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The Spodek Law Group understands how delicate high-profile cases can be, and has a strong track record of getting positive outcomes. Our lawyers service a clientele that is nationwide. With offices in both LA and NYC, and cases all across the country - Spodek Law Group is a top tier law firm.

Todd Spodek is a second generation attorney with immense experience. He has many years of experience handling 100’s of tough and hard to win trials. He’s been featured on major news outlets, such as New York Post, Newsweek, Fox 5 New York, South China Morning Post, Insider.com, and many others.

In 2022, Netflix released a series about one of Todd’s clients: Anna Delvey/Anna Sorokin.

Why Clients Choose Spodek Law Group

The reason is simple: clients want white glove service, and lawyers who can win. Every single client who works with the Spodek Law Group is aware that the attorney they hire could drastically change the outcome of their case. Hiring the Spodek Law Group means you’re taking your future seriously. Our lawyers handle cases nationwide, ranging from NYC to LA. Our philosophy is fair and simple: our nyc criminal lawyers only take on clients who we know will benefit from our services.

We’re selective about the clients we work with, and only take on cases we know align with our experience – and where we can make a difference. This is different from other law firms who are not invested in your success nor care about your outcome.

If you have a legal issue, call us for a consultation.
We are available 24/7, to help you with any – and all, challenges you face.

PPP Loan Fraud Lawyers

Table of contents

If you or your business have been investigated for potential PPP loan fraud, it’s important to find a criminal lawyer who specializes in PPP loan cases. A knowledgeable attorney can help you effectively navigate the complicated federal laws surrounding PPP loans, and ensure that your rights are protected throughout the process.

At [Spodek Law Group], we understand what it takes to successfully defend against allegations of criminal wrongdoing related to a PPP loan application or use of funds. Our team of experienced attorneys will zealously represent you if you are facing investigation by the Department of Justice (DOJ) or another government agency following an alleged misuse of funds obtained through one of these programs.

Our team is well-versed in defending clients against charges relating to:

• False statements on applications – including information about how much an applicant needs, how they will use the money, and whether they qualify for eligibility;

• Falsifying documents – such as manipulating financial records or tax returns in order to obtain larger loans;

• Misuse of loan proceeds – failing to use the money as intended by Congress when providing relief from economic hardship caused by the pandemic;

• Fraudulent transactions – participating in any illegal activities with respect to a PPP program; and

• Improperly obtaining a loan – receiving preferential treatment when applying for one of these types of loans.

When facing possible criminal charges related to a Paycheck Protection Program (PPP) Loan, having experienced legal representation is essential. At [Spodek Law Group], our team has years experience representing clients accused Federal crimes arising from their participation in PPP programs. We understand that these matters must be taken seriously and handled efficiently given their seriousness under both federal and state law enforcement agencies alike. This is why we passionately dedicate ourselves towards ensuring our client’s rights are fully protected throughout this difficult process every step along way!

If you’re under investigation for potential fraud involving your Paycheck Protection Program Loan contact us today. Timely action could mean protecting yourself from potentially severe civil or criminal penalties associated with unjust accusations so don’t wait! Contact us now schedule your consultation so that our highly trained attorneys can provide comprehensive advice tailored specifically towards addressing each individual concern pertaining personal situation!

PPP – Paycheck Protection Program – loan fraud, is a huge issue right now. If you’re investigated and audited, there’s immense political pressure for prosecutors to convict you, or find wrongdoing. PPP loan fraud is the act of getting money by false pretenses from the CARES act. As of April 2020, businesses can get up to $10 million to cover payroll, mortgages, rent, and utilities expenses. If the money borrowed goes towards these expenses, then the money is forgivable for those “qualified expenses.” Only businesses that were truly impacted by COVID 19, and have less than 50 full time employees are eligible for this funding. If you cheated the SBA out of money is a felony. It carries fines, prison time, and immediate repayment of the loan. If you’re accused of PPP loan fraud, or if you’re being audited/investigated, we encourage you to contact us for a risk free consultation.

As investigations into PPP loan fraud continue to escalate across the nation, federal prosecutors and criminal investigators from various agencies are relentlessly pursuing potential violations of the CARES Act, including PPP loan fraud and EIDL loan fraud, with the aim of recovering funds that may have been obtained through fraudulent means.

At our firm, we have a proven track record of successfully resolving PPP fraud investigations for our clients, often without any criminal charges being brought against them. Upon being retained to represent an individual or business in a PPP or EIDL loan fraud case, we immediately take action by contacting the investigators and any prosecutors involved in the case. We meticulously examine the evidence the government has against our client and work with them to review relevant documents with the assistance of expert forensic accountants, in order to build a solid defense against any fraud allegations. Our team then presents the client’s situation to the government, providing information they may not have known and working towards the best possible resolution.

With extensive experience in PPP and EIDL fraud investigations throughout the country, our defense attorneys possess the knowledge and expertise that sets them apart from other legal professionals.

Dedicated PPP Loan Fraud Attorneys

But what exactly is PPP loan fraud? It occurs when an individual or business provides false information in an application or certification for a loan under the Paycheck Protection Program (PPP). The PPP, created to assist companies during the coronavirus pandemic by offering forgivable loans for payroll and operating expenses, must be applied for through commercial banks and strict criteria must be met for eligibility. Even after receiving a PPP loan, businesses must adhere to strict requirements and limitations on how the funds can be used.

