My Bank Called About a PPP Loan Investigation

My Bank Called About a PPP Loan Investigation

Your phone rings. It’s your bank. They have “some questions” about your PPP loan from 2020. Something about documentation. Something about how the funds were used. They’re asking you to “clarify a few things.” The person on the phone sounds helpful, professional, maybe even sympathetic. But here’s what you need to understand before you say another word: by the time your bank calls you about a PPP investigation, the investigation has already been running for months. That call isn’t the beginning of anything. It’s confirmation that you’re already in trouble.

The bank isn’t calling because they just noticed something suspicious. They noticed something suspicious months ago. They filed a Suspicious Activity Report with federal authorities. That report went to FinCEN – the Financial Crimes Enforcement Network. From FinCEN, it went to the FBI or the IRS Criminal Investigation division. An investigation opened. Agents started pulling records. And now, after all that, someone is calling to “ask you a few questions.”

This call feels like a customer service interaction. It isn’t. This call is evidence gathering. The bank is documenting your responses. Those responses can and will be shared with federal prosecutors. The person on the other end of that phone isn’t trying to help you. They’re trying to protect the bank – by getting you to say things that make their reporting look justified and that help federal investigators build a case. The bank gave you the loan. Now the bank is helping the government come after you.

When the Bank Calls, the Investigation Is Already Running

Most people who get a call from their bank about a PPP investigation think it represents the start of something. Like the bank just noticed a problem. Like there’s still time to explain. Like this is the beginning of a process that might go somewhere, or might not.

That understanding is completly wrong.

Heres what actually happened before your phone rang. Somewhere in the banks compliance department, an analyst or automated system flagged your PPP loan. Maybe the funds moved out of the account too quickly. Maybe the spending didnt look like payroll. Maybe there were transfers to personal accounts or purchases that didnt match what PPP was supposed to cover. Whatever the trigger, the bank identified your loan as potentially fraudulent.

Under federal law, the bank was required to file a Suspicious Activity Report.

They filed it. They were not allowed to tell you. The Bank Secrecy Act requires financial institutions to report suspicious activity to the goverment AND to keep the existence of that report secret from the customer. Your bank filed a SAR on you, and you had no idea.

That SAR went to FinCEN, the Treasury Department’s financial intelligence unit. FinCEN shared it with the FBI. An investigation opened. Agents started pulling records. The DOJ may have issued grand jury subpoenas to your bank demanding your complete account history. Your bank complied. They had no choice.

Months later, maybe years later, someone calls you with “a few questions.” That call isnt the investigation starting. Its the investigation reaching the point were they want to hear from you directly – either to give you a chance to confess, or to document statements they can use against you later.

What the Suspicious Activity Report Already Told the FBI

Lets talk about what that SAR actualy contained. When your bank filed a Suspicious Activity Report, they didnt just check a box and move on. They documented everything that made your account look suspicious.

The SAR includes a narrative description of the suspicious activity. It identifies specific transactions that triggered the alert. It provides dates, amounts, account numbers, and the banks analysis of why the activity appeared potentially fraudulent. If the bank has supporting documents – like your PPP application, your stated business purpose, the discrepency between what you claimed and what the transactions showed – those get referenced or attached.

This isnt a casual tip. Its a detailed report that gives federal investigators a roadmap.

Heres the scale of whats happening. The SBA Office of Inspector General recieved over 669,000 referrals for potentially fraudulent PPP and EIDL loans. The SBA OIG hotline saw a 19,500% increase in call volume during the pandemic – over 238,000 calls, resulting in roughly 40,000 actionable complaints. Federal investigators are working through a massive backlog of potential fraud cases.

If your bank called you, it means your case rose to the level of active attention. Your not just a file sitting in a pile. Your a case thats being worked. Thats why there calling.

Your Bank Is Not On Your Side

This is the paradox that destroys people. The bank that gave you the PPP loan is now helping the goverment investigate you for fraud. The same institution that processed your application, deposited the funds, and collected the fees is now acting as an informant against you.

Banks are in an impossible position with PPP loans. On one side, they made money processing these loans. On the other side, if they processed fraudulent loans and didnt report them, they face potential federal prosecution themselves. The bank’s compliance department has a simple calculus: its better to report customers and cooperate with investigators then to risk becoming a target.

Your bank will sacrifice you to protect itself. This isnt personal. Its institutional self-preservation.

Think about what that means for the phone call your recieving. The person calling you represents an institution that has already reported you to federal authorities, already provided your records, and is now documenting your statements for potential use in a criminal prosecution. When they say there “trying to help you clarify things,” what there actualy doing is building a more complete file.

