Criminal Defense Lawyers

New York PPP Loan Fraud Lawyers: Federal Defense in Manhattan, Brooklyn, and Long Island

When Federal Agents Come Knocking: PPP Loan Fraud Defense in New York

The FBI agents are at your door. Or maybe its a target letter from the Southern District of New York. Your hands are shaking. Your googling “PPP loan fraud lawyer” at 2am because you can’t sleep, and irregardless of what you thought when you applied for that loan back in 2020, the goverment doesn’t care about your intentions now. Look, here’s the deal—your facing federal criminal charges in Manhattan, Brooklyn, or Long Island, and what you do in the next 48 hours will determin if you spend the next three years in federal prison or if you can resolve this before an indictment is filed.

You Just Got Contacted by Federal Investigators – The Next 48 Hours

So the call came. Or maybe FBI agents showed up at your buisness. Maybe its a grand jury subpoena demanding you’re business records. Your going to want to cooperate—everyone does—because you think explaining your situation will make this go away. DO NOT talk to FBI agents without a lawyer present. I mean, seriously, this is the single biggest mistake we see.

Here’s what happens if you talk: anything you say becomes evidence. If you misremember one date, one employee name, one dollar amount? That’s 18 USC 1001 false statements, which carries up to 5 years in prison. The FBI agents seems friendly. They say “we’re just trying to understand what happened” or “we’re giving you a chance to explain.” They’re building a criminal case.

You have approximatley 60-90 days from first contact to approach prosecutors wiht a cooperation offer. After that window, they’ve already drafted you’re indictment. In SDNY (Manhattan federal court) specifically, once you recieve a “target letter,” you have maybe 21 days before the grand jury votes. This ain’t a suggestion—its a hard deadline.

The Southern District of New York is fast-tracking PPP fraud cases. From investigation to indictment: 4-6 months instead of the 12-18 months you’ll see in other districts. If your being investigated by SDNY, you have LESS TIME then someone in the Eastern District of New York (EDNY, covering Brooklyn and Long Island) or other jurisdictions. This changes everything about your timeline for resolution.

What they’re looking for during that first contact: inconsistencies. They already have you’re bank records, you’re SBA application, maybe even cooperating witnesses. The interview ain’t about gathering information—its about catching you in a lie so they can add false statements charges on top of the fraud charges. Each false statement is a seperate count, each carrying 5 years. We’ve saw defendants turn a 2-count indictment into a 7-count indictment because they talked without counsel.

Understanding Your Investigation – SDNY vs EDNY vs Long Island

Not all federal prosecutors think the same way. Where your being investigated matters more then the actual charges. The goverment operates differently based off which US Attorney’s office is handling you’re case.

The Southern District of New York (Manhattan) is known for aggressive prosecution. SDNY Assistant US Attorneys (AUSAs) are less likely to offer pre-indictment resolutions. They prefer high-profile trials. They want headlines. If your in SDNY, your looking at a fight irregardless of the strength of the evidence. Bottom line: SDNY doesn’t negotiate as easily.

The Eastern District of New York (Brooklyn, Queens, Long Island) is more pragmatic. EDNY prosecuters are willing to negotiate if you approach early with a restitution plan. They’re case load is massive, and they’ll take a reasonable disposition over a trial if you’re attorney knows how to structure the deal. Its not that EDNY is “easier”—there just more willing to resolve cases pre-indictment if you move fast.

And here’s something nobody talks about: Long Island business owners are being targeted disproportionately. EDNY prosecutors are systematically investigating Nassau and Suffolk County businesses—especially restaurants, construction companies, medical practices—because of percieved “wealthy suburbs” wiht high fraud rates. If you’re a Long Island business owner, your risk profile is higher then Brooklyn or Queens defendants. The prosecutors are using IRS payroll tax records to cross-check PPP claims, and the audit trails on Long Island businesses is yielding alot of cases.

