sided—only the prosecution presents evidence. The defendant doesn’t get to testify or present a defense. If the grand jury returns an indictment (which they almost always do), an arrest warrant is issued.

Day of Indictment: You’ll either receive a call from the U.S. Attorney’s Office asking you to surrender, or FBI agents will arrest you. In Houston, many PPP fraud defendants are allowed to self-surrender, especially if they have an attorney who’s been in contact with prosecutors.

The entire process from initial trigger to indictment typically takes 12-18 months. Some cases move faster, some slower. But by the time your arrested or charged, investigators have been building there case for a long time. That’s why early intervention—hiring an attorney as soon as you suspect a problem—is so critical.

If you’ve received any communication from the SBA, FBI, or IRS, call [PHONE] immediately. The earlier we get involved, the more options you have.

Initial Appearance and Arraignment

After your arrested or you surrender, you’ll have an initial appearance before a federal magistrate judge. This usually happens within 24-48 hours. Here’s what to expect:

The magistrate will read the charges against you, inform you of your rights, and determine bond conditions. In most PPP fraud cases in Houston, defendants are released on a personal recognizance bond or unsecured bond. That means you don’t have to post money, but you have conditions:

• Regular check-ins with pretrial services
• Travel restrictions (usually can’t leave the district without permission)
• Surrender of passport (in cases involving large amounts)
• No contact with co-defendants or witnesses
• Sometimes GPS monitoring

If the loan amount was particularly large (over $500,000) or if your considered a flight risk, the government might request detention. But in most cases, you’ll be released the same day.

The arraignment happens next—sometimes the same day as initial appearance, sometimes a few weeks later. At arraignment, you’ll formally enter a plea of guilty or not guilty. Almost everyone pleads not guilty at this stage, even if they plan to negotiate a plea later. This preserves your options.

Discovery and Evidence Review

After arraignment, the government is required to turn over evidence under discovery rules. In PPP fraud cases, discovery is usually voluminous. We’re talking about:

• Bank records (often hundreds of pages)
• Your PPP loan application and supporting documents
• Email correspondence
• Text messages
• Witness interview summaries (FBI 302 reports)
• Forensic accounting reports
• Expert witness reports

The government typically provides discovery within 3-6 months after arraignment. Going through all this evidence takes time. Your attorney needs to review every document, identify weaknesses in the government’s case, and develop your defense strategy.

This is also when we conduct our own investigation. Interview witnesses, hire forensic accountants, gather evidence that supports your version of events. The government has been investigating for months—we need to catch up quickly.

Pretrial Motions

Before trial, your attorney can file various motions to challenge the government’s case:

Motion to Dismiss: Arguing that even if everything the government alleges is true, it doesn’t constitute a crime. These motions are rarely granted in PPP fraud cases, but there are sometimes legitimate legal arguments.

Motion to Suppress Evidence: If the FBI obtained evidence illegally—through an improper search warrant, coerced statements, or violations of your constitutional rights—we can ask the court to exclude that evidence. This can significantly weaken the government’s case.

Motion to Sever: If your charged alongside co-defendants, sometimes its beneficial to have seperate trials. If your co-defendant’s conduct was more egregious, you don’t want to be tried together.

Motions hearings typically happen 2-3 months before the scheduled trial date. The judge will hear arguments from both sides and issue rulings. These rulings can dramatically affect the case outcome.

Plea Negotiations

Here’s the reality: over 90% of federal criminal cases end in guilty pleas, not trials. That’s not because everyone is guilty—its because the government has enormous resources, broad charging discretion, and the trial penalty is real. Defendants who go to trial and lose typically receive much harsher sentences then those who plead guilty.

Plea negotiations in Houston PPP fraud cases usually begin after discovery is exchanged and motions are resolved. The process involves:

1. Initial Offer: The government makes an opening offer—typically pleading guilty to certain counts in exchange for dismissing others, with a recommended sentencing range.
2. Counteroffers: Your attorney negotiates, pointing out weaknesses in the government’s case, mitigating factors in your situation, and arguing for better terms.
3. Final Offer: Usually comes 2-3 weeks before trial. This is the government’s “take it or leave it” offer. You have to decide: accept the plea deal or go to trial.