Everything you say to the bank can be shared with federal prosecutors. There is no bank-customer priviledge. There is no confidentiality. Your statements to the bank are not protected in any way.

What DOJ Already Has From Your Bank

Before you answer a single question, you need to understand what the goverment already possesses. The Department of Justice has been systematically obtaining bank records through grand jury subpoenas since the PPP program began.

DOJ sent subpoenas to JPMorgan Chase, Bank of America, Wells Fargo, and other major lenders. Those banks turned over customer records without notifying the borrowers. If your PPP loan came through one of these institutions, prosecutors may already have your complete account history, your application documents, and your forgiveness submission.

You are the last person to find out about your own investigation.

The banks knew. The goverment knew. The grand jury has been reviewing evidence. By the time anyone contacts you – wheather its the bank, the FBI, or the prosecutors office – they already have everything. The call isnt gathering new information. Its testing wheather youll be honest about information they already possess.

This is the hidden connection most people miss. The DOJ subpoenas banks first. Then they subpoena you. By the time you recieve any contact, the documentary record is already complete. The question isnt what evidence exists – its wheather youll contradict it and create additional charges for false statements.

The Trap in Just Answering a Few Questions

The bank compliance officer sounds friendly. There just trying to understand. There asking simple questions: How did you use the PPP funds? Were these payments to employees? Can you explain this transfer?

Every answer you give gets documented. Every statement you make can be compared against the records they already have. And heres the trap most people fall into: they try to explain.

Maybe you dont remember exactly how the money was spent. It was years ago. Things were chaotic during COVID. So you give your best recollection – which might not match the bank records perfecty. Maybe you minimize something that looks bad but was actualy legitimate. Maybe you forget about a transaction that now seems suspicious.

Any discrepency between what you say and what the documents show becomes evidence of consciousness of guilt.

If you say the funds went to payroll, but the bank records show large transfers to personal accounts, you just created a false statement issue. If you say you had 10 employees, but IRS records show you had 3, prosecutors now have evidence that you lied – both on the original application AND on the phone call.

The cascade is devastating. Bank calls with questions. You try to explain. Your explanation is documented. Documents are forwarded to prosecutors. Discrepencies are identified. Your own statements become Exhibit A at your criminal trial.

What Bank Records Revealed in Actual Cases

Lets look at what happened when bank records told the story in real PPP fraud prosecutions.

Tommy Hawkins was a branch manager at a national bank in Pennsylvania. He used his position to coordinate 38 fraudulent PPP loan applications totaling approximately $5 million. Bank records showed exactly what happened – applications processed through his branch, funds deposited, money moved to accounts he controlled or to co-conspirators. He was sentenced to 65 months in federal prison and ordered to pay $5.3 million in restitution.

Dezfooli in Nevada obtained over $11 million in fraudulent PPP loans. Bank records showed exactly were the money went: 25 real estate properties purchased with aliases. The paper trail was clear. He was sentenced to over 15 years in federal prison.

Michael and Tiffany Fullerton in Texas used dormant business names to apply for $3.5 million in fraudulent PPP loans. Bank records showed the funds were used to buy a motor home, luxury watches, and a boat. Combined sentence: 32 years in federal prison.

In every one of these cases, the bank records told the story. Transaction histories. Fund movements. Purchases that had nothing to do with payroll or business expenses. The goverment didnt need confessions. They had the paper trail.

Thats what your bank already gave them.

The 10-Year Clock Thats Already Running

Some people think they can wait this out. The pandemic was years ago. Maybe the goverment will loose interest. Maybe the statue of limitations will expire. Maybe if they just dont respond to the bank call, everything will go away.

Congress extended the statute of limitations for PPP fraud to 10 years. If you got your loan in 2020, prosecutors have untill 2030 to bring charges. If you got it in 2021, the window extends to 2031.

There is no escape through waiting. The goverment is not loosing interest. There working through a backlog of over 669,000 flagged loans. Investigations that used to take 18-24 months are now being completed in 4-6 months. The pace is accelerating, not slowing.

Every day you wait is a day the investigation continues without your input. Every day you wait is a day evidence accumulates. Every day you wait is a day the window for potential civil resolution narrows.

The SBA is auditing all companies that recieved PPP loans of $2 million or more. If you fell into that category, your being looked at regardless of wheather your bank filed a SAR. The audit is automatic. The scrutiny is guarenteed.

The 10-year clock is running. And the bank just called.

