Kentucky PPP and EIDL Loan Fraud Lawyers
PPP loan fraud is a heinous crime that occurs when unscrupulous individuals intentionally deceive the government in order to obtain funds through the CARES Act that they are not entitled to. The mere thought of someone taking advantage of a crisis to line their own pockets is reprehensible, but it is unfortunately all too common. Here are just a few examples of the types of PPP loan fraud that have been reported:
- Falsely claiming that a company has fewer than 500 employees in order to qualify for a loan.
- Lying about the impact of the coronavirus crisis on a business in order to qualify for a loan.
- Inflating average monthly payroll costs in order to receive more loan money. (It’s worth noting that payroll costs are capped at $100,000 per employee.)
- Misrepresenting that all of the loan money will be used for qualified expenses (such as payroll, rent, mortgage, and utilities) in order to have the loan forgiven.
- Not disclosing when employees leave, thereby reducing payroll expenses, in order to receive more of the loan forgiven.
The CARES Act created the Office of the Special Inspector General for Pandemic Recovery to investigate fraud allegations, and the Department of Justice (DOJ) will prosecute any charges that are brought forward. The penalties for PPP loan fraud can be severe, with sentences depending on the specific offense. For example, making false statements or overvaluing securities is considered a felony and can result in fines of up to $5,000 and/or two years in federal prison. Embezzlement is considered a more serious offense and can result in fines of up to $10,000 and/or five years in prison. In addition, defendants will be required to pay restitution.
It’s important to note that defendants facing PPP loan fraud charges do have legal defenses available to them. They can argue that they had no intent to defraud, or that the Small Business Administration (SBA) made a mistake. For example, a business owner may have accidentally provided false information on a loan application due to the complicated nature of the application process and the stress of the crisis. Additionally, the SBA, like all bureaucracies, is not infallible and errors can occur. This is why it’s important for business owners to keep detailed records, such as email communications, voicemails, bank statements, accounting notes, receipts, and bills, which may serve as valuable proof of innocence if falsely accused by the government.
It is also worth noting that most federal criminal records are unsealable and that non-citizens convicted of CARES Act fraud are vulnerable to deportation. Aliens facing criminal charges are encouraged to consult with legal counsel as soon as possible as a criminal defense attorney may be able to get the charges dismissed or reduced to a non-deportable offense.
PPP loan fraud is a heinous crime that preys on the most vulnerable during the most dire of times. The CARES Act was designed to provide a lifeline to small businesses struggling to survive the devastating impact of the coronavirus pandemic. However, there are those who would seek to exploit this act for their own gain, committing fraud and deception to obtain funds they are not entitled to.
Five examples of PPP loan fraud include falsely claiming the company has fewer than 500 employees to qualify for the loan, falsely claiming the coronavirus crisis hurt business in order to qualify for the loan, inflating average monthly payroll costs to get more loan money, falsely claiming all the loan money is going towards qualified expenses, and not disclosing if employees leave to get more of the loan forgiven.
The Office of the Special Inspector General for Pandemic Recovery was created to investigate fraud allegations, with the Department of Justice (DOJ) responsible for prosecution. The penalties for PPP loan fraud are severe, with federal punishments including making false statements, overvaluing securities, and embezzlement. Punishments can include fines of up to $10,000 and/or prison sentences of up to 5 years, with the added requirement of paying restitution.
While the consequences of PPP loan fraud are severe, there are defenses that can be made. Defendants can argue that they had no intent to defraud or that the Small Business Administration (SBA) made a mistake. It is important for business owners to keep all records, such as email communications, voicemails, bank statements, accounting notes, receipts, and bills, as they may serve as valuable proof of innocence if falsely accused.
It’s worth noting that in most cases, federal criminal records are unsealable. Also, non-citizens convicted of CARES Act fraud are vulnerable to deportation as it is considered an aggravated felony and a crime involving moral turpitude. Therefore, it’s crucial for aliens facing criminal charges to consult with legal counsel as soon as possible to try to get the charges dismissed or reduced to a non-deportable offense.