In my experience with Houston federal prosecutors, they’re willing to negotiate, but they expect full cooperation and restitution. If you can pay back the loan amount (or as much as possible) before plea negotiations, that significantly strengthens your position.

Trial (If It Comes to That)

If you don’t accept a plea deal, your case goes to trial. Federal trials in the Southern District of Texas typically last 3-7 days for PPP fraud cases, depending on complexity. The process:

Jury Selection: Attorneys for both sides question potential jurors and select 12 jurors plus alternates.

Opening Statements: Government goes first, outlining what they intend to prove. Then your attorney presents your theory of the case.

Government’s Case: Prosecutors present witnesses and evidence. Your attorney cross-examines there witnesses, challenges there evidence.

Defense Case: You can present witnesses and evidence, but you don’t have to. You have the right to remain silent and put the government to its burden of proof.

Closing Arguments: Both sides summarize the evidence and argue why the jury should rule in there favor.

Jury Deliberation: The jury discusses the evidence in private and reaches a verdict. They must be unanimous to convict.

Federal trials are high-stakes. If you win, your free. If you lose, you’ll likely face a harsher sentence then if you’d taken a plea deal. The decision whether to go to trial requires careful consideration with experienced counsel.

Sentencing

If you plead guilty or are convicted at trial, you’ll be sentenced 60-90 days later. Before sentencing, the probation office prepares a Presentence Investigation Report (PSR) that includes:

• Your criminal history (if any)
• The facts of the offense
• Calculation of sentencing guidelines
• Personal background information
• Recommendation for sentence

Your attorney will review the PSR, file objections if needed, and submit a sentencing memorandum arguing for a lower sentence. At the sentencing hearing, both sides present arguments, and the judge imposes sentence.

Federal judges in Houston vary in there sentencing approaches. Some follow the guidelines closely. Others are more willing to depart downward based on mitigating factors. Your attorney’s relationship with the judge and knowledge of that judge’s tendencies matters enormously.

Facing charges? Understanding the process is step one. Call [PHONE] to discuss your specific situation and what to expect.

The penalties for PPP fraud depend primarily on one thing: the loss amount. How much money did the government lose because of the alleged fraud? That number drives everything.

Federal Sentencing Guidelines

Federal courts use the U.S. Sentencing Guidelines to calculate recommended sentences. The guidelines aren’t mandatory anymore, but judges still use them as a starting point. For fraud cases, the loss amount is the primary factor:

• Loss less than $6,500: 0-6 months
• Loss $6,500-$15,000: 4-10 months
• Loss $15,000-$40,000: 6-12 months
• Loss $40,000-$95,000: 10-16 months
• Loss $95,000-$150,000: 15-21 months
• Loss $150,000-$250,000: 21-27 months
• Loss $250,000-$550,000: 33-41 months
• Loss over $550,000: Substantially higher

But that’s just the starting point. Various factors can increase or decrease the sentence:

Enhancement Factors (Increase Sentence):

• Sophisticated means (+2 levels) – basically guaranteed in PPP cases
• More than 10 victims (+2 levels) – government argues SBA and multiple lenders are victims
• Abuse of position of trust (+2 levels) – if you were in a position of responsibility
• Leadership role (+2-4 levels) – if you organized the scheme or managed others

Reduction Factors (Decrease Sentence):

• Acceptance of responsibility (-2-3 levels) – you plead guilty and show genuine remorse
• Minor role (-2-4 levels) – if you were a minimal participant in someone else’s scheme
• Cooperation with government – can result in significant reductions

Each level increase or decrease corresponds to a few months of additional or reduced prison time. The enhancements add up quickly.

Real-World Sentencing in Houston PPP Cases

Forget the theory. Here’s what I’ve actually seen in Houston federal court:

Loans Under $20,000: These cases are increasingly being handled administratively or through civil proceedings rather then criminal prosecution. If criminal charges are filed, defendants with no prior record who cooperate and make restitution usually avoid prison. Probation for 2-3 years is common. But your not getting off completely—expect to pay back the loan plus penalties.