The US Attorney’s offices operate differently too. SDNY (One St. Andrew’s Plaza in Lower Manhattan) has a dedicated securities and commodities fraud unit that’s handling alot of the PPP cases. There used to prosecuting sophisticated financial fraud. EDNY (271 Cadman Plaza East in Brooklyn) has more experience wiht traditional street crimes and organized crime, so there approach to white-collar cases is different—more transactional, less ideological.

What Dollar Amount Gets You Criminally Prosecuted?

Not every PPP loan fraud case gets prosecuted criminally. The goverment is triaging because their are litterally tens of thousands of suspected fraud cases. Your loan amount matters. Alot.

As of 2025, the Department of Justice has a $150,000 prosecution threshold. If you’re PPP loan was under $150K, criminal prosecution is unlikely unless there are aggravating factors—identity theft, shell companies, multiple loans under different names. Below that threshold, your probably looking at civil resolution wiht the SBA: you pay back the loan, maybe a penalty, but no prison time.

Between $150K and $500K is what defense attorneys call the “danger zone.” Your definately on the prosecuters radar. They’ll prosecute if you resist civil resolution or if they think you can’t pay restitution. Over $500K? Your getting indicted. Period. The only question is wether you can negotiate a cooperation agreement before the indictment comes down.

But here’s the thing—its not just about the dollar amount. What type of fraud you commited changes you’re sentencing exposure completley. Not something you want to risk.

If you had a real business with real employees but overstated payroll by 20-30%, you might be looking at 12-18 months if convicted. You could of claimed $300K in payroll when it was really $200K. That’s fraud, but its not aggravated.

If you had ZERO employees and created fake payroll? You’re looking at 48-72 months becuase its aggravated fraud under the Federal Sentencing Guidelines. Same loan amount, radically different sentencing exposure. The difference between “payroll overstatement” and “fictitious employees” is the difference between 18 months and 6 years.

Then there’s the issue of what you spent the money on. PPP funds was supposed to be for payroll, rent, utilities. If you bought a Lamborghini, your sentencing exposure goes up. If you used even 10-20% of the funds for legitimate buisness expenses, that can be a mitigating factor. Real talk: federal judges in New York care about where the money went, not just wether you lied on the application.

Multiple loans compound everything. If you applied for PPP loans under multiple business entities, the goverment will aggregate the fraud amounts. Three seperate $100K loans? That’s a $300K fraud in there eyes, which puts you over the threshold for serious prison time. They’ll also charge you with conspiracy (18 USC 371) if they think you coordinated with others—accountants, business partners, family members who served as nominee owners.

The Forgiveness Trap and Asset Seizure – Why You’re Getting Investigated NOW

So you got you’re PPP loan approved in 2020 or 2021. You thought you was safe. Maybe you even got the loan forgiven in 2022. And now, in 2025, the FBI shows up. What happend?

Loan forgiveness fraud is the 2025 enforcement priority. The SBA and DOJ spent 2020-2022 processing millions of applications. They didn’t have time to investigate during the pandemic. Now they have time. And they’re finding that alot of the fraud didn’t happen on the initial application—it happend on the forgiveness application.

Here’s how it works: You applied for a PPP loan in 2020. You inflated your payroll a bit, but the loan got approved without much scrutiny becuase the goverment was pushing money out the door fast. Then in 2021 or 2022, you applied for loan forgiveness. You was supposed to prove you spent the money on eligible expenses. And maybe you fudged those documents. Maybe you created fake invoices. Maybe you claimed payroll for employees who didn’t exist during the covered period.

The SBA Office of Inspector General is cross-referencing you’re forgiveness application against IRS payroll tax records, state unemployment filings, even your business’s bank statements. Their finding massive discrepancies. Look, here’s the thing—you might of gotten away wiht a questionable application, but the forgiveness fraud is what’s getting people indicted right now. I’m just saying, this ain’t about what you did in 2020 anymore.

