My Accountant Filed My PPP Loan – Am I Criminally Liable

My Accountant Filed My PPP Loan – Am I Criminally Liable

Your accountant prepared your PPP application. They filled in the numbers. They calculated the payroll. They submitted the documents. You signed where they told you to sign. Now federal investigators are asking questions, and you’re wondering: if my accountant made the mistake – or committed the fraud – am I the one who faces criminal charges?

Here’s the uncomfortable truth. Your signature is on that application. When you signed, you certified that everything in that application was accurate. You certified under penalty of perjury. The fact that your accountant filled in the numbers doesn’t change who made the legal certification. You did. The government doesn’t care who typed the numbers. They care who signed the document claiming those numbers were true.

This doesn’t mean you’re automatically guilty. If your accountant committed fraud and you genuinely didn’t know, you may have defenses. But those defenses aren’t as simple as “my accountant did it.” The government will argue that you should have verified the accuracy of what you signed. They’ll argue that discrepancies were obvious. They’ll argue that you had access to the truth and chose not to look. And if your accountant gets charged first, expect them to cooperate against you to reduce their own sentence. The professional you hired to help you may become the government’s star witness.

Your Signature Is Your Problem – Regardless of Who Filled It Out

Let’s start with the legal reality. When you signed that PPP application, you made certifications. Those certifications include statements like “I certify that the information provided in this application and the information provided in all supporting documents and forms is true and accurate in all material respects.”

Your signature means you personally vouched for the accuracy of everything in that application.

The SBA’s guidance is explicit. The individual who signs the application is certifying compliance with the CARES Act requirements. Not the accountant. Not the preparer. The signer. If the application contained false information, the signer is the one who certified that false information as true.

Heres the inversion that catches people. You paid a professional to prepare the application precisely becuase you wanted to get it right. You trusted there expertise. You relied on there knowledge of the PPP program. And now prosecutors are arguing that becuase you were sophisticated enough to hire a professional, you were sophisticated enough to verify there work before signing.

The fact that you paid for professional advice dosent reduce your liability. It increases the expectation that you understood what you were signing. You cant claim ignorance while simultaneously demonstrating that you knew this was complicated enough to require expert help.

The Conspiracy Trap – How Your Accountant’s Fraud Becomes Your Fraud

If your accountant knowingly prepared a fraudulent application, and you signed it, the goverment can charge you both with conspiracy. This is were things get really dangerous.

Under 18 USC 1349, conspiracy to commit bank fraud or wire fraud carries the same penalties as the underlying fraud – up to 30 years for bank fraud conspiracy. Once your charged with conspiracy, your liable for all acts of your co-conspirators that were committed in furtherance of the conspiracy. Your accountants lies become your lies. There fraud becomes your fraud.

Heres the hidden connection most people miss. You dont have to have explicitly agreed to commit fraud. The goverment can prove conspiracy through circumstantial evidence. If you provided false information to your accountant – fake employee lists, inflated payroll numbers, fabricated documents – and they used that information to prepare the application, thats conspiracy. If you reviewed a draft that obviously overstated your payroll and said nothing, thats evidence of agreement. If you received the PPP funds and spent them in ways inconsistent with the program requirements, thats evidence of intent.

The conspiracy doctrine is brutal. Once your in the conspiracy, everything your co-conspirators did to advance the scheme is imputed to you. Your accountants preparation of 50 other fraudulent applications? Relevant to your case becuase it shows the scope of the scheme you allegedly joined.

When Your Accountant Gets Charged First

Heres the scenario that terrifies borrowers. Your accountant gets charged with PPP fraud. Maybe they prepared dozens of fraudulent applications for multiple clients. The FBI arrests them. There facing serious prison time. And now there lawyer is negotiating a cooperation agreement.

Your accountant will cooperate against you to reduce there own sentence. This is how the system works.

The goverment loves accountant cooperators. Accountants have records. They have emails. They have notes from meetings. They can testify about exactly what information you provided, what conversations you had, and wheather you seemed to understand that the application was inaccurate. An accountant’s testimony can be devastating.

Heres the irony that traps defendants. You hired the accountant. You paid them. You trusted them. And now there using everything they know about you to avoid prison for themselves. The professional relationship you thought protected you becomes the evidentiary trail that convicts you.

And heres the consequence cascade. Your accountant gets charged. There lawyer explains the sentencing guidelines. There looking at years in prison. The goverment offers immunity or a reduced sentence in exchange for testimony against there clients. Your accountant takes the deal. Now your “I relied on my accountant” defense has collapsed – becuase your accountant is sitting at the witness stand explaining that you knew exactly what was going on.

