PPP Loan Preparer Arrested: What Happens to Clients

Last Updated on: 22nd December 2025, 09:01 pm

PPP Loan Preparer Arrested: What Happens to Clients

You just heard the news. The person who prepared your PPP loan application – the tax preparer, the accountant, the “consultant” – has been arrested for PPP fraud. Your first thought is relief: you’re not them. Your second thought is concern: you used their services. Your third thought – the one that brought you here – is the question that’s going to keep you awake: what happens to me? Here’s what nobody explains: you think you’re the victim in this story. You paid someone for a service, and they turned out to be a criminal. But federal prosecutors see it completely differently. They see a client who HIRED someone to submit a fraudulent application on their behalf. The payment you made isn’t evidence that you got cheated – it’s evidence that you were in on it. Your receipt is their exhibit A.

Welcome to the Spodek Law Group resource on what happens when your PPP preparer gets arrested – and why your status as their “client” offers no protection whatsoever. Our goal is to show you exactly how federal prosecutors view the preparer-client relationship, so you understand the danger you’re in before it’s too late to do anything about it. You might think: “I just paid them to handle the paperwork. I trusted them. I’m a victim of their fraud.” The law sees it differently. If the information on that application was false, either you provided false information to the preparer, or you knew the preparer was filing false information for you. Either way, you’re not a victim. You’re a co-conspirator.

That’s the reality Todd Spodek and the Spodek Law Group team explain to clients who come in after learning their preparer has been arrested. The initial reaction is always the same: “But I didn’t do anything wrong – they did.” The problem is that prosecutors aren’t investigating whether the preparer committed fraud. They already know that. They’re investigating who else was involved. Every client file in that preparer’s office is evidence. Every application that contains false information is a potential prosecution. You’re not watching from the sidelines. You’re on the list.

You Think You’re the Victim – Prosecutors Think You’re the Co-Conspirator

Heres the inversion that changes everything. You feel victimized because you paid someone who turned out to be a criminal. Prosecutors feel like theyve found a network of co-conspirators who paid a facilitator to commit fraud on there behalf.

Think about how this looks from the governments perspective. They arrest a preparer whos been submitting fraudulent PPP applications. They seize the files. They find 40, 50, maybe 100 applications – all containing false information. Do they think: “Poor clients, they got cheated”? No. They think: “Here are 100 potential defendants.”

The preparer didnt randomly invent fake business information. They got that information from somewhere. Either the clients provided false payroll numbers, or the clients knew the preparer was inflating there numbers. Either way, the clients knew something was wrong. Either way, the clients are exposed.

Your payment to the preparer dosent make you a victim. It makes you a participant. You hired someone to submit a federal loan application. That application contained false statements. Under federal law, you dont get to say “I didnt know what they were filing.” You signed the application. You recieved the funds. You spent the money. Thats participation in fraud, not victimization by it.

The Golden-Larimore Pattern: 21 Clients Charged Alongside Their Preparer

Lets look at a specific case that shows exactly what happens to clients when there preparer gets arrested. Renetta Golden-Larimore was a PPP loan preparer in Kansas City. She prepared and filed fraudulent PPP applications for other people. She charged between $2,000 and $7,000 per application. She filed approximately 43 false PPP applications totalling $908,278 in fraud.

Heres the number that matters: 21 other persons have been charged and convicted in connection with her scheme.

Not just Golden-Larimore. Twenty-one clients. The people who paid her $2,000 to $7,000 for her “services.” They thought they were paying for expertise. They were actualy paying for a conspiracy. And when she got caught, they got caught to.

Think about that ratio. 43 applications. 21 clients charged. Thats roughly half the people she helped facing federal prosecution. The other half might still be under investigation. They might have cooperated early. They might just not have been charged yet.

But half her clients are now federal defendants. Same charges. Same potential penalties. The fee they paid her didnt protect them. It condemned them.

The Client List Is Now a Target List

When federal agents arrest a PPP preparer, they dont just take the preparer into custody. They seize everything. The files. The computers. The phones. The bank records. Every email, every text message, every document related to PPP applications.

That client list your preparer maintained? Its now in federal custody. Investigators are going through it systematicaly. Every name. Every application. Every dollar amount.

Heres how the process works. Agents review each application. They compare the payroll numbers on the PPP form to the tax returns filed for that business. They check wheather the business actualy existed. They verify wheather the applicant had employees. They look for discrepancies.

When they find discrepancies – and they find alot of them – that client moves from “file to review” to “target to investigate.” Subpoenas go out. Bank records get pulled. More comparisons happen. The case builds.

By the time you hear about your preparers arrest on the news, investigators may have already flagged your application. They may have already pulled your tax returns. They may already know that the numbers dont match.

Your not hearing about a problem. Your hearing about a problem thats already been investigating you for weeks.

The Preparer’s Best Defense Requires Your Conviction

Heres the irony that should terrify you. Your preparer is sitting with there defense attorney right now, building a defense. What defense do you think there using?