Why Banks Cooperate So Aggressively With Investigators

You might wonder why your bank is being so helpful to prosecutors. Why would they turn against there own customer? The answer is institutional self-preservation.

Banks faced enormous pressure to process PPP loans quickly during the pandemic. Many banks relaxed there normal underwriting standards. Some banks processed loans with minimal verification. Now, years later, the goverment is looking at which banks processed fraudulent loans – and wheather those banks should have known better.

Cross River Bank, for example, became one of the largest PPP lenders in the country. That high-volume participation has placed them under intense federal scrutiny. Investigators are examining wheather the bank did adequate due diligence. Wheather they caught red flags they should have reported. Wheather there compliance procedures were sufficient.

When a bank is under this kind of scrutiny, there incentive is to cooperate aggressively. Every fraudulent loan they report demonstrates that there compliance systems are working. Every customer they help prosecute is evidence that the bank is doing its job. Your prosecution becomes there defense.

This is why banks turn over records so willingly. This is why they file SARs without hesitation. This is why the compliance officer calling you is so thorough in documenting your responses. There not helping you. There protecting the institution from becoming a target itself.

The bank processed your loan. The bank collected fees on your loan. And now the bank is helping the goverment prosecute you for fraud on that loan. Thats not personal. Thats how the system works.

The Investigation Timeline You Need to Understand

Federal PPP fraud investigations follow a predictable pattern. Understanding were you are in that pattern helps you understand what comes next.

First, the bank identifies suspicious activity and files a SAR. This usually happens within days or weeks of the suspicious transactions. You are never notified.

Second, federal agencies recieve the SAR and open an investigation. This can take weeks to months. During this time, investigators are pulling records, analyzing patterns, and deciding wheather to pursue the case.

Third, grand jury subpoenas go to banks and other third parties. Your complete financial records are obtained. Your tax returns are pulled from the IRS. Your PPP application is reviewed against what the records actually show.

Fourth, investigators may contact witnesses – your accountant, your employees, your business partners. These interviews happen without your knowledge. People who know you are being asked questions about your business operations.

Fifth, you get contacted. Maybe the bank calls. Maybe FBI agents show up. Maybe you recieve a target letter. By this point, the investigation has been running for months or years. The documentary record is complete. The witness interviews are done. There contacting you to close the loop.

The call from your bank puts you somewhere in this timeline. Probably near the end. Probably at the point were decisions about prosecution are being finalized. This is not the beginning of a process with an uncertain outcome. This is the end of a process were the outcome is becoming clear.

What To Do When Your Bank Calls

You have a choice to make. Both options have consequences.

If you refuse to talk to the bank at all, you create suspicion. The bank notes your non-cooperation. That notation becomes part of the file. Prosecutors see that you refused to explain yourself when given the chance. It looks like you have something to hide.

If you cooperate with the bank call, you create evidence. Everything you say gets documented. Statements can be compared against records. Discrepencies can become false statement charges. Your own words can be used against you at trial.

So what do you do?

First, you do not answer substantive questions on this call. Be polite. Tell them you want to cooperate. Tell them you need to consult with your records and with an attorney before providing any detailed information. Take down the callers name and contact information. End the call without making any statements about the loan, the funds, or how the money was used.

Second, you hire a federal criminal defense attorney today. Not a general practice lawyer. Someone who handles PPP fraud cases, who understands bank compliance procedures, who knows how to communicate with prosecutors before charges are filed. Your attorney can contact the bank on your behalf. Your attorney can learn what triggered the call. Your attorney can potentially negotiate before things get worse.

Third, you preserve every document you have. Your PPP application. Your bank statements. Your payroll records. Your tax returns. Everything. Do not destroy anything. Do not organize or clean up anything. Just preserve.

Fourth, you understand that the investigation is already underway. The bank call confirmed it. The question now is not wheather your being investigated – its how you respond to that investigation. Strategic response, guided by counsel, gives you the best chance of navigating this. Panicked cooperation or defensive silence both make things worse.

Your bank is not your ally in this. They filed the SAR. They provided the records. They called to gather more evidence. The only person working for you in this situation is your attorney. Get one before you say anything else.

The bank call is a warning. It tells you that your PPP loan is under scrutiny. It tells you that federal investigators have been looking at your records. It tells you that the window for getting ahead of this situation is closing. How you respond in the next few days will shape everything that follows.

Dont let the friendly tone fool you. Dont let the routine-sounding questions lull you into cooperation. Dont mistake the banks call for a chance to explain. Its a trap dressed as customer service. Treat it accordingly. Get an attorney involved immediatly, and let them handle all future communications with the bank. Your future may depend on it.