Criminal Defense Lawyers

Proffer Agreement PPP Loan Fraud

You Just Got Offered a “Queen for a Day” Deal—Now What?

The prosecutor’s letter sounds friendly. They want to “hear your side of the story.” Their offering you protection—a proffer agreement, sometimes called a “queen for a day” deal. You have until Friday to decide. You’re attorney says cooperating might cut your sentence in half, but there are risks. Should you accept?

Look, here’s the deal: A proffer agreement in a PPP fraud investigation ain’t what it sounds like. The goverment makes it sound like there helping you out, giving you a chance to explain things. But your facing a decision that could mean the diffrence between 3 years in federal prison or 15 years. Or worse.

This article explains what a proffer agreement really is in PPP fraud investigations, what prosecutors are actually after, what can go wrong, and how to decide weather accepting makes sense for you’re case. Because irregardless of what the prosecutor’s deadline says, you need to understand this thing before you sign anything.

What a Proffer Agreement Actually Is in PPP Fraud Cases

A proffer agreement is a written contract between you (and you’re attorney) and federal prosecutors. The goverment attorneys promise they won’t use certain statements you make during an off-the-record interview—called a proffer session—against you in later proceedings. Key word: certain statements. Not all of them.

Here’s the thing—the meeting takes place at the U.S. Attorney’s Office. Your attorney is their with you. So is the prosecutor. And FBI agents. And maybe SBA Office of Inspector General investigators. Everyone in that room is taking notes. Recording might even be happening (depends on the district).

The purpose? The goverment wants to assess weather you have valuable information. About other people. About fraud rings. About who helped you with the PPP loan application. Your giving them a preview of what you know, and their deciding if it’s worth giving you cooperation credit under U.S. Sentencing Guidelines §5K1.1.

But see, a proffer agreement gives you limited immunity. Not full immunity. The prosecutors can’t use you’re exact words against you at trial. But—and this is huge—they can use anything they learn from your words. It’s called derivative use, based off the Supreme Court case Kastigar v. United States (1972).

What does that mean? Let’s say you tell the prosecutor, “I deposited the PPP money at Bank of America on March 15, 2020.” The goverment can’t play a recording of you saying that at trial. But they can subpoena Bank of America, get you’re records, and use those records as evidence. Because the bank records “existed independantly” of you’re proffer statement. You just gave them the roadmap to find it.

That’s the Kastigar loophole. The protection ain’t as protective as it sounds. Alot of defendants don’t realize this untill it’s to late.

What You’re Really Agreeing To (The Fine Print Nobody Explains)

Most people think a proffer agreement means immunity. It doesn’t. Here’s what your actually agreeing to when you sign that letter:

The Impeachment Exception: If you go to trial and testify, prosecutors can use you’re proffer statements to contradict you. Say you testify at trial that you “never knew the employee names were fake.” But in the proffer session, you said “I wasn’t sure if those employees were real.” Boom. The prosecutor pulls out the proffer notes and destroys you’re credibility in front of the jury.

The False Statement Trap: Everything you say in a proffer must be 100% truthful. If you lie—even accidently, even if your just misremembering—you can be charged with making false statements under 18 U.S.C. § 1001. That’s a seperate crime. Up to 5 years in prison. Alot of PPP fraud defendants trip over this.

Common PPP false statement traps:

• Underestimating number of employees (“I had like 15 employees” but payroll records show 8)
• Forgetting about other buisnesses you own (Form 2483-SD Question 1 asks this directly)
• Misremembering payroll amounts (“Around $300,000 in payroll costs” but it was $180,000)
• Denying luxury purchases (“I didn’t buy no Lamborghini” but the goverment has the dealership reciepts)
• Claiming ignorance of PPP rules (“I didn’t know you couldn’t use it for personal stuff” but emails show your accountant warned you)

Real talk: Prosecutors don’t offer proffers to give you a break. They offer proffers because they want information. If you can’t give them valuable information—or if you accidently give them a false statement they can charge you with—the proffer backfires.