During a PPP loan fraud investigation, the primary objective is to determine if charges should be brought against someone for violating the strict requirements of the PPP loan program. Commonly, prosecutors focus on businesses and individuals who may have violated the PPP loan program by:

  • Making false statements on the PPP loan application
  • Applying for PPP loans from multiple lenders (“loan stacking”)
  • Using PPP loan money for an improper or unapproved purpose
  • Submitting false certifications for PPP loan forgiveness
  • Lying to agents during a PPP loan audit or investigation

Individuals charged with PPP loan fraud may face severe criminal and civil penalties. The most common criminal charges include:

  • Wire Fraud (18 U.S.C. Section 1343)
  • Bank Fraud (18 U.S.C. Section 1344)
  • False Statements to a Financial Institution (18 U.S.C. Section 1014)
  • Conspiracy to Commit Fraud (18 U.S.C. Section 1349)

The penalties for committing these crimes can range up to 20 to 30 years in prison. (The banks have great lobbyists in Congress.)

Don’t wait until it’s too late, if you or your business is under investigation for PPP loan fraud, contact us immediately to discuss your legal options and protect your rights.

What’s PPP loan fraud and when do you need a PPP loan fraud defense lawyer?

PPP loan fraud is a determination made due to someone intentionally obtaining, or attempting to obtain, funds through the CARES act which they aren’t entitled to getting at all. Below are examples of PPP loan fraud.

  • Claiming you have less than 500 employees when it’s not true
  • Claiming Coronavirus hurt your business, in order to qualify for the loan
  • Inflating payroll costs to get more money
  • Claiming the loan money is going towards qualified expenses

If investigated, it’s likely the Office of the Special Inspector General for Pandemic Recovery will investigate you. It’s likely the DOJ will also get involved and prosecute charges.

What are penalties for PPP fraud?

PPP loan fraud is a crime. The sentences will depend on the offense you commit.
For example, if you’re convicted of a Felony, it’s likely to result in a fine, and prison time, in addition to restitution.
In order to disprove PPP fraud allegations, the defendant will have to prove there was no intent to defraud and that the SBA has made a mistake.

Lack of intent to defraud is important

Defendants aren’t criminally liable if they accidentally provided false info. Loan applications are very complicated, and at a time of stress – things can get filled out incorrectly. For example if you added an extra 0 to your payroll costs, this is an honest mistake. No crime is committed because you had no intent to defraud the government. If the government tries to go after you, they would have to prove guilt beyond a reasonable doubt. If you say and explain your mistake, the charges might be dropped.

The SBA could make a mistake

Like all agencies, the SBA messes up. During this time of increased stress and activity, errors are likely. It’s critical to keep your records. You must written, email, text, communications, in addition to receipts, bills, and bank statements. They can serve as proof of your innocence if the government audits and investigates you for PPP fraud.
For example, if you apply for PPP loan forgiveness, the government may think you are lying. You will need proper evidence, like receipts, bills, etc, invoices, to prove you spent the PPP funds on necessary expenses that qualify.

Could there be immigration consequences?

Fraud over $10,000 is an aggravated felony. Non-citizens convicted of PPP loan fraud could be deported.
It’s critical if you are facing PPP loan fraud charges, you speak to our attorneys.
The SBA is a government agency, and defrauding the agency is the same as defrauding the government. It is likely to lead to jail time, and can have huge financial consequences. It’s likely if you’re accused of SBA fraud, you’ll need a criminal attorney who can help defend you and explain your possible defense strategies. Spodek Law Group, PC, can provide you with the aggressive and knowledgable legal help you need to avoid consequences associated with a fraud related conviction.

SBA offers a number of programs and benefits to enforce companies. It helps small business owners succeed. If there is fraud suspected, the SBA will work with the DOJ and IG to seek redress for fraud, or misrepresentation made. The SBA prosecutes defendants who give misleading statements, make material omissions, and submit false information or engage in other dishonest behavior in conjunction with the Small Business administration program.

If you make fraudulent statements to participate in the HUBZone program to get benefits, this can result in jail time and financial fines. If you submit false information to the SBA, this can result in severe fines. If you provide false statements to qualify for loans guaranteed/provided by the SBA, this is another issue which can get you in trouble. If you make fraudulent statements in connection with Section 8A programs, this can also result in fraud charges against you.

If you divert SBA funds to larger corporations through fraudulent means, this is another ground for investigation. The inspector general of the SBA has described this as the most important challenge facing the SBA.

Spodek Law Group, PC, help with all forms of SBA fraud cases. We encourage you to contact us for a risk free consultation in order to learn more about your rights.

How to hire a PPP loan fraud attorney

It’s important you hire a knowledgable attorney who has experience handling federal cases when you’re facing a PPP investigation, or indictment. The DOJ is casting a VERY WIDE NET when it comes to PPP Fraud investigations, or other alleged acts. No amount of abuse is being tolerated when it comes to the PPP program, and the government is doing a very thorough job of investigating businesses that took fraudulent funds through the federal program. You could face penalties, and criminal prosecution, by the government. Even if you believe you complied with the terms of the loan program, the DOJ’s PPP loan program has a very wide scope, and it could result in a federal criminal investigation. This can wreak havoc on your personal life, and professional life. You want individualized legal representation when facing federal fraud allegations in PPP cases. No two PPP fraud cases are alike, which is why you want to hire an attorney who can provide concierge and individualized attention. The fact is, the Spodek Law Group is the right law firm to hire in situations like this.

