Criminal Defense Lawyers

PPP Loan Fraud Charges in California

Last Updated on: 13th December 2025, 01:30 pm

The 10-year statute of limitations means federal prosecutors are just getting started. That’s what most Californians who received PPP loans don’t understand. They think the danger has passed. The loans were forgiven. The program ended. Four years have gone by without a knock on the door. What they don’t realize is that Congress extended the statute of limitations from 5 years to 10 years in August 2022 – retroactively. A 2020 PPP loan is prosecutable until 2030. A 2021 loan until 2031. California’s four federal districts – Central, Northern, Southern, and Eastern – are all actively prosecuting PPP fraud cases right now. And defendants sentenced in 2024-2025 are receiving sentences 40% longer than those sentenced in 2021-2022 for identical conduct.

Here’s what makes California’s prosecution landscape particularly intense: the Central District of California formed a Corporate and Securities Fraud Strike Force in October 2023. The same prosecutors who take down corporate executives and securities fraudsters are now applying that expertise to PPP loan fraud. Richard Ayvazyan received 17 years for leading a Los Angeles fraud ring that used 150 fake applications with stolen identities. Casie Hynes got 5 years for submitting over 80 fraudulent applications. Emanuel Tucker faces 20 years for buying a Ferrari, Bentley, and a $400,000 diamond necklace with PPP proceeds. California prosecutors aren’t treating PPP fraud as minor pandemic-era mistakes. They’re treating it as organized financial crime – and prosecuting with strike force resources.

The conviction statistics confirm what the prosecution patterns predict. IRS Criminal Investigation achieves a 98.5% conviction rate in prosecuted COVID fraud cases. Once you’re charged in federal court in California, conviction is virtually certain. The question isn’t guilty or not guilty. It’s how long you’ll serve, how much restitution you’ll owe, and whether they seize the assets you bought with the money.

The 10-Year Statute That Changed Everything

Heres what nobody told you when the PPP program ended. The standard statute of limitations for federal wire fraud is 5 years. For most people who received PPP loans in 2020, that would mean the deadline for prosecution would have been 2025. But Congress changed the rules. In August 2022, President Biden signed the PPP and Bank Fraud Enforcement Harmonization Act. The statute of limitations became 10 years – retroactively. Every PPP loan ever issued is now subject to prosecution for a full decade from the date of the offense.

And heres the thing about how “date of the offense” works. It isnt just the application date. If you submitted a fraudulent forgiveness application in 2021, thats a seperate offense with its own 10-year clock. If you made false statements to investigators in 2023, thats another offense. The statute of limitations runs from the LAST fraudulent act, not the first. For many defendants, the prosecution window extends even longer then they realize.

Think about what this means practicaly. You got a PPP loan in April 2020. You thought you were safe after April 2025. Wrong. The statute now runs to April 2030. You filed for forgiveness in January 2021? That clock runs to January 2031. The DOJ has over 800 pending civil fraud investigations. The SBA OIG referred 669,000+ loans for review. There prosecuting cases right now that originated in 2020, and there just getting started.

The retroactive application caught many California defendants off guard. Lawyers who told clients in 2021 “just wait it out for 5 years” had to revise that advice completly. The strategy of running out the clock dosent work when Congress moves the clock. And unlike many legal changes, this one applies to conduct that already happened – you cant argue you didnt know the rules when you took the loan becuase the prosecution window wasnt extended untill after the fraud occured.

California’s Four Federal Districts Are Prosecuting PPP Fraud

California has four federal judicial districts, and all four are activly prosecuting PPP loan fraud. Where your case is filed depends on where the fraud occured, where you live, or where the financial institution was located. Each district has its own U.S. Attorney’s Office, its own prosecutors, and its own approach to PPP cases.

The Central District of California (CDCA) covers Los Angeles, Orange County, Riverside, San Bernardino, Ventura, Santa Barbara, and San Luis Obispo. Its the largest federal district in the country by population. In October 2023, U.S. Attorney Martin Estrada announced the formation of a Corporate and Securities Fraud Strike Force – and PPP fraud became a priority target. When CDCA prosecutes PPP fraud, they bring strike force resources. Richard Ayvazyan recieved 17 years for leading a fraud ring that submitted 150 fake applications using identities stolen from elderly people, deceased individuals, and foreign exchange students.

The Northern District of California (NDCA) covers San Francisco, Oakland, San Jose, and Silicon Valley. NDCA has expertise in tech industry fraud and white-collar crime. A California man was arrested in the Northern District for a $3.6 million PPP and EIDL fraud scheme. The tech-savvy prosecution teams understand digital evidence – IP addresses, device fingerprints, electronic trails.

The Southern District of California (SDCA) covers San Diego and Imperial County. SDCA handles significant cross-border fraud cases and participates in national healthcare fraud takedowns. PPP fraud prosecutions continue alongside the districts traditional caseload.