“I just filed what my clients told me.”

Thats it. Thats the defense. The preparer argues they were just a facilitator – they took information from applicants and put it on forms. If the information was false, thats the clients fault. The preparer was just following instructions.

For this defense to work, the preparer has to prove that YOU provided false information. They have to show that you gave them inflated payroll numbers. They have to demonstrate that you told them to list employees that didnt exist. They have to establish that the fraud came from you, not them.

In other words, there acquittal requires your conviction.

The preparer is not your ally in this. There not going to protect you. There not going to take the fall for applications you submitted. There going to point the finger directly at you – because thats the only way they get out of this.

Every name they give prosecutors earns cooperation credit. Every client they implicate reduces there sentence. You are the currency they use to buy freedom.

The Kickback That Proves You Knew

How did you pay your preparer? This matters more then you think.

If you paid a flat fee – $500, $1,000, maybe $2,000 – prosecutors can argue you were paying for a service. Its still problematic, but its a service fee.

But if you paid a percentage of your loan – 10%, 15%, 20% of the funds you recieved – thats evidence of something much worse. Thats profit sharing. Thats a kickback. Thats proof you knew this wasnt a legitimate application.

In the Massachusetts $7.5 million PPP fraud scheme, borrowers paid kickbacks to preparers “commonly in amounts equal to 10 or 20 percent of the loan amount.” That payment structure became key evidence. Why would you pay 10% of your loan to someone just filling out paperwork? The only reason is if you knew the paperwork was fraudulent and you were sharing the proceeds.

If you paid your preparer based on how much money you recieved – if your fee went up because your loan was bigger – prosecutors will argue you were splitting the proceeds of fraud. Thats not a client-service relationship. Thats a criminal partnership.

What the Files Show vs. What Your Tax Returns Show

Federal investigators love paper trails. And PPP fraud cases create perfect paper trails.

On one side, they have your PPP application. It says you had X employees and Y in payroll. It says your business earned Z in revenue. These numbers justified your loan amount.

On the other side, they have your tax returns. Your 1040, your Schedule C, your 941 payroll tax filings. These numbers show what you actualy reported to the IRS before anyone was offering free money.

When those numbers dont match – when your PPP application claims $100,000 in payroll but your tax returns show $30,000 – investigators dont need to prove you lied. The documents prove it for them.

Heres the problem. Either you gave your preparer accurate information and they inflated it, or you gave your preparer false information and they filed it. Either way, YOUR signature is on that application. YOU certified that the information was accurate. YOU recieved the funds.

The documents are going to contradict each other. And you signed both of them.

They’ve Already Reviewed Your Application

Theres a timeline here that most people dont understand. By the time your preparers arrest becomes public, the investigation has been running for months. Maybe years.

Federal agents didnt arrest your preparer based on a tip they got yesterday. They built a case. They gathered evidence. They reviewed files. They compared documents. They identified patterns.

That means they’ve already looked at your application. They’ve probably already pulled your tax records. They’ve likely already compared the numbers. They may have already flagged discrepancies.

Your not learning about a new investigation. Your learning about an investigation thats already reviewed your file. The question isnt wheather they’ll find problems with your application. The question is wheather theyve already found them.

Clients come to Spodek Law Group after hearing about there preparers arrest thinking they have time to prepare. Often, the preparation should have happened weeks or months earlier. The investigation moved faster then they realized.

The 24-Defendant Indictment: Everyone Who Paid Gets Charged

June 2024. Roanoke, Virginia. A federal grand jury returns a 142-count indictment.

Not against one person. Against twenty-four.

The scheme was simple. A tax preparer and there associates charged clients $5,000 to obtain a $20,000 PPP loan. Pay five thousand, get twenty thousand. Sounds like a good deal. Except its federal fraud.

Every client who paid that $5,000 is now named in a federal indictment. Wire fraud. Conspiracy. Money laundering. False statements. The indictment lists 142 counts spread across 24 defendants.

These clients probly thought they were getting a service. They probly thought the preparer was handling everything. They probly thought if anything went wrong, the preparer would take the blame.

Twenty-four defendants say otherwise.

The payment they made – the $5,000 “fee” – became evidence of there participation. They paid for fraud. They recieved proceeds. They benefited from false statements. The fact that someone else filed the paperwork dosent change there culpability.

“I Didn’t Know What They Were Filing”

OK so lets address the defense your thinking about right now. “I didnt know what the preparer was filing. I trusted them to handle it. I never saw the final application.”

This defense has two problems.

First, you signed something. PPP applications require a certification that the information is accurate. Your signature appears on that document. “I didnt read what I signed” isnt a defense to federal fraud charges – its an admission that you were reckless with federal funds.

Second, you knew your own business. You knew wheather you had employees. You knew your actual payroll. You knew your real revenue. If the application claimed numbers that were dramaticaly different from reality, you either provided those false numbers or you knew the preparer was inventing them.