Why You Need A PPP Loan Fraud Lawyer

If you received a loan from the Paycheck Protection Program in 2020, you no doubt used it to keep your business afloat. However, due to many accusations of fraud being tossed about by federal investigators and lenders across the country, there is a chance federal prosecutors could at some point decide to charge you with PPP loan fraud. Should this happen, it will be imperative you immediately hire a PPP loan fraud lawyer who has an in-depth knowledge of the CARES Act and PPP to make sure your rights are protected throughout the process. Otherwise, you could find yourself not only being threatened with fines and prison, but possibly being convicted of a crime you did not commit.

Aggressive Tactics

Because the PPP ran out of its $350 billion much faster than anyone anticipated, the government has basically decided tremendous amounts of fraud have taken place across the United States. This is bad news for business owners who were recipients of PPP loans, since they are undoubtedly under much greater scrutiny regarding their financial activities. As a result, investigators and prosecutors are scrambling to not only look over the PPP loan information contained in government databases, but are also trying to examine any large purchases made by PPP recipients in 2020. Thus, even if you got a PPP loan and used the funds in the proper manner, you may be facing allegations of fraud if you also made a large purchase shortly after getting your money. For example, if you bought a new car or home, the government will look very closely at how you paid for these items. If you are being aggressively pursued by the federal government over how you used your PPP funds, speak to a PPP loan fraud lawyer who can examine your case, explain possible scenarios, and put your mind at ease.

Chaos and Confusion

While the federal government is trying to blame business owners for misusing PPP loans, the reality is that the federal government itself is to blame. By putting the program together in haste, failing to clearly convey the rules and regulations surrounding how PPP loans were to be applied for and used, and other areas that were not well-thought-out beforehand, business owners have had little guidance from the very beginning. Yet despite this, government investigators and lawyers have tried to pressure business owners into admitting they committed fraud. Should you give in to this pressure and even hint that you may have committed fraud of any kind regarding your PPP loan, the government will seize on this and file charges against you. To avoid this scenario and legal headaches that will follow, hire a PPP loan fraud lawyer as soon as you receive word you are under investigation.

Feedback from PPP Lenders

While the federal government would no doubt be looking at possible PPP loan fraud due to the speed at which the $350 billion in funds were depleted, they are also doing so based on information they are receiving from banks and other lenders. As the U.S. Treasury Department has asked for feedback from lenders nationwide about how the program worked, many banks are telling investigators they believe many loan applications may have been fraudulent. Because of this, chances are your PPP loan application is undergoing a second look from Treasury Department officials. Unfortunately, federal fraud charges could soon follow. For example, if you were not clear regarding PPP rules and stated incorrect information regarding the number of employees you have, your payroll expenses, or other areas, this could be construed as an attempt to defraud the government. Should you be contacted by investigators and threatened with fraud charges, don’t feel as if you need to immediately start talking to authorities. In fact, your next step should be to contact a PPP loan fraud lawyer so they can take over any communications with the federal government.

PPP Audits and Investigations

In many cases before fraud charges are brought against a company by the federal government, the company will have an audit of its PPP funds done by the FBI, Department of Justice, or other federal agencies. While this will be unnerving, there are certain things you should remember. First, try not to make false statements or withhold any information you are required by law to disclose to federal investigators, since this can lead to charges of fraud and other crimes being levied against you. However, also be sure not to incriminate yourself by revealing information that could be potentially harmful to your case. Since it can be very tricky trying to figure out what you should or should not say to investigators in these situations, don’t try to go it alone and make mistakes that create an even worse situation than the one you are now facing. By contacting a PPP loan fraud lawyer immediately upon being notified on an upcoming audit, you can be much better prepared when federal investigators come calling.
Even if you are glad to have received a PPP loan and feel as if you applied for and used whatever funds you received correctly, that may not stop federal agents and prosecutors from making serious allegations against you. If and when this happens, don’t expect them to change their minds and let you off the legal hook. To ensure your case is resolved to your satisfaction, schedule a consultation today with a PPP loan fraud lawyer.

What are the Red Flags for PPP Loan Fraud? When do you need a PPP loan fraud lawyer?

Federal authorities are looking at companies and individuals who they suspect have defrauded the PPP. Below are some red flags which could trigger a PPP investigation. The federal Paycheck Protection Program comes with a lot of rules. The SBA acknowledged that the PPP loan application had a lot of compliance burdens, and the fact there was limited information made initially available to applicants. The SBA offered a grace period during which companies could return PPP loans they received improperly without any penalty. This grace period has expired. The SBA-OIG, the DOJ, and other federal agencies are now targeting companies suspected of engaging in PPP loan fraud. If your company received a PPP loan, it’s possible you might be at risk if you made a mistake. You could be at risk, as a company owner, board member, executive, etc. There are many pitfalls. Executing an effective and timely defense is crucial. All companies who received PPP loans are advised to conduct an internal PPP compliance investigation to make sure there are no pitfalls. At Spodek Law Group, we can help with PPP loan fraud audits, investigations, and criminal defense.

Top 10 Reasons For PPP Loan Fraud

No Documentation To Support Your Company’s PPP Loan Application Representations
Companies that make representations during the PPP loan application process have to be able to support those representations. Under the terms of the PPP program, companies have to be able to show:
-They are applying for PPP because there was uncertainty due to economic conditions, which require the loan to support ongoing operations.
-There are fewer than 500 employees, qualify as a small business concern, or meet one of the other PPP eligibility standards
-The owners of the business are eligible to participate in SBA programs such as PPP.
During a PPP loan audit or investigations, agencies will assess the loan recipient’s eligibility, in addition they’ll look for whether companies have documentation on hand to justify the representations they made on their loan application.

