PPP Loan Fraud Charges in Illinois

PPP Loan Fraud Charges in Illinois: How The 10-Year Statute Of Limitations Means Federal Prosecutors Are Just Getting Started

The 10-year statute of limitations means federal prosecutors are just getting started. That’s what most Illinois residents 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. Illinois has three federal districts – Northern, Central, and Southern – and all three are 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 Illinois’ prosecution landscape uniquely dangerous: prosecutors are indicting entire employee groups at once. The Central District indicted 19 USPS workers in a single sweep. The Southern District charged three VA employees from the same Belleville office. The state inspector general has identified 375 government workers implicated in PPP fraud – and that list is becoming a target list for federal prosecution. Farooq Khan got 42 months for submitting 30 fraudulent applications through his tax service. Rahul Shah faces up to 30 years after conviction for a $55 million scheme. Christopher Scott got nearly six years for defrauding the program of $550,000. Illinois prosecutors aren’t treating PPP fraud as pandemic-era desperation. They’re treating it as organized theft – and prosecuting accordingly.

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 Illinois, 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 you lose everything 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 Illinois 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.

Illinois’ Three Federal Districts Are All Prosecuting PPP Fraud

Illinois has three federal judicial districts, and all three 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 Northern District of Illinois (NDIL) covers Chicago and the metropolitan area – Cook County, DuPage, Lake, Will, and 17 other northern counties. Its the most populous federal district in Illinois by far. The Dirksen Federal Building at 219 S. Dearborn Street handles the bulk of Illinois PPP prosecutions. When NDIL prosecutes PPP fraud, they bring resources – these are the same prosecutors who handle major financial crimes and organized crime cases. Rahul Shah of Evanston was convicted for a $55 million scheme involving falsified bank statements and stolen identities. Farooq Khan recieved 42 months for submitting 30 fraudulent applications. Christopher Scott got nearly six years for defrauding the program of $550,000 through non-existent businesses.

The Central District of Illinois (CDIL) covers Springfield, Peoria, Champaign, and central Illinois. CDILs most significant PPP prosecution involved 19 United States Postal Service workers indicted in a single sweep. Workers from Springfield, Champaign, Urbana, and Danville – current and former postal employees – all charged with wire fraud related to PPP. Each faces up to 30 years in prison.

The Southern District of Illinois (SDIL) covers East St. Louis, Belleville, Carbondale, and southern Illinois. SDIL indicted three VA federal workers from the same Belleville office – Katherine Liggins, Eric Scott, and Tamika Wilson – for combined PPP fraud exceeding $80,000. All three were full-time federal employees when they submitted fraudulent applications.

And heres were Illinois’ prosecution landscape gets uniquely dangerous. Prosecutors are pursuing sweep indictments – charging entire groups of employees from single agencies simultaneously. The 19 USPS workers. The three VA employees. The 15+ state workers charged by Attorney General Raoul. When your coworkers get indicted alongside you, cooperation becomes attractive. And cooperation means naming everyone else in the scheme.

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. Illinois, with Chicagos massive economy 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 Illinois-specific wrinkle involves the state inspector general investigation. Susan Haling’s office began investigating state employee PPP fraud in 2022. They found 375 government workers implicated. They found $7.2 million in improper loans. They found workers who admitted paying kickbacks to brokers who submitted fraudulent applications. That investigation has become a roadmap for federal prosecutors – a target list of people who already admitted fraud to state investigators.

The Charges Illinois Federal Prosecutors Bring

Heres were the sentencing exposure gets serious. PPP fraud isnt charged under a single statute. Federal prosecutors in Illinois 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 an Illinois case. Rahul Shah was convicted of 7 counts of bank fraud, 5 counts of false statements, 2 counts of money laundering, and 2 counts of aggravated identity theft. Thats potentialy 30 years on each of 12 counts, plus mandatory consecutive time for identity theft. The charges run concurently in many cases, but when you have 16 counts, prosecutors have enormous leverage.

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

Recent Illinois PPP Fraud Sentences

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

Rahul Shah (Northern District – Evanston): Faces up to 30 years after jury conviction. Shah, 56, operated IT companies in the Chicago area. He submitted falsified bank statements that fraudulently inflated deposits, falsified balance sheets that overstated revenues, and fabricated audited financial statements with forged signatures. For one $441,138 PPP loan, he used stolen identities – names and taxpayer IDs of people who never recieved payments from his company. Convicted of 7 counts bank fraud, 5 counts false statements, 2 counts money laundering, 2 counts aggravated identity theft. Sentencing scheduled November 2025.