The “I didnt know” defense fails the common sense test. How did the preparer know what numbers to put on your application? They got them from somewhere. Either from you, or from documents you provided, or they made them up while you watched.

Federal judges have seen this defense hundreds of times. It almost never works. The question they ask is simple: did you recieve money based on false statements? If yes, youre liable. Your claimed ignorance of how those false statements got created dosent change the outcome.

The Cooperation Race You’re Already Losing

Heres the timeline reality. Your preparer was arrested. That means there cooperation process has already started.

Within 24-48 hours of arrest, they had an initial appearance. Within days, there attorney explained the sentencing exposure. Within weeks – maybe within days – they sat down with prosecutors for a proffer session.

During that proffer, prosecutors asked one question over and over: “Who else was involved? Who gave you false information? Who knew the applications were fraudulent?”

Your preparer is answering those questions right now. There naming clients. There pointing to files. There saying “this person told me to inflate the numbers” or “this person knew there business didnt qualify.”

Every name earns cooperation credit. The more clients they implicate, the lighter there sentence. There not protecting you. There protecting themselves by sacrificing you.

And your not in the room. You dont know what there saying. You dont know which documents there pointing to. You dont know wheather your name has already come up.

The cooperation race started the moment your preparer was arrested. There already running. You havent even started.

Same Charges, Same Penalties

Heres what shocks most people. Under federal law, clients who participate in preparer-led fraud schemes face the same charges as the preparer themselves. Not reduced charges. Not lesser penalties. The same.

The aiding and abetting statute – 18 USC 2 – treats people who aid or facilitate fraud as if they committed the fraud directly. If you provided false information that appeared on a fraudulent PPP application, your not an accessory. Your a principal.

Wire fraud carries up to 20 years. Bank fraud carries up to 30 years. Conspiracy to defraud the United States carries up to 5 years. Money laundering – if you spent the proceeds – adds another 10 to 20 years depending on how its charged.

The preparer who got arrested is looking at these numbers. And so are you. The fact that someone else physically submitted the application dosent reduce your exposure. You provided the false information. You recieved the funds. You certified the application. Under federal law, thats enough.

In practice, minor participants sometimes recieve lower sentences because judges consider there role. But your still prosecuted. Your still convicted. Your still a federal felon. “Minor role” is an argument at sentencing. Its not a defense to charges.

The Text Messages They Already Have

When your preparer was arrested, federal agents seized there phone. Every text message. Every email. Every communication about PPP applications.

Think about what those messages contain. Maybe you texted about the numbers on your application. Maybe you discussed how much you’d recieve. Maybe you asked questions that show you knew the application was inflated. Maybe you sent information the preparer used to create false documents.

All of that is now in federal custody. Investigators are reading it. Prosecutors are building timelines. Your words – sent on a phone you no longer control – are being used to construct a case against you.

This is why talking to the preparer after there arrest is so dangerous. Any new communication gets added to the file. Any attempt to coordinate stories becomes evidence of consciousness of guilt. The government isnt just looking at what you said before the arrest. There watching what you say after.

Your communications with the preparer already exist in federal evidence. You cant unsend them. You cant explain them away. You can only deal with them strategicaly – which requires an attorney who understands what your facing.

What to Do When Your Preparer Gets Arrested

At Spodek Law Group, Todd Spodek and the federal defense team handle exactly this situation. Clients come to us after learning there preparer was arrested, wondering what happens next. Heres the advice we give.

First, understand that your not a bystander. The preparers arrest is the beginning of an investigation that includes you. Your application is evidence. Your payment is evidence. Your signatures are evidence. Act accordingly.

Second, preserve everything. Dont delete texts with the preparer. Dont throw away documents. Dont alter records. If you destroy evidence after learning about an investigation, your facing obstruction charges on top of everything else. Obstruction often carries worse penalties then the underlying fraud.

Third, stop talking. Dont call the preparer. Dont discuss the situation with other clients. Dont post on social media. Anything you say becomes evidence. Communication with other potential defendants can be characterized as witness tampering or conspiracy.

Fourth, consult an attorney immediately. Not next week. Now. An attorney can assess your actual exposure, advise you on your rights, and potentialy begin discussions with prosecutors if early cooperation makes sense.

Fifth, understand the math. If your application contained false information, prosecutors will find out. The question is wheather you get ahead of the situation or let it overtake you. Early cooperators get better deals. Late cooperators get whatever scraps are left.

If your PPP preparer has been arrested and you used there services, call Spodek Law Group at 212-300-5196. The consultation is confidential. We can help you understand wheather your application is likely to be flagged, what the investigation timeline looks like, and what options you have before prosecutors contact you.

The worst position is waiting to find out if your a target. The best position is knowing – and acting – before the government reaches your name on the list. Your preparer already made there choice. There cooperating against you. The question is what your going to do about it.