Multiple PPP Loan Applications Submitted to Many Lenders
Under the CARES Act, companies can only get 1 PPP loan from one lender. Getting more than one PPP loan, or stacking PPP loans, is prohibited. Companies which applied with multiple lenders could face allegations for attempting to stack multiple PPP loans. Even if only one PPP loan was obtained, attempting to get more than one loan can lead to criminal charges being filed. Individuals and companies charged with attempts can face the same penalties that apply – as if it was a successful completion of a criminal offense.

No Adoption of PPP Compliance Policies
The CARES Act established requirements for how companies can use PPP loan funds. Strictly, once you get PPP funds, companies must adopt policies and procedures to ensure continuous PPP compliance.  It’s important that companies be only allowed to use the funds they received from PPP for specific authorized purposes. These purposes include payroll and related expense, payment of insurance premiums, payment of utility bills, and other things related to the business. In order to account for the disbursements from the PPP loan, companies should deposit the loan into a specific account – and not commingle their PPP loan funds with other company assets.

No Adequate Documentation of PPP Loan Expenditures
When you use your PPP loan funds, companies should document their expenditures in order to show they have used their PPP loan for authorized purposes only. In many cases, this means more than recording the transaction in Quickbooks. It means having documentation. It’s important that the use of PPP loan funds was not for personal expenses. Under the terms of the PPP program, utilizing funds for personal expenses was prohibited. The DOJ has already initiated federal cases against individuals who misused PPP funds for personal expenses.

Inadequate Documentation Regarding Loan Forgiveness Certification
Another aspect of the PPP program is that it is forgivable, assuming it was used for the right reasons. When seeking forgiveness, companies have to provide documentation, and certify as to the accuracy of the documentation. Inadequate or questionable documentation can be a red flag.

PPP Loan Fraud is being taken seriously by authorities and you may need a PPP loan fraud lawyer

If you have been contacted by a federal agent or other official regarding a PPP loan, it is crucial that you tread with caution. In recent months, there have been numerous instances of individuals who spoke with investigators without legal counsel, ultimately facing obstruction or false statement charges in addition to PPP loan fraud. At our firm, we advise our clients to reach out to us before engaging in any discussions or providing any documents to government officials.

It is not uncommon for those under PPP loan fraud investigation to experience frozen or seized bank accounts. While this can be a distressing situation, it does not necessarily indicate that criminal charges are imminent. However, it is important to take immediate action to respond to the seizure and protect yourself from potential charges. Our firm believes in the power of proactivity, and encourages individuals not to ignore the issue and hope it will resolve itself.

By being proactive in a PPP loan fraud investigation, one can increase the likelihood of avoiding criminal charges. Despite the ongoing criminal prosecutions related to PPP fraud, coronavirus restrictions have limited federal grand juries. This presents an opportunity for experienced federal defense attorneys to steer the case towards a civil disposition, such as repaying the funds and paying a fine, rather than facing federal criminal charges.

If you have concerns about possible PPP fraud charges, it is highly recommended that you hire a seasoned federal defense attorney and take the following steps to safeguard yourself and your business:

  1. Gather all business and personal financial records, and create a digital copy for documentation and defense.
  2. Do not discard or destroy any business records, particularly those used in preparing your loan application or certifications. These documents may be necessary for later use, and destroying them in anticipation of a PPP loan fraud investigation can result in an additional criminal charge.
  3. Ensure that all employees are aware that they can report suspicions of PPP fraud to management without fear of retaliation. Failure to do so may result in employees going directly to government or whistleblower lawyers, leading to an expensive investigation.

At our firm, we have a team of experienced attorneys, paralegals, and consultants who have been successful in assisting business owners navigating PPP and EIDL loan fraud investigations. Once retained, we immediately contact any investigator or government agent involved in the matter to prevent further contact with our client. We also reach out to any financial institutions holding funds belonging to the business or individual. Our steps thereafter are tailored to the specific case and investigation status, which may include:

  1. Reviewing loan applications and supporting documents for any alleged errors.
  2. Gathering and preserving relevant business documents that may support the need for the loan or use of funds received.
  3. Interviewing any CPA, accountant, or financial advisor consulted during the loan application process.
  4. Interviewing relevant employees with the business owner’s permission and consent.
  5. Consulting with a forensic accountant regularly used by our firm to review the company’s financials and provide an opinion on the loan application information.
  6. Presenting any available arguments for mitigation or mistake to government agents, investigators, or prosecutors for a potential payback or resolution.

Our federal defense attorneys are closely monitoring PPP loan fraud cases and developments. We have already advised our clients on how best to navigate these investigations and avoid criminal charges. If you have been charged with PPP loan fraud or believe you may be under investigation, please contact us now for a confidential consultation.

How do I respond to a PPP loan fraud investigation? Should I hire a PPP loan fraud attorney?

Beware! If a federal agent or official contacts you regarding a Paycheck Protection Program (PPP) loan, exercise caution. In recent times, individuals who spoke with investigators without legal representation have faced charges of obstruction, false statements, and PPP loan fraud. Protect yourself by reaching out to a competent attorney before engaging in any discussions or handing over business records to the government.

We’ve received reports from individuals whose bank accounts were frozen or seized by the government as part of a PPP fraud investigation. Don’t let panic take over. Although this action doesn’t always lead to criminal charges, it’s vital to take immediate steps to contest the seizure and protect yourself. Ignoring the situation will only make things worse. Consider it a warning sign that a criminal investigation might be underway.

Preemptive action is key in avoiding criminal charges in a PPP fraud investigation. With widespread coronavirus restrictions affecting federal grand juries, hiring an experienced federal defense lawyer can help steer the case towards a civil resolution, such as repaying the funds and paying a fine, instead of criminal charges.