The Eastern District of California (EDCA) covers Sacramento, Fresno, and the Central Valley. While fewer high-profile PPP cases have emerged from EDCA, the district is activly investigating alongside federal partners.

How The SBA Detects PPP Fraud

Heres what most defendants dont understand untill its to late. The SBA didnt just approve loans and move on. They built sophisticated detection systems that continue running years after the program ended. And the detection methods are comprehensive – there cross-referencing your PPP application against every government database that exists.

The four-step fraud detection process works like this:

• Screening: Every application passed through automated systems comparing it to IRS records, Social Security databases, and business registrations
• Data Analytics: Machine learning algorithms identified patterns – multiple applications from the same IP address, employee counts that didnt match tax filings, businesses that didnt exist before 2020
• Human Review: Flagged applications went to fraud examiners who compared stated information against actual records
• OIG Referral: Cases with evidence of fraud were referred to the SBA Office of Inspector General, which coordinates with the FBI and DOJ

And heres the hidden connection that catches people. Your PPP application said you had 50 employees? Your IRS Form 941 quarterly payroll reports say you had 3? That discrepancy triggered automatic referral. The cross-referencing happens without any human involvement – algorithms compare your claims to your actual tax filings and flag inconsistancies.

The referral volume is staggering. The SBA OIG has recieved over 669,000 referrals of potentialy fraudulent loans. They cant prosecute all of them – but there prioritizing by amount, evidence strength, and cooperator availability. California, with its massive population and huge number of PPP loans issued, generated proportionaly more referrals. If you havnt been contacted yet, that might mean your lower priority. It dosent mean your safe.

The California-specific wrinkle involves ICE Homeland Security Investigations. In May 2025, an ICE Los Angeles multiagency taskforce resulted in 14 arrests on complaints alleging more then $25 million in COVID-19 relief fraud. Federal agencies are coordinating across jurisdictions – your case might involve FBI, IRS-CI, SBA-OIG, and HSI all working together.

The Charges California Federal Prosecutors Bring

Heres were the sentencing exposure gets serious. PPP fraud isnt charged under a single statute. Federal prosecutors in California typicaly bring multiple charges, each carrying its own maximum sentence. The charges stack. The exposure compounds. What seems like a single act of fraud can result in decades of potential prison time.

The primary charges include:

• Wire Fraud (18 USC 1343): Up to 30 years per count. Any electronic transmission of false information – emails, online applications, electronic fund transfers – constitutes a seperate count.
• Bank Fraud (18 USC 1344): Up to 30 years per count. If the PPP loan went through a traditional bank, bank fraud applies.
• Making False Statements (18 USC 1014): Up to 30 years. The false statements on your application are each potentialy seperate violations.
• Money Laundering (18 USC 1956): Up to 20 years. If you moved the fraudulent proceeds through multiple accounts or used them to purchase assets, money laundering charges can attach.
• Aggravated Identity Theft (18 USC 1028A): Mandatory 2 years consecutive. If you used someone elses identity information – Social Security numbers, names of fake employees – this adds mandatory prison time that runs AFTER your other sentences.

OK so lets do the math on a California case. The Ayvazyan fraud ring submitted 150 fake applications using stolen identities. Thats potentialy 150 counts of wire fraud, 150 counts of bank fraud, plus identity theft charges for each stolen identity used. Richard Ayvazyan got 17 years – among the longest PPP sentences nationaly. The charges run concurently in many cases, but when you have 150 fraudulent applications, prosecutors have enormous leverage.

And heres the cascade that catches defendants off guard in California. You lied on the application – thats fraud. Then you certified the forgiveness application – thats a second false statement. You bought a Ferrari with the proceeds – thats money laundering. You used fake employee names – thats identity theft. One PPP scheme generates multiple seperate federal crimes, each with its own prosecution timeline and sentencing exposure.

Recent California PPP Fraud Sentences

Heres what California federal judges are actualy imposing. These arent hypotheticals – there real sentences from real cases in California’s federal courts.

Richard Ayvazyan (Central District – Los Angeles): 17 years in federal prison. Ayvazyan led a fraud ring that submitted approximately 150 fraudulent PPP and EIDL applications using stolen and synthetic identities – including names belonging to elderly people, deceased individuals, and foreign exchange students. The ring obtained over $20 million. They used the funds as down payments on luxury homes and to buy gold coins, diamonds, jewelry, and luxury watches. His wife Marietta Terabelian recieved 6 years. His brother Artur Ayvazyan recieved 5 years.

Casie Hynes (Central District – Mid-City Los Angeles): 60 months in federal prison. Hynes submitted more then 80 fraudulent applications for PPP and EIDL loans in the names of approximately 20 fake companies. She obtained over $2.3 million and also falsely sought nearly $1.3 million in pandemic tax credits. Sentenced February 2025 with $2,376,168 in restitution.