Loans $20,000-$150,000: This is the gray area. Criminal charges are likely, but theres room to negotiate. If its your first offense, you cooperate fully, and you can pay substantial restitution, probation is possible. I’d say about 40% of defendants in this range avoid prison with good representation and the right circumstances. The other 60% are looking at 6-18 months. The question is whether you have mitigating factors.

Loans $150,000-$500,000: Prison is likely. Even with cooperation and no criminal history, your probably looking at 18-36 months. The government takes these cases seriously. However, the exact sentence depends on the details—was it a sophisticated scheme? Did you use the money for egregious personal expenses? Can you make restitution? Good legal representation can make the difference between 18 months and 36 months, which is huge.

Loans Over $500,000: Your facing significant prison time. Prosecutors will typically file multiple counts, seek enhancements, and push for sentences in the 3-6 year range. These are the cases that make headlines. The only way to reduce exposure significantly is through substantial cooperation—meaning providing information that leads to prosecution of others.

Trial vs. Plea Penalty

Here’s something most people don’t realize. If you go to trial and lose, you’ll typically receive a sentence about twice as long as if you’d taken a plea deal. Why? Because you lose the “acceptance of responsibility” reduction (3 levels, which is substantial). And because judges tend to impose harsher sentences on defendants who put the government through the expense and time of a trial, especially when the evidence is strong.

I’ve seen defendants reject plea offers of 18 months, go to trial, lose, and get sentenced to 48 months. Was fighting the charges the right decision? Only you can answer that. But you need to understand the stakes.

Beyond Prison: Other Consequences

Prison time isn’t the only penalty. Your also facing:

Restitution: You will be ordered to pay back the full amount of the fraudulent loan. This is mandatory. The court will set a payment schedule, and if you don’t pay, you can be sent back to prison for violating your supervised release conditions. I’ve had clients who thought they could avoid restitution by claiming poverty. Doesn’t work. You’ll be paying this back for years, possibly decades.

Fines: In addition to restitution, the court can impose fines up to $250,000 per count (or more in some cases). In practice, courts often waive fines if restitution is substantial, but don’t count on it.

Supervised Release: After you serve your prison sentence, you’ll be on supervised release for 1-5 years. This is like probation—you have to check in with a probation officer, follow conditions, submit to drug testing, maintain employment. Violating supervised release conditions can send you back to prison.

Asset Forfeiture: The government can seize property purchased with PPP loan proceeds. That car you bought? They’ll take it. The house you put a down payment on? They can force you to forfeit your equity. Business equipment, investments, even cash in bank accounts. If they can trace it to the PPP loan, they can seize it.

Professional Licenses: If your a doctor, lawyer, accountant, contractor, real estate agent, or hold any professional license, a federal fraud conviction will likely result in losing that license. State licensing boards don’t look kindly on federal felonies.

Security Clearances: A federal fraud conviction means you’ll lose any security clearance and will never be able to obtain one in the future.

Immigration Consequences: For non-citizens, a federal fraud conviction is an “aggravated felony” that can result in deportation, even if you’ve lived in the U.S. for decades. There’s no exceptions.

Employment: Finding a job with a federal fraud conviction on your record is difficult. Many employers won’t hire convicted felons. Your career options will be significantly limited.

Credit and Banking: Your credit score will be destroyed. Getting loans, mortgages, credit cards—forget it. Some banks won’t even let you open a checking account.

Can You Avoid Prison?

The question I get asked most: Can I avoid going to prison? Sometimes, yes. Here’s when its possible:

• First offense (no criminal history)
• Loan amount under $150,000
• You cooperate fully with the investigation
• You pay back as much restitution as possible before sentencing
• You can show the fraud wasn’t sophisticated or planned
• You have significant mitigating factors (health issues, family circumstances, etc.)
• You demonstrate genuine remorse

Even with all these factors, its not guaranteed. But its possible. I’ve had clients avoid prison even with six-figure PPP fraud cases. It takes aggressive advocacy, strategic negotiation, and presenting you in the best possible light to the court.

The stakes are enormous. Your freedom, your livelihood, your future. Call [PHONE] now to discuss your case and what we can do to minimize the consequences.