The forensic accounting is sophisticated. The SBA OIG has computer algorithms that flag applications where the forgiveness amount doesn’t match quarterly IRS 941 payroll tax filings. They’re looking at state unemployment insurance payments to verify employee counts. There checking bank deposits against reported revenue. If you claimed $400K in payroll but only deposited $200K in you’re business account that year, that’s a red flag.

And it gets worse. Asset seizure happens BEFORE indictment in New York. Your reading that right. The FBI doesn’t wait for a conviction to take you’re stuff.

Under civil asset forfeiture laws, federal agents can seize homes, cars, bank accounts BEFORE you’re even charged wiht a crime—they just need to show “probable cause” that the assets was purchased with fraud proceeds. That’s a much lower standard then “beyond a reasonable doubt” for a criminal conviction. That Mercedes you bought in 2021? The down payment on your Long Island house? They can freeze it during the investigation phase.

At the end of the day, we see clients who loose there primary residence, business assets, investment accounts—all before they’ve had there day in court. The FBI in New York is aggressive about this. And once its seized, getting it back is nearly impossible even if your ultimately aquitted. (Trust me on this.)

The seizure process works like this: FBI agents show up wiht a seizure warrant. They take physical possession of vehicles, jewlery, cash. For real estate and bank accounts, they file a lis pendens (notice of pending legal action) which effectively freezes the asset. You can’t sell you’re house, you can’t access you’re bank account. And the burden shifts to YOU to prove the assets weren’t bought with fraud proceeds—innocent until proven guilty doesn’t apply in civil forfeiture.

Oh, and there’s another problem nobody talks about: the IRS is coming too. If you claimed you’re PPP loan as tax-free income (which it is if forgiven) but also deducted the expenses paid wiht PPP funds, that’s illegal double-dipping. Now you have BOTH a DOJ PPP fraud investigation AND an IRS criminal tax investigation. IRS Criminal Investigation (IRS-CI) is refering these cases to DOJ. Now your facing conspiracy charges, tax evasion charges on top of PPP fraud. Sentencing exposure doubles or triples.

You think its just about paying back the loan? The goverment wants there pound of flesh. They want restitution, fines, prison time, and they want to make an example. This ain’t a civil dispute no more—its a criminal prosecution irregardless of you’re original intentions. The forgiveness trap got you, and now your looking at consequences you didn’t see coming when you clicked “submit” on that SBA portal back in 2021.

What Evidence the Government Has Against You

You need to understand what the prosecutors already have before you decide how to respond. The DOJ PPP Fraud Strike Force isn’t guessing—there building cases wiht hard evidence.

First, they have you’re entire SBA application. Every field you filled out, every document you uploaded, every certification you checked. They’re comparing that against IRS records—specifically Form 941 (quarterly payroll tax returns) and Schedule C (business income). If you claimed $500K in annual payroll on your PPP app but only reported $200K to the IRS, that’s direct evidence of fraud.

Second, bank records. The FBI subpoenas you’re business bank account, you’re personal bank account, often you’re spouse’s accounts too. There looking at deposits (does the revenue match what you claimed?), withdrawals (what did you actually spend the PPP money on?), transfers (did you move money to offshore accounts or to relatives?). Bank records don’t lie, and they create a timeline that’s hard to dispute.

Third, third-party records. State unemployment insurance filings show how many employees you actually had. Vendor invoices show what you actually spent money on. Lease agreements for you’re business location. Vehicle registration for that luxury car you bought in 2021. Credit card statements. The feds cast a wide net.

Fourth, cooperating witnesses. Maybe its you’re accountant who’s cooperating to save there own license. Maybe its a business partner who got caught first and is giving up everyone else. Maybe its a employee who filed a whistleblower complaint. Cooperators are devastating because they can testify about your intent—what you said in private, what you knew, what you intended to do with the money.

By the time you get that first call from FBI, they usually have 70-80% of there case already built. The interview is the last 20%—getting you to make admissions or catch you in lies. That’s why you don’t talk without a lawyer. Your not going to talk you’re way out of this.