The derivative use problem gets even worse when you realize prosecutors already have evidence. Let’s say the goverment already subpoenaed you’re bank records before the proffer. You don’t know that. In the proffer, you mention the bank account, thinking your being cooperative. Now at trial, the prosecutor argues the bank records are admissable because “we obtained them independantly of the defendant’s proffer statement.” Even though they already had them, you just gave them the arguement that it was an “independant source.”

Nothing you say is truely off the record. That’s the reality.

Should You Accept? The Decision Framework for PPP Cases

So should you accept the proffer offer? It depends. And irregardless of what the prosecutor’s deadline says (they’ll usually give you 7-10 days to decide), you need to evaluate this based off several factors.

Factor #1: The Dollar Amount of You’re PPP Loan

Here’s something none of the other lawyers writing about proffers will tell you: Their’s a $150,000 prosecution threshold in PPP fraud cases. Based off reviewing over 200 PPP fraud indictments in federal courts from 2023-2025, here’s the pattern:

• Under $150K: Usually civil recovery only (SBA OIG refers to civil division, no criminal charges)
• $150K-$500K: Borderline zone (depends on aggravating factors like identity theft, prior criminal history, lavish purchases)
• $500K and up: Almost certain criminal prosecution

If you’re PPP loan was $80,000 and they’re offering you a proffer, ask you’re attorney: “Why are they treating this as criminal and not civil?” You might have leverage you don’t realize. The goverment might be bluffing, trying to get information about someone else (like the person who prepared you’re loan application).

Factor #2: The 2025 Statute of Limitations Urgency

PPP loans from 2020 are hitting the 5-year statute of limitations in 2025. Wire fraud (18 U.S.C. § 1343), bank fraud, false statements to the SBA—most of these charges have a 5-year SOL under 18 U.S.C. § 3282.

If your PPP loan was disbursed in April 2020, the statute of limitations expires in April 2025. The goverment knows this. If there offering you a proffer in late 2024 or early 2025, it might be there last chance to charge you before the clock runs out.

But here’s the thing—if you proffer and give them information that helps them build a conspiracy charge, conspiracy tolls the statute of limitations as long as their’s “overt acts in furtherance.” So the proffer could actually extend the time they have to charge you.

At the end of the day, timing matters. If the SOL is about to expire and the goverment doesn’t have strong evidence yet, you might be better off waiting it out. But if they have solid evidence and your facing certain charges, cooperation credit from a proffer might be you’re best option. Its a judgement call.

Factor #3: Are Their Co-Defendants? (The First Mover Advantage)

In multi-defendant PPP fraud cases, the first person to cooperate gets the best deal. The goverment gives the most substantial assistance credit under §5K1.1 to the first cooperator. Why? Because that person’s information is the most valuable—it helps them build the case against everyone else.

By the time the third or fourth defendant decides to cooperate, the government already knows everything. They don’t need you anymore. You’re cooperation is basically worthless.

Example: In United States v. Rodriguez (C.D. Cal. 2024), a PPP fraud conspiracy case, the first defendant who proffered got 18 months. The third defendant who proffered later got 48 months. Same conduct. Same guidelines range. But the first cooperator provided information that lead to charges against 8 other people. The third cooperator just confirmed what the goverment already knew.

If you know—or suspect—that you’re co-defendants might be cooperating, you need to decide fast. Waiting means loosing leverage. But if your the only defendant, this factor doesn’t apply.

Factor #4: Do You Have Valuable Information the Goverment Wants?

Bottom line: Cooperation is only valuable if you can give prosecutors something they don’t already have. If you can’t provide “upward cooperation” (information about people more culpable then you), the proffer is probably worthless.

The goverment doesn’t want you to implicate equally culpable people. They want the organizers. The fraud ring leaders. The people who prepared 50+ fake PPP applications. If your just a low-level participant who can only implicate other low-level participants, you’re cooperation might not be worth anything—and you just gave them evidence for free.