1. Lack of Intent Defense

The government has to prove you acted “knowingly and willfully.” That’s a high bar. Its not enough that you made a mistake or even that you were reckless. They have to prove you intended to defraud the government.

This is where the pandemic chaos becomes your friend, ironically. In March and April 2020, everything was confusing. The PPP rules were changing daily. Guidance from the SBA was contradictory. Banks were overwhelmed. Business owners were panicking. Congress passed the CARES Act on March 27, 2020, and the PPP application portal opened on April 3, 2020—one week later.

In that environment, did you have criminal intent to defraud? Or did you make a good faith mistake while trying to save your business? This is a powerful defense if we can support it with evidence:

• Contemporaneous emails or texts where you questioned how to fill out the application
• Communications with your accountant, banker, or attorney asking for guidance
• Business records showing your company was actually struggling in early 2020
• Evidence you tried to follow the rules but misunderstood them

The challenge? Prosecutors will look for evidence of intentional deception—things you wrote or did that show you knew what you were doing was wrong. That email where you joked about “free government money”? That’s going to hurt. The key is building a narrative of confusion and good faith, not fraud.

2. Reliance on Professional Advice

If you relied on your accountant, attorney, or financial advisor, and they gave you incorrect guidance, that can be a defense. The law recognizes that business owners aren’t expected to be legal experts. If you asked professionals for help and followed there advice, that shows lack of criminal intent.

But this defense only works if:

• You actually consulted professionals (documented, not just your word)
• You gave them accurate information (if you lied to your accountant, this doesn’t work)
• You followed there advice (not just cherry-picked what you wanted to hear)
• The advice was reasonable given the circumstances

I’ve seen this defense work in cases where business owners relied on CPA’s who misunderstood the payroll calculation requirements or attorney’s who gave incorrect interpretations of the economic necessity certification. The government may still pursue charges against the professional, but it can help you avoid conviction.

3. Economic Necessity Argument

One of the PPP application requirements was certifying that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.” This was an incredibly vague standard. What does “economic uncertainty” mean? What level of necessity?

The SBA later provided guidance that businesses whose revenues were down should qualify. But what if your revenues weren’t down yet but you reasonably believed they would be? What if your industry was being decimated even though your specific business hadn’t felt the impact yet?

This is a highly fact-specific defense. We need to gather:

• 2019 vs. 2020 revenue comparisons
• Customer cancellations and contract losses
• Industry reports showing economic conditions in your sector
• Evidence of your reasonable belief that your business would suffer
• Communications and planning documents from March-April 2020

The government will argue that if your business actually increased revenue in 2020, you didn’t have economic necessity. But economic necessity was supposed to be prospective—what you reasonably believed at the time, not what actually happened. This is a subtle but important distinction.

4. Challenging the Loss Amount

Remember, the loss amount drives your sentencing exposure. If the government claims the loss was $300,000 but we can show that $150,000 was used for legitimate payroll expenses, we’ve just cut your sentencing exposure in half.

This requires detailed forensic accounting. We need to:

• Trace every dollar of the PPP loan
• Identify which expenses were legitimate under PPP guidelines
• Document payroll that was actually paid
• Show any other qualifying expenses (rent, utilities, etc.)

Even if there was some misuse, showing partial legitimate use reduces the loss amount. The government bears the burden of proving loss amount by a preponderance of the evidence. If we can create doubt about the exact amount, we can argue for a lower calculation.

I’ve had cases where the government initially claimed $400,000 in losses, and through careful forensic analysis, we reduced the loss calculation to $180,000. That’s the difference between 33-41 months and 21-27 months in the guidelines—a huge difference.

5. Procedural Defenses

Sometimes the government makes mistakes in there investigation or prosecution:

Statute of Limitations: Generally, the government has 5 years to charge you with most fraud offenses, 10 years for bank fraud. If they wait too long, charges can be dismissed. We’ve seen the government rush to bring charges as the limitations period approaches, and sometimes they file before the investigation is complete.

Illegal Search and Seizure: If the FBI obtained evidence through an improper search warrant or violated your Fourth Amendment rights, we can move to suppress that evidence. If the key evidence is suppressed, the government’s case may collapse.