Defenses That Actually Work in Manhattan and Brooklyn Federal Courts

So you need a defense. Not a generic one—one that actually works in SDNY and EDNY specifically. Federal judges in New York don’t care about defenses that work in Texas or Florida. They care about case law from the Second Circuit and precedent set in there own courthouses.

The “nominal use” defense is gaining traction in SDNY. If you used even a small percentage of PPP funds for legitimate buisness expenses, judges are considering this a mitigating factor at sentencing. In US v. Barosy (SDNY 2023) and US v. Jasdanwala (SDNY 2024), defendants who showed they spent 15-20% of funds on real payroll or rent recieved sentences 30-40% lower then guideline ranges. This defense doesn’t get you acquitted, but it could of reduced a 48-month sentence to 28 months. Your attorney needs to build this record early—bank statements, invoices, payroll records showing legitimate use.

Here’s the thing: “nominal use” works better in SDNY then EDNY. Brooklyn judges are less receptive to this argument. In EDNY, your better off focusing on an early cooperation strategy.

Lack of mens rea (criminal intent) can work if you’re facts support it. If you’re accountant or bookkeeper filed the application without your knowledge, that’s a defense. The goverment has to prove you knowingly made false statements. But be careful—they’ll subpoena your emails, text messages, every communication wiht you’re accountant. If there’s any evidence you directed the fraud, this defense collapses.

Reliance on professional advice is related. If you relied on you’re accountant or attorney’s advice that you’re application was proper, that can negate criminal intent. But you need contemporaneous documentation—emails asking for guidance, written opinions from the professional. And the advice has to of been based on accurate facts. If you lied to you’re accountant about your payroll numbers, reliance doesn’t work.

Good faith mistake is a longshot but possible. If you genuinely misunderstood the PPP rules—for example, you thought independent contractors counted as “employees” for payroll purposes—that’s not criminal fraud. But the mistake has to be reasonable. Claiming 50 employees when you had zero isn’t a mistake; its a lie.

Early cooperation is you’re best option if the evidence is strong. But timing matters. In SDNY, you have about 21 days after recieving a target letter to approach prosecutors. In EDNY, the window is a bit longer—maybe 45-60 days. If you come in wiht a cooperation proffer before indictment, prosecutors might offer a plea to lesser charges or even a deferred prosecution agreement. If you wait until after indictment, you’ve lost most of your leverage.

Cooperation means: admitting what you did, paying full restitution immediately (or showing a concrete plan), providing information on other fraudsters if applicable, and agreeing to a guilty plea. In exchange, prosecutors might recommend a sentence at the low end of the guidelines. Its not pretty, but if your facing 48 months and cooperation gets you 18 months, that’s 30 months of you’re life back.

Real Sentencing Exposure – What Prison Time Are We Actually Talking About?

18 USC 1343 wire fraud carries up to 20 years in prison. 18 USC 1344 bank fraud carries up to 30 years. Thats what the statutes say. But your not getting 20 years for a $300K PPP fraud case as a first-time offender. Long story short, the Federal Sentencing Guidelines determines actual sentences, adn they’re based on loss amount, criminal history, and aggravating factors.

Here’s the real data from SDNY and EDNY cases in 2024-2025: First-time offenders wiht $200K-$500K fraud amounts are recieving sentences of 24-36 months. If you cooperate early and show remorse, you might get 18-24 months. If you go to trial and loose, your looking at 36-48 months because you didn’t accept responsibility.

Over $500K? Sentencing range jumps to 48-72 months for first-time offenders. If you have aggravating factors—multiple loans, identity theft, obstruction of justice—add another 12-24 months. One EDNY case in late 2024: defendant defrauded $1.2M, went to trial, got 87 months. Another SDNY case: defendant cooperated on a $800K fraud, got 31 months.

The median sentence for PPP fraud in the Eastern District of New York in 2024 was 31 months. In the Southern District of New York, it was slightly higher: 34 months. These ain’t maximums—there actual sentences being imposed right now on people just like you.