Farooq Khan (Northern District – Chicago): 42 months in federal prison. Khan, 31, owned Hannan Tax Services. From May 2020 through October 2021, he prepared and facilitated at least 30 fraudulent PPP and EIDL applications. He knowingly submitted applications for non-operational companies that didnt qualify, falsifying employee counts and tax records. The scheme obtained approximately $3.6 million in funded loans. Khan personally took $1.2 million. Court ordered $3,645,104 in restitution.

Christopher Scott (Northern District – Suburban Chicago): Nearly 6 years in federal prison. In 2020 and 2021, Scott submitted applications to lenders and the SBA on behalf of non-existent or non-operating businesses. He fraudulently obtained more then $550,000 in small business loans under the CARES Act.

Hadi Isbaih (Northern District – Palos Heights): Convicted June 2024 on all four counts of wire fraud, each carrying up to 20 years. Isbaih operated Flash Tax Service in Bridgeview. From May to August 2020, he submitted fraudulent PPP and EIDL applications containing false statements about customer businesses. He charged customers upfront fees to submit the fraudulent applications, then charged additional fees when they recieved the funds. Sentencing pending.

Francesco Distefano (Northern District – Addison): Charged December 2024 for $6.3 million scheme. Distefano allegedly used fraud proceeds to purchase luxury automobiles including a Lamborghini Huracan, Maserati Ghibli, and Porsche 911. Case pending.

19 USPS Workers (Central District): Indicted September 2023 for wire fraud related to PPP. Workers from across central Illinois – Springfield, Champaign, Urbana, Danville, Downers Grove. Each faces up to 30 years. Cases pending.

Three VA Workers (Southern District – Belleville): Katherine Liggins, Eric Scott, and Tamika Wilson indicted. All three were full-time VA employees at the St. Louis County Regional Office when they submitted applications. Combined fraud exceeds $80,000. Cases pending.

The State Employee Investigation That Became A Federal Target List

Heres the Illinois-specific problem that dosent exist in most other states. The Illinois Office of Executive Inspector General has been investigating PPP fraud among state workers since 2022. And what they found has become a roadmap for federal prosecution.

The numbers are staggering. 375 Illinois government workers have been implicated in PPP fraud. $7.2 million in improper loans identified. Most cases – 175 – involved Department of Human Services employees. 31 cases in Department of Corrections. 27 in Department of Children and Family Services. 3 in Illinois State Police. Employees from 13 different state agencies.

And heres what makes this investigation so dangerous for defendants. Workers talked. They admitted to state investigators what they did. One fired employee from Ludeman Developmental Center in Park Forest admitted she inflated her 2019 income to get a PPP loan. On her application, she claimed about $122,000 in business income. In her interview, she said she “wouldn’t be at Ludeman wiping people’s behinds” if she actually made that much money. She admitted paying a tax preparer a $4,000 kickback to arrange a $20,832 PPP loan.

The kickback scheme is widespread. Workers admitted paying brokers fees ranging from $600 to $4,000 for fraudulent loans averaging about $20,000 each. Ten workers admitted someone else filled out there PPP applications. Half admitted paying kickbacks – a total of about $22,000 among them. The average kickback was $2,200.

Those brokers are being identified. Those brokers have client lists. And those client lists are becoming federal target lists.

Attorney General Kwame Raoul has already charged 15+ government employees. The prosecutions continue. And the state investigation has handed federal prosecutors exactly what they need – admissions, broker names, and a list of 375 people who recieved fraudulent loans while working for the government.

Why Sentences Are Getting Longer, Not Shorter

Heres the inversion that surprises Illinois 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 Illinois:

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 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 state inspector general investigation gave federal prosecutors a roadmap. Stronger cases produce longer sentences.

The sweep prosecution strategy creates pressure. When 19 coworkers get indicted together, cooperation becomes attractive. Cooperators provide testimony against others. More testimony means stronger cases. Stronger cases mean longer sentences for those who dont cooperate.

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 Illinois 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 Illinois

If your reading this becuase your under investigation or youve been contacted by federal agents about a PPP loan in Illinois, 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 – 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 state investigation connection. If your a government employee and youve already spoken to state investigators, those statements may be available to federal prosecutors. The state inspector general has identified 375 workers. That list exists. Your name may be on it.

Fifth: get a federal criminal defense attorney who handles PPP cases in your district. NDIL, CDIL, and SDIL 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 Illinois is designed to produce convictions. The 10-year statute, the sophisticated detection systems, the state investigation that became a target list, 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. Illinois federal prosecutors are just getting started.

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