Brady Violations: The government is required to turn over evidence that’s favorable to you, including evidence that undermines there case. If they hide exculpatory evidence, that’s a Brady violation that can result in dismissal or reversal of conviction.

Speedy Trial Violations: You have a right to a speedy trial. If the government delays too long without good reason, charges can be dismissed.

These defenses don’t work in every case, but when the government has overstepped, we can exploit those mistakes.

6. Cooperation and Negotiated Resolution

Sometimes the best “defense” is working with the government rather then against them. This isn’t giving up—its being strategic about achieving the best possible outcome.

Cooperation can take several forms:

Voluntary Disclosure: If you realize you made mistakes on your PPP application before the government contacts you, voluntarily disclosing to the SBA Office of Inspector General can sometimes result in a civil resolution rather then criminal prosecution. This only works if you’re early—before any investigation has begun.

Early Restitution: Paying back the loan amount (or as much as possible) before charges are filed shows good faith and reduces the government’s loss. Prosecutors are more willing to offer favorable plea deals when you’ve already made restitution.

Cooperation Agreement: If you have information about other fraudulent schemes or can testify against co-defendants, the government may offer a cooperation agreement with reduced charges or sentencing recommendations.

Deferred Prosecution Agreement (DPA): For first-time offenders with smaller loan amounts who cooperate fully, sometimes the government will agree to a DPA. You admit the conduct, pay restitution and penalties, and complete probation. If you successfully complete the terms, charges are dismissed and you avoid a conviction.

In my experience with Houston federal prosecutors, they’re willing to negotiate—but you have to bring something to the table. Full cooperation, restitution, and genuine remorse matter. Coming in with an aggressive “we’re going to fight everything” posture when the evidence is strong rarely ends well.

What Doesn’t Work

Let me also tell you what defenses don’t work, so you don’t waste time or money:

“The rules were unclear” (alone): Yes, the rules were confusing. But that alone isn’t a defense unless you can show how the confusion led to a good faith mistake rather than intentional fraud. You need more.

“Everyone was doing it”: Doesn’t matter. If everyone jumped off a bridge, would you? The government doesn’t care that others committed fraud. They care that you did.

“I paid the loan back already”: Great, that helps with sentencing. But it doesn’t erase the crime. Paying back embezzled money doesn’t make embezzlement legal. Same principle.

“The program was poorly designed”: Probably true. Doesn’t matter. You still can’t defraud a poorly designed program.

“I needed the money to save my business”: Economic desperation isn’t a defense to fraud. The program existed to help businesses—if you actually qualified and used the funds properly, you wouldn’t be charged. The issue is fraud, not need.

Refusing to cooperate without leverage: If the government has overwhelming evidence and your refusing to cooperate or negotiate, your just making things worse. There’s a difference between fighting when you have a legitimate defense and stubbornly refusing to accept reality.

The Bottom Line on Defense Strategy

Every case is different. The right strategy depends on:

• The strength of the government’s evidence
• The loan amount involved
• Whether you have a legitimate defense
• Your criminal history (or lack thereof)
• Your ability to make restitution
• Your willingness to cooperate

Cookie-cutter approaches don’t work. You need an attorney whose going to analyze your specific situation and develop a customized strategy that gives you the best possible outcome.

Want to know what defenses might work in your case? Call [PHONE] for a confidential evaluation.

Why Early Intervention Matters

Once your indicted, the government’s position hardens. They’ve invested significant resources in investigating you, presenting your case to a grand jury, and obtaining an indictment. There ego is invested. Walking away becomes much harder.

But before charges are filed, the government is still deciding whether to prosecute. They’re weighing factors like:

• Strength of the evidence
• Loss amount
• Your cooperation
• Whether prosecution is in the public interest
• Availability of civil remedies instead

If you can intervene early and demonstrate that criminal prosecution isn’t necessary—because you’ll make restitution, cooperate fully, and accept civil penalties—you might avoid criminal charges entirely.

Responding to SBA Audit Letters

Many PPP fraud investigations begin with an audit letter from the SBA. The letter will ask you to provide documentation supporting your loan application—payroll records, tax returns, business formation documents, etc. You’ll typically have 30-60 days to respond.