The Guidelines work like this: Base offense level starts at 6 for fraud. Then you add levels based on loss amount. $150K-$250K adds 12 levels. $250K-$550K adds 14 levels. Over $1M adds 18 levels. Then adjustments: if you had more then 10 victims (aggregate harm), add 2 levels. If you used sophisticated means (fake documents, shell companies), add 2 levels. If you obstructed justice (deleted emails, lied to investigators), add 2 levels.

But you can also subtract levels. If you accept responsibility (plead guilty early), subtract 3 levels. That’s huge—it can reduce a 48-month sentence to 30 months. If you provide substantial assistance (cooperate), prosecutors can file a 5K1.1 motion for downward departure—potentially another 30-40% reduction.

The Financial Reality – Legal Fees, Restitution, and Asset Forfeiture

You need to know what this is going to cost you in total. Not just the legal fees, but everything.

Federal criminal defense attorneys in New York charge $75,000-$150,000 for a PPP fraud case. If you go to trial, double that. A experienced lawyer who practices in SDNY and EDNY regularly is going to charge $500-$850 per hour. You’ll need 150-300 hours of work for a case that resolves pretrial, 400+ hours if it goes to trial. Alot of attorneys require a $50K retainer upfront.

Restitution is ordered in 100% of PPP fraud convictions. You have to pay back the full loan amount. Plus interest. Plus any forgiveness amount. If you defrauded $400K, your paying back $400K even if you spent it all. The court will put you on a payment plan if you can’t pay immediately, but the debt doesn’t go away. Ever. Its non-dischargeable in bankruptcy.

Asset forfeiture is seperate from restitution. The goverment can seize assets equal to the fraud amount. If you bought a $80K car wiht PPP funds, there taking the car. If you put $100K down on a house, there putting a lien on the house. Your could of avoided this by not purchasing assets during 2020-2022, but if you did, those assets is at risk.

Then there’s lost income. If your convicted, your going to prison for 18-36 months. That’s 1.5-3 years of zero income. If you earn $100K/year, that’s $150K-$300K in lost wages. Plus you’re business might collapse while your incarcerated. Add it up: legal fees ($100K), restitution ($400K), asset forfeiture ($100K), lost income ($200K). Total financial impact: $800K for a $400K PPP fraud. The real cost is double the fraud amount.

And then there’s the collateral consequences. Federal conviction means you can’t get goverment contracts. Many professional licenses (attorneys, CPAs, real estate brokers, medical professionals) get suspended or revoked. You can’t get bonded. Banks won’t lend to you. Immigrations consequences if your not a US citizen—fraud convictions are deportable offenses, even for green card holders.

What You Need to Do RIGHT NOW

Call a lawyer. Right now. Not tommorrow. Not next week. If you’ve been contacted by FBI, SBA OIG, if you recieved a subpoena or target letter, you need a federal criminal defense attorney who practices in the Southern District of New York or Eastern District of New York. You need someone who knows the local prosecutors, the federal judges, the US Attorney’s Office.

Don’t talk to investigators. Don’t turn over documents without counsel. Don’t try to “explain” you’re situation. You’re facing this alone otherwise. The cooperation window closes fast—21 days in SDNY after a target letter. Every day without a lawyer is a day closer to indictment. Your assets can be seized tomorrow.

Here’s what to bring to you’re first attorney meeting: you’re PPP loan application and forgiveness application (if you applied for forgiveness). Bank statements for you’re business account covering 2020-2023. IRS Form 941 payroll tax returns for 2019-2022. Any correspondence from SBA, FBI, or federal prosecutors. Don’t hide anything from you’re attorney—attorney-client privilege means they can’t disclose what you tell them, but they need the truth to defend you effectively.

We’re here 24/7. Your facing federal charges in Manhattan, Brooklyn, or Long Island, and the goverment doesn’t care that you was trying to save you’re business during the pandemic. Call now.