PPP Loan Preparer Under Investigation

PPP Loan Preparer Under Investigation

You just learned that your PPP preparer is “under investigation.” Maybe you saw it in the news. Maybe someone told you. Maybe you got a strange phone call. Your first instinct is that this is early warning – you have time to figure out what’s going on, time to prepare, time to see how things develop before doing anything. Here’s what nobody explains: by the time you hear a preparer is “under investigation,” the investigation of their clients has been running for months. Grand jury subpoenas went to banks long before the investigation became public. Your preparer’s files were seized weeks or months ago. Every client application is being compared to tax returns the IRS already has on file. “Under investigation” doesn’t mean the investigation is beginning. It means your window to act is closing fast.

Welcome to the Spodek Law Group resource on what happens when your PPP preparer is under investigation – and why the timing is nothing like what you think. Our goal is to show you exactly how federal investigations of PPP preparers actually work, because understanding the real timeline is the difference between having options and having none. You might think: “It’s just under investigation. Nothing has happened yet. I’ll wait and see how this plays out.” The law works differently. Federal investigations run for 6 to 18 months before becoming public. By the time you’re hearing about it, investigators have already obtained your bank records, pulled your tax returns, compared the numbers, and documented the discrepancies. You’re not at the beginning of anything. You’re approaching the end of your opportunity to get ahead of this.

That’s the reality Todd Spodek and the Spodek Law Group team explain to clients who come in after learning their preparer is under investigation. The initial reaction is always the same: “But nothing has actually happened to me yet.” The problem is that everything has happened – you just weren’t told about it. The grand jury subpoenas went to banks, not to you. The document production happened, but you weren’t notified. The comparison of your PPP application to your tax returns already happened. By the time the investigation becomes news, the investigative work is substantially complete.

“Under Investigation” Doesn’t Mean It’s Beginning

Heres the paradox that changes everything about your situation. You think learning your preparer is “under investigation” gives you early warning. Actually, your getting late notice. The investigation has been running long before you heard anything about it.

Federal investigations dont become public until prosecutors are ready to act. Before that point, everything happens in secret. Grand jury proceedings are sealed. Subpoenas go to third parties who cant notify you. Witnesses are interviewed without your knowledge.

By the time a preparer investigation becomes news, investigators have already seized the preparers files. They’ve already obtained bank records for every client. They’ve already pulled tax returns from the IRS. They’ve already compared PPP applications to actual financial records. They’ve already documented discrepancies.

The “under investigation” phase that you think your in is actualy months or years old. The investigation didnt start when you heard about it. It started long before. What you experienced was the investigation going public – not the investigation beginning.

The Investigation Has Been Running for Months

Lets talk about what happened before you learned anything was wrong.

First, federal investigators identified suspicious patterns. Maybe the preparer filed too many applications with similar characteristics. Maybe applications showed payroll that didnt match payroll tax filings. Maybe multiple businesses at the same address all got PPP loans.

Then came the subpoenas. Grand jury subpoenas went to banks requesting complete records on PPP loans the preparer facilitated. Your bank recieved that subpoena. Your bank produced documents. You were never notified. Banks dont have to tell customers when they respond to grand jury subpoenas.

Then came the IRS records. Investigators already have access to tax returns you filed. They can see what you reported as income, what you claimed as deductions, what employees you listed on payroll tax forms.

Then came the comparison. Your PPP application – which claimed X in payroll and Y in employees – was compared to your tax returns. If the numbers didnt match, that discrepancy got documented.

Then came the preparer seizure. Federal agents executed a search warrant on your preparers office. They took files, computers, phones. Your application was in those files. Any communications between you and the preparer were in those files.

All of this happened before you heard anything. The investigation has been running for months. Your just finding out now.

Your Bank Already Gave Them Everything

Heres something most people dont understand about federal investigations. Banks turn over records without notifying customers.

The Department of Justice has been systematicaly obtaining bank records through grand jury subpoenas since the PPP program began. DOJ sent subpoenas to JPMorgan Chase, Bank of America, Wells Fargo, and other major lenders. Those banks turned over customer records – your records – without sending you a letter, without making a phone call, without any notification whatsoever.

Your bank recieved a grand jury subpoena. Your bank produced documents. Your first notification that investigators have been examining your records for months might be when agents show up at your door.

This isnt illegal. Its how grand jury subpoenas work. The subpoena goes to the entity holding the records. That entity produces the records. The person whose records are being produced has no right to notice and no opportunity to object.