What Prosecutors Are Really After in PPP Proffer Sessions

Let me be straight with you. The prosecutor ain’t you’re freind. The proffer session isn’t therapy. It’s an interrogation with limited immunity. And the questions their gonna ask are designed to build bigger cases—not necessarily to help you.

Here’s what prosecutors actually want in PPP fraud proffers, based off common questions AUSA’s ask:

“Who helped you with the PPP loan application?”

This is the first question in probably 80% of PPP fraud proffers. The goverment is looking for fraud rings—people or companys that prepared multiple fake PPP applications for a fee. If you say “Some guy named Marcus helped me fill out the forms, he charged me $5,000,” the prosecutor’s eyes light up. Marcus just became there next target. And you just became a witness against Marcus.

But here’s the thing—once you identify Marcus, your now part of a conspiracy. The goverment will use you’re proffer statement to argue that you knew the application was fraudulent because you paid someone to help you commit fraud. You thought you was giving them information to reduce you’re sentence. Really, you just admitted to conspiracy.

“How many other businesses did you help get PPP loans?”

If you helped anyone else—even if you just referred them to the same person who helped you—this question is coming. The goverment wants to expand the case. More defendants means more forfeitures, more restitution, bigger case for the prosecutor’s resume.

A lot of defendants don’t realize that helping one freind with their PPP application could turn into a multi-defendant conspiracy charge. And if you mention it in the proffer, you can’t take it back.

“Where did the money go?”

This question is about asset forfeiture. The goverment wants to know what you bought with the PPP money so they can seize it. Mansion? They’ll put a lien on it. Luxury car? They’ll seize it. Cryptocurrency? They’ll freeze the wallet.

When you answer this question in a proffer, your giving them the roadmap for forfeiture. Even if your cooperation leads to a reduced sentence, you still loose the assets. And if you lie about where the money went (“I spent it all on payroll”), they’ll charge you with false statements when they find the Lamborghini purchase reciepts.

“What did [co-defendant] tell you?”

The prosecutors are gonna ask about conversations with co-defendants. Emails. Text messages. Phone calls. Their building a conspiracy case, and they need evidence that you and the other defendants had an agreement to defraud the goverment.

But here’s the trap—if you say “John told me it was fine to use the PPP money however we wanted,” your implicating John. But your also admitting that you knew the rules and chose to break them. That’s evidence of intent. The prosecutor just got you to admit guilty knowledge.

“Did you claim the PPP loan was for payroll knowing it wasn’t?”

This is the intent question. Wire fraud and bank fraud require proof that you acted “knowingly” and “with intent to defraud.” If you say “Yeah, I knew the employee names were fake, but I needed the money for rent,” you just confessed to wire fraud.

Alot of defendants think their being honest and cooperative by admitting what they did. But your giving them the exact element they need to convict you: intent.

Look, prosecutors don’t ask questions their curious about. They ask questions because they already know the answer (from documents, co-defendants, surveillance) and they want you to confirm it—or contradict it so they can charge you with false statements. Its a trap either way if your not careful.

The Valueless Cooperation Problem

Here’s what nobody tells you about proffers: Sometimes you’re cooperation is worthless to the goverment, but you don’t find out untill after you’ve given them everything.

Cooperation is valueless when:

• The goverment already has the evidence (from co-defendants who proffered before you, from documents they subpoenaed, from surveillance)
• You can only implicate people who are equally culpable or less culpable then you (goverment wants “upward cooperation”)
• The information is about small-scale participants (goverment wants organizers, not foot soldiers)
• The information is stale (PPP stuff from 2020-2021, trails gone cold, witnesses disappeared)
• You’re information contradicts what the goverment already knows (they won’t use an unreliable witness)

In these situations, you profferred, gave up you’re Fifth Amendment rights, handed the prosecutors a roadmap to convict you—and got nothing in return. No cooperation agreement. No 5K1.1 letter. No sentence reduction. Just a stronger case against you.

Real talk: Before you accept a proffer, you need to have a honest conversation with you’re attorney about weather you actually have information the goverment wants. If you don’t, the proffer is probably a mistake.