Here’s what NOT to do:

• Ignore the letter (worst possible move)
• Respond yourself without attorney review
• Provide false documents
• Make statements that will incriminate you later

Here’s what you SHOULD do:

• Contact a federal defense attorney immediately
• Have your attorney review the letter and all documents before responding
• Gather all relevant records
• Be truthful in your response (lies make everything worse)
• Consider whether voluntary disclosure is appropriate

A well-crafted response can sometimes resolve the matter administratively. A poorly crafted response can provide the evidence needed to prosecute you criminally. The stakes of getting this right cannot be overstated.

Voluntary Disclosure Programs

The SBA Office of Inspector General has indicated there open to voluntary disclosures from borrowers who realize they made mistakes. If you come forward before any investigation has begun and you:

• Fully disclose the problem
• Provide complete documentation
• Pay back the loan amount
• Accept civil penalties

You might avoid criminal prosecution. This is particularly viable for cases involving smaller loan amounts or good faith mistakes rather then egregious fraud.

But timing is everything. Once the SBA has referred your case to the FBI or other criminal investigators, voluntary disclosure is too late. You need to act before the criminal investigation begins.

Proffer Agreements (“Queen for a Day”)

Sometimes your attorney can arrange a proffer session with prosecutors. This is an off-the-record meeting where you tell the government your side of the story. Anything you say in the proffer generally can’t be used against you directly (though if you later testify differently at trial, the proffer can be used to impeach you).

Proffers can be useful when:

• You have a legitimate explanation that the government doesn’t understand
• You can provide information about others involved in fraud
• You want to explore cooperation without committing to it

But proffers are risky. You’re essentially confessing to prosecutors, and if they don’t believe you or find your information valuable, you’ve just strengthened there case. You need experienced counsel to navigate proffers.

Pre-Indictment Restitution

If you can afford to pay back the PPP loan before charges are filed, do it. This demonstrates:

• Good faith (your not trying to keep money that wasn’t yours)
• Reduced loss to the government (makes criminal prosecution less justified)
• Acceptance of responsibility
• Financial ability to make things right

I’ve had cases where early restitution was the difference between criminal charges and a civil settlement. Prosecutors are less interested in sending someone to prison when the government has already been made whole financially.

When Pre-Indictment Intervention Doesn’t Make Sense

To be clear, pre-indictment intervention isn’t always the right strategy. If:

• The government doesn’t have strong evidence and might not charge you anyway
• You have a legitimate defense and didn’t commit fraud
• Disclosure would reveal information the government doesn’t already have
• Your drawing attention to yourself prematurely

Then early intervention could backfire. This is why having an experienced attorney assess your specific situation is critical. Sometimes the right move is to stay quiet and see what the government does. Other times, early proactive intervention is essential.

Document Preservation

Whether or not you decide on early intervention, you must preserve all documents related to your PPP loan:

• Your original application and all supporting documents
• Bank statements showing use of funds
• Payroll records
• Tax returns
• Business formation documents
• Email correspondence about the loan
• Text messages
• Any other relevant records

Do NOT destroy anything. Destroying documents is obstruction of justice—a separate federal crime that will only make your situation worse. Even if documents are damaging, destroying them is worse.

Organize everything and provide it to your attorney. We need to see the good, the bad, and the ugly to properly assess your case and develop a strategy.

If you’ve received an audit letter or suspect a problem with your PPP loan, don’t wait. Call [PHONE] immediately to discuss pre-indictment strategies.

Here’s how to choose the right attorney for your PPP fraud case.

Questions to Ask Potential Attorneys

1. How many PPP fraud cases have you handled?

PPP fraud is relatively new (cases started in 2020), but by now, experienced federal attorneys should have handled multiple cases. If an attorney has handled zero PPP cases, there going to learn on your dime. You want someone whose already up to speed on the specific statutes, defenses, and prosecutorial approaches.

2. What’s your experience in the Southern District of Texas?

Federal court is hyper-local. An attorney whose practiced extensively in the Eastern District of New York isn’t going to know the judges, prosecutors, or procedures in Houston. You want someone who practices regularly in the Bob Casey Courthouse and knows the Southern District.