The ‘Reliance on Professional Advice’ Defense – What Actually Works

The “reliance on professional advice” defense is real. It can work. But it requires more then just saying “my accountant told me to.”

For this defense to succeed, you need to establish several things:

• First, you hired a real professional – a licensed CPA, a tax attorney, someone with genuine credentials. Not a “PPP specialist” you found on social media. Not someone who advertised easy approvals. A legitimate professional.
• Second, you disclosed all relevant facts to that professional. If you hid information from your accountant, you cant claim you relied on there advice. The advice was based on incomplete information that you provided. Thats not reliance – thats manipulation.
• Third, you can document what advice they gave you. This is were most people fail. “My accountant told me I qualified” is worthless without proof. An email from your CPA saying “based on the payroll records you provided, your eligible for $X” is powerful evidence. Verbal advice with no documentation is extremly difficult to prove.
• Fourth, you had no reason to know the advice was wrong. If your accountant submitted an application claiming 50 employees when you knew you only had 5, you cant claim reliance. The fraud was obvious. A reasonable person would have caught it. “I didn’t read it” isnt a defense – its evidence of willful blindness.

Willful blindness is legally equivalent to actual knowledge.

If you deliberately avoided learning information that would have revealed the fraud – “I dont want to know the details, just submit it” – the goverment can prove intent through your deliberate ignorance. Courts treat willful blindness the same as if you actually knew the application was false.

What Happened to Accountants Who Prepared Fraudulent PPP Loans

Lets look at what happened to accountants and preparers who were caught. These cases show both the liability of the preparer AND what happened to there clients.

Harold Dotson was an accountant and tax preparer in Maryland. He owned H&M Tax Service LLC. He used his accountant expertise to prepare numerous false and fraudulent PPP applications for businesses that “did not exist in any legitimate capacity.” His conspiracy resulted in over 85 fraudulent PPP loans totaling more than $14.8 million, plus at least 30 additional loans worth $6.5 million. Dotson was sentenced to 3 years in federal prison and ordered to pay $24.8 million in restitution. His co-conspirator Sary was sentenced to 7 years.

Lisa Smith from North Carolina helped submit PPP applications containing fake bank statements and IRS tax forms. She received a percentage of the loan proceeds as compensation. The conspiracy involved 29 PPP loans totaling more than $3.5 million. She faces a maximum of 30 years in prison and a $1 million fine. Sentencing was scheduled for November 2024.

Tommy Hawkins was a bank branch manager who used his position to help individuals obtain at least 38 fraudulent PPP loans totaling approximately $5 million. He worked with recruiters who found people with dormant companies and helped them submit applications with false representations about employees and payroll. He was sentenced to 65 months in federal prison.

These cases show that preparers face serious consequences. But notice something important: these cases also involved charges against the borrowers. The accountant going to prison dosent mean you dont go to prison. You can both be convicted.

Why ‘I Didn’t Read It’ Makes Things Worse

Some people think not reading the application protects them. “I didnt know what it said – I just signed were my accountant told me to sign.” This defense almost never works. In fact, it often makes things worse.

Heres the inversion. Not reading a federal document before signing it isnt exculpatory. Its negligent at best and willfully blind at worst. The goverment will argue that you had an obligation to read what you were signing. You had an obligation to verify the accuracy of certifications you were making. Your failure to do so dosent establish innocence – it establishes that you didnt care wheather the application was accurate.

And heres the paradox that traps sophisticated defendants. If your a business owner who hired an accountant to prepare your PPP application, your demonstrating a certain level of business sophistication. You understood the stakes. You understood the process required professional help. The goverment will argue you also understood that you should verify what your accountant prepared before signing federal loan documents.

“I trusted my accountant” feels like a defense. It sounds reasonable. But to prosecutors, it sounds like an excuse. Trust dosent eliminate the obligation to verify. Trust dosent transfer legal responsibility. Trust dosent make false certifications true.

The more sophisticated you are – the bigger your business, the more employees you have, the more professionals you work with – the less believable your “I didnt know” defense becomes. The goverment expects sophisticated business owners to review documents before signing them.

The Documentation You Need – And Probably Don’t Have

The reliance defense lives or dies on documentation. Can you prove what advice your accountant gave you? Can you prove what information you provided? Can you prove you asked the right questions and got answers that seemed legitimate?

Most people dont have this documentation. Most people dont save every email from there accountant. Most conversations happened over the phone or in person. Most people assumed the relationship was collaborative, not adversarial, and didnt think they needed a paper trail.