If you fear PPP fraud charges, it’s crucial to take these precautionary measures and hire a seasoned federal defense attorney:

  1. Gather all your financial records, personal and business, and make digital copies for documentation and defense.
  2. Preserve all business records, especially those used for loan application or certifications. Destroying evidence could lead to a separate criminal charge.
  3. Encourage your employees to report any suspicions of PPP fraud to management without fear of retaliation. Suppressing their fears could lead to a costly investigation, even if there was no violation of PPP rules.

Don’t let the fear of criminal charges in a PPP fraud investigation weigh you down. Be proactive and safeguard your interests with the help of an experienced federal defense attorney.

What Can Our Firm Do to Help?

As seasoned legal professionals, our team of expert attorneys, skilled paralegals, and trusted consultants have achieved unparalleled success in guiding business owners through complex PPP and EIDL loan fraud investigations.

Upon being retained, we leap into action, making sure to shield our clients from any further interactions with investigators or government agents. Our team also reaches out to any financial institutions that may be holding the business or individual’s funds. Then, based on the unique facts of each case, we take several crucial steps to protect our clients:

  • Thoroughly examine all loan applications and supporting documents for any possible inaccuracies.
  • Secure and analyze any business records that could validate the need for the loan or the appropriate usage of funds.
  • Consult with any financial experts, such as CPAs, accountants, or advisors, who were involved in the loan application process.
  • With the business owner’s approval, gather testimonials from key employees to reinforce the necessity of the loan or proper usage of funds.
  • Regularly collaborate with a trusted forensic accountant to examine the company’s financials and provide informed opinions on the loan application.
  • Leverage our in-depth understanding of the system to present compelling arguments for mitigation or error to government agents, investigators, or prosecutors, and seek the best possible resolution, whether it be a repayment plan or other outcome.

Our passionate federal defense attorneys stay on top of the latest developments in PPP loan fraud cases, and have already equipped our clients with the knowledge they need to steer clear of criminal charges. If you’ve been accused of PPP loan fraud or fear you may be under investigation, reach out to us for a confidential consultation today.

What is a PPP Fraud Federal Indictment

The Department of Justice’s Crackdown on PPP Loan Fraud

The Department of Justice (DOJ) is taking a firm stance against alleged loan fraud in connection with the Paycheck Protection Program (PPP). Just a few short weeks after the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act was signed into law, the DOJ announced its first PPP fraud federal charges.

By swiftly arresting and filing criminal charges against those suspected of PPP loan fraud, the DOJ sends a clear message that it will aggressively pursue federal criminal charges against anyone who attempts to fraudulently seek forgivable loans guaranteed by the Small Business Administration (SBA).

Are You at Risk of a PPP Fraud Federal Indictment?

If you suspect that you may be the target of a PPP loan fraud investigation, the risk of a PPP fraud federal indictment looms over you. Protect your rights and contact our firm as soon as possible to retain the services of a knowledgeable PPP loan fraud defense attorney. Our passionate legal team is dedicated to fighting for the rights of individuals and business owners charged with PPP fraud and will help you mount a strong defense against these criminal charges.

What is an Indictment?

An indictment is a formal accusation against one or more defendants, who are suspected of committing a federal felony offense like PPP loan fraud. In the criminal justice system, a federal indictment is the primary method by which a federal prosecutor initiates legal proceedings in a criminal case. However, a federal indictment can only be returned by a grand jury, which is a panel of 16 to 23 citizens authorized by the federal government to investigate alleged criminal activity and determine whether federal criminal charges should be brought.

The Federal Grand Jury Process

The grand jury process begins after a federal investigation has been initiated or after a federal complaint is filed by the arresting agency. The grand jury hears evidence presented by the U.S. Attorney’s office and decides whether there is probable cause to believe that a criminal offense has been committed. The grand jury’s decision does not have to be unanimous, and if the majority believes the suspect should be tried for the federal crime, they will hand down an indictment.

Unfortunately, the grand jury process operates without the participation or even knowledge of the criminal suspect, meaning that the grand jury only hears from the government. The defense has no right to call witnesses and there is no defense attorney to present evidence favorable to the defendant. The prosecutor controls what the grand jury sees and hears, making it easy for a good prosecutor to secure an indictment.

Protect Your Rights with a Skilled Criminal Defense Attorney

Given the one-sided nature of the grand jury proceeding, it is critical to hire a skilled criminal defense attorney who specializes in federal legal matters as soon as possible after you become aware of a federal criminal investigation. A knowledgeable defense lawyer with experience in PPP fraud defense will assess your possible criminal liability before a grand jury investigation begins or after an indictment has been handed down, providing you with the best possible defense against PPP loan fraud charges.

What is PPP Loan Fraud

The Paycheck Protection Program (PPP), a lifesaving measure enacted during the Covid-19 pandemic, has been a beacon of hope for small businesses struggling to keep their doors open and retain their employees. With over $800 billion in forgivable loans authorized by Congress under the Coronavirus Aid, Relief and Economic Securities (CARES) Act, the PPP has been a game changer for small businesses across the nation.

However, with such a large sum of money at stake, it’s no surprise that some individuals have tried to take advantage. The Department of Justice has publicized several cases of PPP fraud, including a Florida man who fraudulently obtained almost $4 million in PPP loans and spent some of the money on a Lamborghini, and a Miami nurse who received more than $420,000 and spent the funds on personal expenses.