3. Have you tried cases in federal court?

Most cases plead out, but the attorney’s willingness and ability to go to trial matters. Prosecutors negotiate differently with attorneys they know can and will try cases versus attorneys who always plead out. Ask about there trial experience—not just federal trials generally, but white collar trials specifically.

4. What’s your relationship with the Assistant U.S. Attorneys in Houston?

This matters enormously. Attorneys who have good working relationships with prosecutors—built on professionalism and credibility—can often negotiate better deals. Attorneys who prosecutors don’t trust or respect? Your plea negotiations will suffer.

5. Who will actually work on my case?

At some firms, a senior attorney meets with you but a junior associate does the actual work. Make sure you know who’s handling your case day-to-day. You want experienced attorneys working on a case this serious.

6. What’s a realistic outcome for my situation?

Be wary of attorneys who promise specific outcomes or guarantee results. No one can guarantee how a case will turn out—there’s too many variables. What you want is an honest assessment based on the specific facts of your case. “We’ll fight for you” is nice, but “Here’s what I think is realistically achievable and why” is more valuable.

7. What’s your fee structure?

Federal cases are expensive. Attorneys typically charge either flat fees or hourly rates. Make sure you understand:

• What’s included in the fee
• What costs extra (expert witnesses, investigators, trial preparation)
• Payment terms and plans
• What happens if the case goes to trial

Get the fee agreement in writing. No surprises.

What to Look For

Federal White Collar Experience: PPP fraud is a white collar crime. You don’t want a DUI attorney or a state court criminal attorney. You need someone whose handled federal fraud cases.

Southern District Specific Knowledge: Knowledge of local procedures, judges, and prosecutors is invaluable. An out-of-town attorney won’t have those relationships and local knowledge.

Former Prosecutor Experience (Optional but Helpful): Attorneys who’ve worked as federal prosecutors understand how the government builds cases and what motivates charging decisions. This can be valuable, though its not absolutely necessary.

Track Record with Plea Negotiations: Ask about specific results they’ve achieved in similar cases. Obviously everything is confidential, but they should be able to discuss general outcomes.

Trial Experience: Even if your case will likely plead out, you want an attorney who’s actually tried federal cases. The threat of trial gives you leverage in negotiations.

Houston-Based: Local presence matters. You want an attorney who’s in the Houston courthouse regularly, not someone flying in from another state.

Red Flags to Avoid

Guarantees or Promises: “We’ll get the charges dismissed” or “You won’t do any prison time” before they’ve even reviewed your case? Run. No ethical attorney can make those promises.

No Federal Experience: State court and federal court are completely different. An attorney whose only handled state criminal cases is not qualified for your federal PPP fraud case.

Never Handled PPP Cases: By 2024, experienced federal attorneys should have handled multiple PPP fraud cases. If they haven’t, your going to pay while they learn.

Unclear Fee Structure: If the attorney can’t or won’t clearly explain there fees, that’s a problem. You need transparency.

High-Pressure Sales Tactics: “You need to hire me today or your going to prison” type fear-mongering is unprofessional. Take time to meet with multiple attorneys before deciding.

Too Busy to Meet: If the attorney doesn’t have time to meet with you for a consultation, there probably too busy to properly handle your case.

The Consultation

Most federal defense attorneys offer free initial consultations. Use this time to:

• Explain your situation
• Assess the attorney’s knowledge and experience
• Get an honest evaluation of your case
• Understand the process and timeline
• Discuss fees and payment options
• Determine if you feel comfortable with this attorney

Trust your gut. You’re going to be working closely with this person during one of the most stressful times of your life. If something feels off, keep looking.

Ready to discuss your case? Call [PHONE] for a free consultation with experienced Houston PPP fraud defense attorneys.

Immediate Action Steps

1. Stop Talking

Do not speak to federal investigators without an attorney present. Period. I don’t care how innocent you are. I don’t care if you think you can explain everything. Do. Not. Talk.

The FBI agents are professionals. They’re trained in interrogation techniques. They’re not your friends. Anything you say will be used against you, and it will be mischaracterized in ways you can’t imagine. Exercise your Fifth Amendment right to remain silent and demand an attorney.