Heres what you need to reconstruct if you can:

• Any emails or written communications with your accountant about the PPP application
• Search your email for there name, for “PPP,” for “payroll protection,” for any terms related to the loan
• Any drafts they sent you to review before submission
• Any invoices or engagement letters describing what services they were providing
• Any notes you took during meetings or phone calls

If you have emails were you asked questions about eligibility, were you expressed uncertainty, were you sought clarification – those emails help. They show you were trying to do this right. They show you werent trying to commit fraud.

If you have emails were the accountant explained there calculations, were they cited specific regulations, were they assured you the application was accurate – those emails help. They show you were relying on professional advice.

But if all your communications were verbal, if you dont have any documentation, if your only evidence is “they told me I qualified” – your in a much worse position. The goverment has your accountants records. They have the application. They have the bank records showing how you spent the money. Your memory of a phone conversation years ago is not compelling evidence against that paper trail.

Document everything going forward. Every conversation with your attorney. Every document you locate. Every timeline you reconstruct. The case against you may depend on your ability to prove what happened during conversations that nobody recorded.

What Happens When Your Accountant Testifies Against You

Lets talk about what happens if your accountant becomes a cooperating witness. This is not hypothetical. This is how these cases typically resolve.

Your accountant gets arrested. There facing 15-20 years if convicted. The goverment offers a deal: plead guilty to a reduced charge, get a sentencing recommendation for 3-5 years, and testify truthfully against your clients. Your accountant takes the deal. Most people take the deal.

Now your accountant is sitting in front of a grand jury, or at your trial, explaining what happened. “I prepared the application based on information the defendant provided.” “The defendant told me they had 25 employees.” “The defendant reviewed the application before signing it.” “The defendant asked me to inflate the payroll numbers.”

You can challenge this testimony. Your attorney can cross-examine. You can argue the accountant is lying to save themselves. But juries tend to believe cooperating witnesses who have pleaded guilty and are testifying under oath. The accountant has already admitted wrongdoing. There testimony has the ring of truth.

And heres the devastating part. Your accountant knows everything. They know what information you provided. They know what documents you gave them. They know wheather you asked questions or just signed blindly. They know wheather you expressed concern about the numbers or seemed eager to get as much money as possible. All of this becomes there testimony.

The person who knew your business finances most intimately – outside of you – is now working for the prosecution. Thats the reality you face when your accountant is charged first.

How to Protect Yourself If Your Accountant Is Being Investigated

If you learn that your accountant is under investigation for PPP fraud, you need to take immediate action. Your interests and your accountants interests are not the same – and they may become directly opposed.

First, hire your own federal criminal defense attorney immediately. Do not share an attorney with your accountant. Do not communicate with your accountants attorney. Your accountant may become a cooperating witness against you. Anything you tell there lawyer could be shared with prosecutors. You need completly independent representation.

Second, preserve all documentation of your interactions with the accountant. Emails. Text messages. Meeting notes. Invoices. Anything that shows what information you provided, what questions you asked, what advice they gave. This documentation could support your reliance defense – or it could incriminate you. Either way, you need to know what exists before prosecutors do.

Third, do not contact your accountant to “get your stories straight.” This is obstruction of justice. Witness tampering. It will create additional charges that are easier to prove then the original fraud. Whatever relationship you had with your accountant is now adversarial. Treat it that way.

Fourth, do not destroy any documents. The investigation is underway. Destroying documents related to your PPP application is obstruction. Even if you think a document makes you look bad, destroying it makes you look worse – and creates criminal exposure separate from the fraud.

Fifth, understand that your accountants records have probably already been subpoenaed. Every email they sent you. Every draft they prepared. Every note they took during your meetings. The goverment already has this material. Your attorney needs to see it so they can assess your exposure and develop a defense strategy.

The relationship with your accountant is over. Whatever you thought that relationship was – trusted advisor, professional partner, expert guide – its now adversarial. Your accountant may become the primary witness against you. Your communications with them may become the evidence that convicts you. Act accordingly.

Your accountant prepared the application. You signed it. Those facts dont change. What matters now is wheather you can establish that you relied in good faith on professional advice, that you disclosed all relevant information, that you had no reason to know the application was inaccurate, and that any errors were honest mistakes rather then intentional fraud. Those are fact-specific defenses that require careful development with qualified counsel.

Dont assume the accountant’s fault protects you. Dont assume your signature is meaningless becuase someone else filled in the numbers. And dont try to navigate this alone. Get an attorney. Preserve your documents. And prepare for the possibility that the professional you hired to help you may become the governments primary weapon against you.

The question isnt wheather your accountant made mistakes or committed fraud. The question is wheather you knew, or should have known, that the application was inaccurate. The question is wheather you can prove you relied in good faith on professional advice. The question is wheather your conduct – not your accountants conduct – demonstrates criminal intent. Those questions require careful analysis and skilled representation. Your future may depend on the answers.