To combat such fraud, the federal government has communicated its intention to crack down and even passed bills into law to establish a ten-year statute of limitations for PPP fraud prosecutions. The government has been aggressively investigating and charging businesses that appear to be taking advantage, recognizing that every dollar fraudulently procured was taken from a business or employee in need during the pandemic.

In this article, we will delve into the CARES Act and PPP, the qualifications for loan forgiveness, and how businesses can protect themselves from PPP fraud investigations and charges. The CARES Act, signed into law in March 2020, provided more than $2 trillion in relief to battle the Covid-19 pandemic, including the PPP for small employers to keep employees working or at least continue to pay them during Covid closures. The PPP provided $349 billion for relief during the covered period from February 15, 2020 to June 30, 2020 and was later amended, extended, and funded to a total of over $800 billion.

To qualify for loan forgiveness, PPP recipients needed to demonstrate that 60% of their loan was used for payroll costs and the remaining amount was used on other qualifying business expenses such as rent or mortgage interest, utilities, operations expenditures, and worker protection costs. Records keeping was essential, as the PPP required that 60% of the loan be spent on payroll to qualify for loan forgiveness. The small business could then apply for forgiveness through its lender and the lender had to decide within 60 days.

However, the PPP’s quick relief came at a cost. The SBA allowed lenders to determine whether or not to provide and forgive loans based on borrowers’ application materials alone, without vetting the information. This has led to some borrowers submitting false or inaccurate information to their lenders to qualify for larger loans and to have those loans forgiven. Borrowers can be prosecuted for fraudulently procuring and/or seeking forgiveness for PPP loans under various criminal statutes including Bank Fraud, Wire Fraud, Mail Fraud, False Statements, and False Statements to the SBA.

In conclusion, the PPP has been a lifesaving measure for small businesses during the Covid-19 pandemic. However, with such a large sum of money at stake, it’s important for businesses to understand the qualifications for loan forgiveness and how to protect themselves from PPP fraud investigations and charges. Stay vigilant and always keep accurate records to ensure the safety of your business and its employees.

What Should I Do If My Bank Freezes My PPP Loan Account?

Banks are on the lookout for suspicious activities and are quick to refer these cases to the government. Even the slightest hint of impropriety can trigger an investigation. For instance, if you apply for a loan just a few weeks after starting your business, it’s an automatic red flag. This is because very few businesses managed to grow their payroll and establish themselves in such a short span of time, especially considering the pandemic.

Personal History and Payroll Scrutiny

Banks can also examine the personal history of the loan applicant if they have an existing account with the bank. For example, if a person who typically has a balance of a couple of thousand dollars in their account suddenly claims to have a payroll of $10,000 a month, supporting five employees, it’s a red flag.

Verifying Documentation

During the loan process, applicants are required to submit documentation that can be verified by the bank. This can include bank statements, W2s, or 1099s that are sent to the IRS. If the bank is unable to verify the information, it will be considered fraudulent. After the loan process is completed, banks are going back and reviewing these loans to identify any suspicious information.

Lack of Knowledge and Financial Fraud

One of the most significant indicators of financial fraud is the lack of knowledge on the part of the business owner. Most individuals are unaware of the methods used to falsify documents and commit financial fraud. In these cases, sophisticated schemers often offer to help, but their laziness often leads to their downfall. Instead of creating new bank statements, they change a few names on a template, and the bank realizes that they have received the same documentation from other companies, triggering investigations.

Verifying Source Material

The first step in any investigation is to verify the source material of the documentation submitted. If bank statements are flagged for potential fraud, the bank will be subpoenaed, and the original statements will be reviewed. If the original statements differ from the ones submitted, it’s considered fraud, and the investigation ends there. The IRS can also verify the W2s and 1099s submitted, making it easy to identify any discrepancies.

Contacting Employees and Accountants

Investigators may also contact the employees reported on the documentation and the applicant’s accountant, if they have one. Some accountants may be implicated if they have helped their clients submit fraudulent documentation, leading to legal consequences.

Overall, banks and the government are taking a closer look at loan applications to ensure that fraud doesn’t go unnoticed. With the use of advanced technologies and their vast network of resources, they’re able to detect any inconsistencies and take the necessary actions to protect the integrity of the financial system.

The CARES Act and Criminal Enforcement of the Paycheck Protection Program

The Lack of Provisions in the CARES Act

The CARES Act tragically lacks provisions for criminal enforcement of the Paycheck Protection Program (PPP). Instead, the Act merely outlines that loan recipients who fail to fulfill the employee retention and qualified expenses criteria must repay their loans with an interest rate of 1%. As a result, the Department of Justice must turn to pre-existing federal statutes in the pursuit of charges for PPP loan fraud.

Federal Crimes and Penalties

The following federal crimes and associated penalties may be pursued by the DOJ against individuals suspected of committing PPP fraud:

  • Bank Fraud (18 U.S.C § 1344) – Conviction may lead to a maximum sentence of 30 years in prison and a fine of up to $1,000,000
  • Wire Fraud (18 U.S.C. § 1343) – A fine and/or a maximum term of imprisonment of 20 years may be imposed (30 years and a maximum fine of $1,000,000 if the violation affects a financial institution or involves a presidentially declared major disaster or emergency).
  • Mail Fraud (18 U.S.C. § 1341) – Conviction may result in a fine and/or a maximum prison sentence of 20 years (or 30 years, a maximum fine of $1,000,000, if the violation affects a financial institution or involves a presidentially declared major disaster or emergency).
  • Making False Statements to the SBA or a Financial Institution (18 U.S.C. § 1014) – Imprisonment of up to 30 years, a fine of up to $1,000,000, or both may be imposed upon conviction.
  • Aggravated Identity Theft (18 U.S.C. § 1028A) – Conviction may lead to an additional two-year term of imprisonment, to be served with the penalty for the underlying felony offense.
  • Attempt and Conspiracy (18 U.S.C. § 1349) – Any attempt or conspiracy to commit fraud is punishable by the same penalties as the actual fraud offense.
  • Making False Statements to Federal Agents (18 U.S.C. § 1001) – Conviction may result in a fine and/or a maximum sentence of five years in prison.
  • Conspiracy to Defraud the Government (18 USC § 371) – A fine and/or a term of imprisonment of up to five years may be imposed upon conviction.
  • Tax Evasion (26 U.S.C. § 7201) – Conviction may lead to a fine of up to $100,000 (for an individual) or $500,000 (for a business), a term of imprisonment of up to five years, or both.

Serious Penalties for Serious Crimes

Of the charges being pursued in connection to PPP loan fraud, the most severe penalties are tied to crimes such as bank fraud, mail fraud and wire fraud

PPP Loan Fraud Penalties

The Paycheck Protection Program is a $670 billion federal loan program which was established by the SBA in March 2020, under the CARES act. In the middle of the pandemic, the PPP program was intended to provide business owners the economic aid they needed to keep employees on their payroll. PPP provided funds in order to pay employee salaries, and support ongoing business operational costs. The key component of the Paycheck Protection Program was the provision that the loans can be forgiven provided that recipients retained their workforce, maintained employee salary levels, and used the funds to cover the payroll costs and other eligible expenses. The loan amount was based on the # of employees, average payroll costs. 60% of the loan had to be used for payroll, while the other 40% could be used for interest on office mortgage, rent, utilities, etc.

PPP Loan Recipients Could Be At Risk
The PPP program was very susceptible to fraud schemes, more than anyone could have predicted. As a result of this, the federal government has increased their oversight of the program, and are working very hard to ensure compliance of the loan program .The rules and regulations governing the Paycheck Protection Program is constantly changing, and business owners are unsure of whether they were eligible for it – and qualify for loan forgiveness. The Department of Justice is very carefully investigating allegations of PPP loan fraud, and the SBA is auditing PPP loan recipients. There is immense risk for criminal prosecution re: PPP fraud.

What Constitutes PPP Loan Fraud?
The PPP rollout was very rocky. There was high unemployment, and there were ongoing concerns about the pandemic. Small business owners scrambled to get PPP funds before the cash ran out. Lenders struggled to keep up with the influx of loan applications. As of mid-July, the PP program had issued almost 4.9 million forgivable loans for a total of $521 billion in funds. Unfortunately, there was so much confusion – many businesses got PPP funds that weren’t eligible for it. As the federal government undertakes an effort to root out abuses with the PPP program, many applicants and recipients are now concerned about audits and investigations, or being charged with a crime.

Below are examples of things that can trigger criminal prosecution for PPP loan fraud:

  • Overestimating the number of employees
  • Misclassifying employees in order to qualify as a small business
  • Making bad-faith certifications on a PPP loan application
  • Inflating payroll costs to get a higher PPP loan amount
  • Getting PPP funds from multiple lenders
  • Using PPP funds for unauthorized expenses
  • Firing, or failing to rehire employees or cutting employee salaries despite getting PPP funds

PPP Loan Fraud Penalties

The CARES Act doesn’t specifically contain provisions for criminal enforcement of the Paycheck Protection Program. The Act simple says that PPP loan recipients who fail to retain employees, and fail to use funds for qualified expenses for loan forgiveness, have to repay the loan at an interest rate of 1%. As a result, the DOJ has relied on pre-existing federal statutes when pursuing charges for PPP loan fraud. Below are examples of some of the federal crimes the DOJ might pursue against individuals who are suspected of committing PPP fraud and the associated penalties.
  • Bank Fraud – max sentence of 30 years in prison, and/or up to $1,000,000 in fines
  • Wire Fraud – Fine, and/or imprisonment of 20 years. Or 30 years, plus a maximum fine of $1,000,000
  • Mail Fraud – Fine, and/or maximum prison sentence of 20 years
  • Making false statements to the SBA or a financial institution – Imprisonment of up to 30 years, fine up to $1,000,000 or both
  • Aggravated Identity Theft – 2 year term of imprisonment, in addition to the penalty for the underlying offense
  • Attempt and Conspiracy – Any attempt or conspiracy to commit a fraud crime, can be punished by the same penalties as the actual fraud
  • Making false statements to federal agents – Fine, and or a maximum sentence, of 5 years in prison
  • Conspiracy to defraud the government – Fine and/or term of imprisonment of up to 5 years
  • Tax evasion – Fine of up to $100,000 for an individual, or $500,000 for a business, a term of imprisonment of up to 5 years or both

The most serious penalties are tied to crimes like bank fraud, mail fraud, and wire fraud. Making a false statement to the SBA or a financial institution can lead to a prison term of up to 30 years. Other federal crimes carry varying degrees of penalties. If you are accused of attempting, or conspiring, to defraud the Paycheck Protection Program —- even if you didn’t get PPP Funds, you could still face criminal penalties upon conviction as if the fraud was successful.
DOJ Aggressively Pursuing PPP Loan Fraud Penalties
Federal investigators have ramped up efforts to combat PPP loan fraud. Since 2021, individuals in many states have been arrested, and criminally charged with fraud crimes and/or the attempt to commit fraud crimes like bank fraud, wire fraud, and for making false statements to a financial institution. The DOJ has issued many press releases following the announcement of charges in each case. Below are examples of what the government is cracking down on:

  • Applicants who are making false or misleading statements on their PPP loan application
  • PPP funds used for unauthorized purposes
  • Loan recipients making false statements on PPP loan forgiveness applications

The Paycheck Protection Program: A Lifeline for Struggling Small Businesses

In response to the devastating impact of the coronavirus pandemic on small businesses, the government launched the Paycheck Protection Program (PPP) lending initiative. This program was designed to provide much-needed support to small business owners, offering loans to cover essential expenses such as rent, payroll, and utilities.