That means:

• If FBI agents show up at your door: “I’d like to speak with an attorney before answering any questions.”
• If they call you: “I’d like to speak with an attorney. Please contact my lawyer.” Then hang up.
• If they try to pressure you: Stand firm. You have the absolute right to remain silent.

2. Preserve All Documents

Gather every document related to your PPP loan and preserve it. Don’t destroy anything—that’s obstruction of justice, a separate federal crime. What you need:

• Your PPP loan application and all attachments
• Bank statements (business and personal accounts where PPP funds went)
• Payroll records for 2019 and 2020
• Tax returns (business and personal)
• Business formation documents
• Email correspondence about the loan
• Text messages
• Calendar entries
• Any other relevant records

Organize everything chronologically and provide it to your attorney. We need to see everything—the good, the bad, and the ugly—to properly assess your case.

3. Calculate Your Exposure

Understand the loan amount and how you used the funds. Make a detailed accounting:

• Total PPP loan amount received
• How much went to payroll
• How much went to rent, utilities, other qualifying expenses
• How much went to non-qualifying expenses
• How much is still in your accounts vs. spent

This helps your attorney understand the potential loss amount and your sentencing exposure.

4. Don’t Destroy Anything

It bears repeating. Even if documents are damaging, destroying them is worse. Obstruction of justice charges carry serious penalties and make you look guilty of the underlying fraud. Preserve everything.

5. Evaluate Your Ability to Make Restitution

Can you pay back the loan amount? Even partially? Restitution is one of the most powerful tools in your defense. If you can gather funds—through savings, selling assets, borrowing from family—do it. Having money available for restitution significantly strengthens your negotiating position.

6. Contact an Attorney Immediately

Don’t wait. Don’t “see what happens.” Don’t try to handle this yourself. You need experienced federal defense counsel now.

You especially need an attorney immediately if:

• FBI or IRS agents have contacted you
• You received an SBA audit letter
• Your bank account has been frozen
• You received a grand jury subpoena
• Your loan amount was over $150,000
• You know you made false statements on your application
• Other people involved in your loan have been arrested

What NOT to Do

Don’t Talk to Investigators: I know I already said this, but its worth repeating because its the most common mistake. You will not talk your way out of charges. You will only provide evidence against yourself.

Don’t Discuss the Case on Phone or Email: Assume all your communications are monitored. Don’t discuss your case with anyone except your attorney, and only in person or through encrypted channels. Definitely don’t discuss it with:

• Business partners or co-defendants
• Family members
• Friends
• Employees

Don’t Continue Spending PPP Funds Questionably: If you still have PPP funds in your account and your under investigation, don’t spend them on personal expenses. Every transaction from this point forward will be scrutinized. Use them only for clearly legitimate business expenses, or don’t touch them at all.

Don’t Contact Business Partners About the Case: If there were other people involved in your PPP loan, don’t reach out to them to “get your stories straight.” That’s conspiracy and obstruction. It makes everything worse. Let your attorney handle any necessary communications.

Don’t Wait to “See What Happens”: The government isn’t going to forget about you. Hoping this blows over is not a strategy. The sooner you get legal help, the more options you have.

Don’t Hire the Wrong Attorney: This bears repeating from the previous section. A general criminal attorney or a state court attorney is not qualified to handle your federal PPP fraud case. You need someone with federal white collar experience in the Southern District of Texas.

Why This Matters So Much

Your facing federal fraud charges. The consequences include:

• Years in federal prison
• Hundreds of thousands of dollars in restitution and fines
• Loss of professional licenses
• Destruction of your career
• Permanent criminal record
• Devastating impact on your family

The statute of limitations means cases from 2020-2021 are being prosecuted right now, through 2025-2026. The government is working through there backlog of PPP fraud investigations, and they’re not slowing down. If your on there radar, they’re coming.

Your next 90 days will determine the next 5 years of your life. Maybe longer. The actions you take now—or fail to take—will have enormous consequences.

Early intervention gives you options. Waiting until your arrested eliminates options. Its that simple.