Hassan Kanyike (Central District – Santa Clarita): Over 4 years in federal prison. Kanyike obtained approximately $1.8 million through fraudulent PPP and EIDL applications. Before his arrest, he had already transferred $762,000 to Uganda. The overseas transfer didnt help – he was still caught, still convicted, still sentenced.

Emanuel Tucker (Central District – Canyon Lake): Faces maximum 20 years after pleading guilty to $15.9 million scheme. Tucker used PPP funds to buy a Ferrari F8 Tributo, Bentley Continental, Cadillac Escalade, multiple million-dollar houses, a $63,000 diamond ring, and a $400,000 diamond necklace. Sentencing pending.

Robert Benlevi (Central District – Encino): Arrested for $27 million scheme. Benlevi allegedly submitted 27 bank loan applications to four banks seeking PPP loans. Case pending.

14-Defendant Taskforce Case (Los Angeles Area): In May 2025, ICE Los Angeles multiagency taskforce arrested 14 defendants on complaints alleging more then $25 million in COVID-19 relief fraud. One defendant, Sarkis Sarkisyan of Glendale, allegedly obtained over $700,000 for a fake business. Each defendant faces decades in prison if convicted.

Why Sentences Are Getting Longer, Not Shorter

Heres the inversion that surprises California defendants. You might think sentences would be getting lighter as time passes – more distance from the pandemic emergency, more sympathy for COVID-era desperation. The opposite is happening. Defendants sentenced in 2024-2025 recieve sentences 40% longer on average then those sentenced in 2021-2022 for identical conduct.

Several factors drive this in California:

The Strike Force mentality has elevated prosecutorial intensity. CDCAs Corporate and Securities Fraud Strike Force treats PPP fraud like corporate securities fraud – with the same resources, the same expertise, and the same sentencing expectations. This isnt pandemic cleanup. This is financial crime prosecution.

Judges are less sympathetic to “COVID desperation” arguments. In 2021, some judges accepted that legitimate businesses made desperate decisions during an unprecedented crisis. In 2025, that argument rings hollow. Four years of California’s economic recovery have passed. The desperation narrative has expired.

The “I didnt understand the rules” defense has collapsed. Early defendants could credibly claim confusion about rapidly-changing program requirements. That dosent work anymore. Courts expect defendants to have understood eligiblity rules that have been extensively publicized and litigated.

Prosecutors are bringing stronger cases. With more time to investigate, prosecutors arrive at sentencing with more evidence, more cooperating witnesses, and more aggravating factors. The Ayvazyan prosecution had years to build that case. Stronger cases produce longer sentences.

And heres the uncomfortable truth. The 98.5% conviction rate means trial is almost always a mistake. Fighting charges adds sentencing exposure through trial penalties and loss of acceptance-of-responsibility reductions. Most California defendants who go to trial recieve significantly longer sentences then those who plead guilty.

What To Do If You’re Under Investigation for PPP Fraud in California

If your reading this becuase your under investigation or youve been contacted by federal agents about a PPP loan in California, heres what you need to understand immediatly. The decisions you make in the next days and weeks will determine wheather your facing months or years.

First: do not speak to federal agents without an attorney. FBI agents, SBA OIG investigators, IRS Criminal Investigation agents, HSI agents – there all trained to obtain statements that can be used against you. “I just want to clear this up” becomes a confession. “I didnt know it was wrong” becomes an admission of the underlying act. Invoke your right to counsel. Say nothing else.

Second: do not attempt to repay the loan without legal advice. What worked in 2021 – quickly repaying to avoid scrutiny – now triggers prosecution. Repayment is treated as consciousness of guilt. “If the loan was legitimate, why did you repay it?” Get legal advice before making any financial moves related to the loan.

Third: preserve all documents but dont destroy anything. Destruction of evidence is obstruction of justice – a seperate federal crime. But having documents allows your attorney to evaluate your defense. Bank statements, tax returns, payroll records, the original application – keep everything.

Fourth: understand the asset forfeiture risk. California defendants who bought luxury items – houses, cars, jewelry – face forfeiture of those assets. The Ayvazyan defendants lost there luxury homes. Tucker will likely lose the Ferrari, Bentley, and diamond necklace. Forfeiture is on top of prison time, not instead of it.

Fifth: get a federal criminal defense attorney who handles PPP cases in your district. CDCA, NDCA, SDCA, and EDCA each have different prosecutors, different judges, and different approaches. An attorney familiar with your specific district, who has handled PPP cases, can evaluate your exposure and advise on strategy.

The federal PPP fraud prosecution system in California is designed to produce convictions. The 10-year statute, the sophisticated detection systems, the strike force resources, the multiple overlapping charges – all of it creates a machine thats very difficult to escape once your in it.

The conviction rate exceeds 98%. The statute of limitations runs to 2030 or beyond. Sentences are getting longer, not shorter. California’s federal prosecutors are just getting started.

Dont assume the danger has passed becuase you havnt heard anything yet.