Every deposit you recieved from your PPP loan. Every purchase you made with PPP funds. Every transfer out of the account. Investigators have all of it. They’ve had it for months.

The Government Isn’t Trying to Find Out What Happened

You think your in a fact-finding stage where everyone is trying to understand what happened. Thats not whats happening at all. The government already knows what happened. There not investigating to discover facts. There investigating to build a prosecutable case from facts they already have.

Think about what investigators possess. They have your PPP application with its specific claims about payroll and employees. They have your tax returns showing what you actualy reported. They have your bank records showing what you recieved and how you spent it. They have your preparers files showing what information was exchanged.

The discrepancies are already visible. If your PPP application claimed $100,000 in payroll but your tax returns showed $30,000, investigators can see that right now. They dont need to investigate to discover it. They just need to look at the documents they already have.

The “investigation” at this point isnt about discovering whether fraud occured. Its about documenting the fraud, identifying everyone involved, and building files strong enough to prosecute.

Your not in a phase where the outcome is uncertain. Your in a phase where the outcome is being formalized.

The $150,000 Line That Determines Criminal vs Civil

Heres a pattern that emerged from analysis of over 200 PPP fraud indictments from 2023 through 2025. Theres a threshold that largley determines whether your case becomes criminal or civil.

Below $150,000 in fraud, most cases result in civil recovery only. The government seeks repayment plus penalties. You might face False Claims Act liability. But your probly not facing prison.

Above $150,000, criminal prosecution becomes likely. Wire fraud. Bank fraud. Conspiracy. These are the charges that carry years in federal prison.

Between $150,000 and $500,000 is a gray zone where aggravating factors matter. Did you have a prior criminal history? Did you obstruct the investigation? Did you spend the money on luxury items that showed consciousness of guilt?

If your PPP loan was below $150,000, you might be looking at repayment and civil penalties. If it was above that threshold, criminal charges are on the table.

This dosent mean small loans are safe – its a pattern, not a rule. But it helps you understand what your probly facing.

Your Preparer Is Being Asked About You

The information flow goes in a direction most people dont expect. You think investigators are learning from your preparer. In reality, investigators are showing your preparer documents and asking them to confirm what the documents already reveal.

“Did this client provide these numbers, or did you calculate them?”

“Did this client know the application contained inflated payroll?”

“Did you discuss with this client how to make the numbers look right?”

Your preparer is being asked to provide context for documents investigators already have. There not being asked to reveal hidden information. There being asked to explain and confirm what the paper trail shows.

Every answer your preparer gives either confirms your involvement or creates a story that contradicts the documents. Either way, information about you is flowing to prosecutors. And your preparer has every incentive to cooperate – because cooperation is the only way to reduce there own sentence.

The 2025 Deadline Is Forcing Faster Decisions

Theres a timing pressure that most people dont understand. The statute of limitations for PPP fraud is creating urgency on the government side.

The standard statute of limitations for fraud is 5 years. For 2020 PPP loans, that means the basic fraud window closes in 2025. Congress extended the limitation to 10 years for certain violations, pushing some deadlines to 2030 or 2031.

But for 2020 loans without the extension, prosecutors are racing against a 2025 deadline. They need to charge before limitations expire. That means faster decisions, less time for negotiation, less willingness to give targets the benefit of the doubt.

If your preparer is under investigation now, in late 2025, prosecutors may be moving quickly to ensure charges get filed before deadlines expire. The pressure isnt just on you – its on them. And that pressure translates into faster charging decisions and less room for delay.

What Happens When the Preparer Starts Cooperating

When your preparer gets arrested or indicted, the first thing there lawyer tells them is: cooperate.

Federal sentencing guidelines give massive credit for “substantial assistance.” A defendant who helps prosecutors build cases against other people can get there sentence reduced by 50% or more. For someone facing 5-10 years, thats the difference between going home and staying in prison.

Your preparer is calculating right now. How much information can they provide? How many clients can they implicate? What documents can they point to?

Every client they identify earns cooperation credit. Every detail they provide about how applications were prepared, what information was exchanged, who knew what – all of it reduces there sentence.

You might think your preparer would protect you. When your facing years in federal prison, protection stops mattering. Survival matters. Your preparer is surviving by providing information about you.

Why Waiting to See What Happens Is the Worst Strategy

You might think the smart move is to wait. See how the investigation develops. See wheather your name comes up. See wheather anyone contacts you. Dont do anything that might draw attention.

This is the worst possible strategy.