Misuse of PPP Funds: A Growing Concern

Despite its popularity, the PPP loan program has faced accusations of fraud and misuse of funds. Some small business owners have been accused of lying on their loan applications to secure PPP funding, while others have used the funds for purposes beyond what was originally intended. In some cases, companies used PPP loan monies to purchase inventory, which they later sold for a profit.

Auditing PPP Loans Over $2 Million

To prevent fraud and financial mismanagement, the Small Business Administration (SBA) is auditing all PPP loans exceeding $2 million, with some loans being marked for additional review. This means that businesses who received these loans may be subject to greater scrutiny from the SBA, and must take this responsibility seriously.

According to a 2020 research study, a significant number of PPP loan recipients may have engaged in “double-dipping,” receiving loans from multiple relief programs. In some cases, this behavior was intentional, while in others it was simply due to the rushed and chaotic nature of the loan process.

Blame on FinTech Lenders

The study also pointed the finger at FinTech lenders, who were accused of failing to properly vet loan applications, leading to rampant fraud and mismanagement of funds. Despite the PPP being one of several relief measures implemented by Congress through the COVID Act to aid businesses and prevent poverty, the rapid spread of fraud has marred its effectiveness.

Penalties for Fraudulent PPP Loans

Businesses and individuals found guilty of misusing PPP funds face severe consequences, including fines of up to $250,000, imprisonment for up to five years, and civil liability for damages incurred. In addition to possible criminal and civil penalties, individuals who received PPP loans through fraudulent means may be required to repay the full amount of the loan, plus interest.

What Happens When a PPP Loan is Flagged?

If your PPP loan has been flagged, it’s important to take the government’s information request seriously and seek the assistance of a PPP loan fraud lawyer. Before speaking with counsel, it’s crucial to not take any actions that could be used against you in court. With the help of a legal advisor, you can develop a plan to address the government and navigate this challenging process.

Even if your loan was under $2 million, it’s still possible that it may be audited, so it’s essential to be prepared. If one of your employees raises a red flag through a qui tam lawsuit, it’s important to understand the strict federal and employment laws surrounding this situation, as obstructing the government and retaliating against the employee is strictly prohibited.

The Consequences of a Flagged PPP Loan

If your Paycheck Protection Program (PPP) loan has been flagged, you may receive a subpoena or other form of civil investigative demand. The nature of the investigation will depend on the agency handling the case, but the bottom line is that you must seek the guidance of a skilled PPP loan fraud defense attorney.

Potential Criminal Charges

You may face a range of charges from federal authorities, including bank fraud, wire fraud, making false representations to a financial institution, and more. It’s crucial to assume that you are under investigation for PPP loan fraud if your loan has been flagged, marking the beginning of a complex inquiry. A PPP loan fraud lawyer can help you navigate these charges and defend your rights.

When you learn that your PPP loan has been flagged, it’s essential to take the following steps:
-Preserve all of your personal and professional records and avoid destroying any potential evidence.
-Seek immediate assistance from a team of experienced PPP loan fraud defense attorneys.

The Severity of Fraudulent PPP Loans

If a PPP loan recipient provides fraudulent information to obtain a loan, they may face up to five years in jail and a fine of up to $250,000, according to the Paycheck Protection Program Flexibility Act. Similarly, if a loan recipient provides false information while requesting loan forgiveness, they may face up to five years in jail and a fine of up to $250,000.

Loan Forgiveness and PPP Loan Fraud

The recipient of a loan that is forgiven under the PPP must provide documentation of how the loan proceeds were used and the number of employees employed during the relevant period. Any false information provided to the Small Business Administration (SBA) may result in severe consequences, including up to five years in jail and a fine of up to $250,000.

PPP Loan Fraud at the State and Federal Level

PPP loan fraud can be prosecuted at the state or federal level, with federal False Claims Act, wire fraud, and mail fraud laws being used to prosecute federal PPP loan fraud cases. At the state level, charges for state PPP loan fraud may be brought under state law. False claims cannot be submitted to either the federal or state governments, and all claims for payment, including PPP loan applications, are subject to federal wire and mail fraud laws.

Penalties for Fraudulent PPP Loans

The fines for PPP loan fraud are established by federal law, with civil penalties of up to $11,000 for each false claim submitted to the government under the False Claims Act. In addition, the government may recover triple damages for losses incurred as a result of false claims. The maximum jail sentence for wire and mail fraud is 20 years, with a maximum fine of $250,000.

Penalties for state PPP loan fraud may vary depending on the specific offense, with some states imposing criminal sanctions and others applying civil sanctions.

PPP Loan Fraud Statutes

Federal law establishes the relevant federal PPP loan fraud statutes, including the False Claims Act, the Wire Fraud Statute, and the Mail Fraud Statute. The False Claims Act prohibits the submission of false claims to the federal government and is codified at 31 U.S.C. 3729-3733


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