Heres why. Federal prosecutors dont reach out to inform you of the investigation. They reach out when the case is ready to charge. By the time you hear from an agent or receive a target letter, the investigation is complete. The decision to charge has already been made. Your opportunity to influence the outcome has passed.

Early cooperation – cooperation before your charged – gets the best outcomes. Defendants who come forward before indictment, who provide information while it still has value, who help prosecutors build cases against bigger targets – these defendants get the most favorable treatment.

Waiting until your contacted means waiting until your leverage is gone. You’ll be offered a plea deal based on what prosecutors already know. The only negotiation will be over sentence length, not wheather to charge you at all.

The window for meaningful negotiation is right now – while the investigation is still running, while prosecutors are still making decisions, while your information might still be valueable. Every day you wait, that window closes a little more.

The Documents That Will Be Used Against You

Lets be specific about what prosecutors have and how they’ll use it.

Your PPP application. The one you signed. The one that certified under penalty of perjury that the information was accurate. Prosecutors will point to every claim on that application and compare it to reality.

Your tax returns. The Schedule C that showed your self-employment income. The 941 payroll tax filings that showed what you actualy paid employees. The 1099s that showed contractor payments. All of it is being compared to what you claimed on the PPP application.

Your bank records. Every deposit from the PPP loan. Every purchase. Every transfer. Prosecutors can trace exactly where the money went and compare it to what PPP funds were supposed to cover.

Communications with your preparer. Emails, texts, documents you sent. If you discussed the numbers, if you asked about eligibility, if you received advice about what to claim – investigators have those communications now.

The comparison between these documents tells the story. If your PPP claimed $80,000 in annual payroll but your tax returns showed $25,000, that discrepancy is obvious. If you recieved $20,000 in PPP funds and bought a car three days later, that purchase is documented.

Prosecutors dont need your confession. The documents confess for you.

The Sequence You Never Saw

Heres the timeline of events that happened before you knew anything was wrong.

Investigation opened (you didnt know). Grand jury subpoenas issued to banks (you werent notified). Bank records produced (no notice to you). IRS records pulled (automatic, no notice). PPP application compared to tax records (discrepancies documented). Preparer’s office searched (files seized). Preparer interviewed (asked about clients). Client files reviewed (your application flagged).

By the time the investigation goes public – by the time you learn your preparer is “under investigation” – all of these steps have already happened. The investigative work is done. The documentary record is complete. Prosecutors are deciding who to charge, not wheather fraud occured.

You experienced a news story or a rumor or a phone call. What actualy happened was months of investigation that you were never told about.

What to Do When Your Preparer Is Under Investigation

At Spodek Law Group, Todd Spodek and the federal defense team handle exactly this situation. Clients come to us after learning there preparer is under investigation, wondering what it means for them. Heres the advice we give.

First, understand that your not at the beginning of anything. The investigation has been running for months. Your application has already been compared to your tax returns. Discrepancies have already been documented. You dont have time to wait and see.

Second, gather your records immediately. Find your PPP application if you have a copy. Find your tax returns from 2019 and 2020. Compare the numbers yourself. You need to know wheather there are problems before you decide how to respond.

Third, dont contact your preparer. Any communication now can be characterized as witness tampering or conspiracy. Your preparer may already be cooperating. Anything you say to them may go directly to prosecutors.

Fourth, dont talk to anyone else about this. Not friends. Not family. Not business partners. Anyone you talk to can be called as a witness. Keep this between you and your attorney.

Fifth, consult a federal defense attorney immediately. Not next week. Now. You need to understand your actual exposure, assess wheather early cooperation makes sense, and develop a strategy before investigators contact you.

If your PPP preparer is under investigation and you used there services, call Spodek Law Group at 212-300-5196. The consultation is confidential. We can help you understand where you are in the investigation timeline, what exposure you face, and what options you have while you still have options.

The worst mistake is thinking “under investigation” means early. It dosent. It means late. The investigation has been running for months. Your window to act is closing. The question is wheather you use the time you have left – or wheather you let it run out wondering what to do.

Clients who wait until they recieve a target letter or get contacted by agents have far fewer options. By that point, the charging decision is made. The only negotiation is about sentencing. The opportunity to avoid charges entirely – to settle civily, to cooperate for immunity, to demonstrate that no fraud occured – those opportunities exist now. They wont exist later.

Your preparer is under investigation. That means your in the investigation too. What you do in the next days and weeks determines wheather this becomes a federal case or a problem you addressed proactively. The choice is yours – but the window for that choice is closing faster then you realize.