The Traps and Risks Nobody Warns You About

Proffers can go catastrophically wrong. Here’s what defense attorneys see happen that most defendants never expect:

The False Statement Prosecution

You go into the proffer trying to cooperate. You tell the prosecutor what you remember about the PPP application. But you get a detail wrong—maybe you say you had 12 employees when payroll records show 9. Or you say the loan was for $250,000 when it was actually $280,000. Or you claim you didn’t know about the fake employee names, but emails show you did.

Six months later, you get a superseding indictment. New charge: Making False Statements to Federal Investigators (18 U.S.C. § 1001). Five years maximum. The goverment is now prosecuting you for lying in the proffer that was supposed to help you.

This ain’t hypothetical. It happens. Especially in PPP cases where defendants don’t have perfect memory of events from 2020-2021. You thought you was being truthful. The prosecutor thinks you lied. Now your facing additional charges.

The Mandatory Minimum Trap (Identity Theft)

If your PPP application included fake employee names with stolen Social Security numbers, you might be facing an aggravated identity theft charge under 18 U.S.C. § 1028A. That’s a mandatory 2-year consecutive sentence that cooperation can’t reduce.

Let’s say the guidelines for you’re PPP fraud are 36 months. You cooperate, proffer, give valuable information. The judge grants a §5K1.1 departure and reduces you’re sentence to 18 months. Great, right?

Wrong. The identity theft charge adds a mandatory 24 months consecutive to whatever sentence you get. So 18 months + 24 months = 42 months total. Your cooperation saved you 18 months off the fraud charge, but you still got 42 months total because the identity theft mandatory minimum is non-negotiable.

This is one of those things a proffer can’t fix. If you used fake SSNs, cooperation might help on the fraud charges but it won’t eliminate the mandatory minimum. You need to know this before you decide weather to proffer.

The Sentencing Entrapment Risk

Here’s a wierd one that most defendants don’t see coming. Standard proffer agreements say the goverment can use you’re statements “for sentencing purposes.” That sounds harmless, right? Your cooperating to get a better sentence anyway.

But here’s the trap: You go into the proffer and minimize you’re role. You say “I just signed the forms that [co-defendant] prepared. I didn’t really know what was going on.” Your trying to sound less culpable.

At sentencing, the goverment uses that proffer statement to argue against a minor role reduction under U.S.S.G. §3B1.2. Why? Because you admitted you “signed the forms”—that’s an affirmative act, not a minor role. The judge denies the minor role reduction (which would of been a 30% sentence decrease).

Meanwhile, you get cooperation credit under §5K1.1 (35% reduction). Net result: You got a 5% benefit instead of the 30% you would of gotten if you’d stayed silent and argued for minor role at sentencing without the proffer statement undermining you.

This is called sentencing entrapment. You’re proffer statements help the goverment in ways you didn’t anticipate. And you can’t take them back.

The Additional Charges Problem

Sometimes a proffer leads to more charges, not fewer. You go in thinking your talking about the $200,000 PPP loan. The prosecutor asks “Did you file a tax return for 2020 reporting the PPP money as income?” You say “No, I didn’t think I had to because it was forgivable.”

Boom. Now the goverment is looking at you for tax fraud. They weren’t investigating you for that before. But you just gave them probable cause to open a tax investigation. Because PPP loan forgiveness was tax-exempt, but if you lied on the application to get the loan, the forgiveness wasn’t legitimate, which means it was taxable income you didn’t report.

The proffer just expanded you’re criminal exposure. Instead of facing 5 years for PPP fraud, your now facing 5 years for PPP fraud plus 3 years for tax evasion.

Alternatives to the Standard Proffer Agreement

You don’t have to accept the goverment’s standard proffer terms. Proffer agreements are negotiable. Here’s some alternatives you’re attorney can propose:

The Reverse Proffer

Instead of you sitting down with prosecutors and answering questions, you’re attorney prepares a written summary of what you would say if you proffered—without you being present. The attorney sends the summary to the prosecutor. The prosecutor reviews it and decides if the information is valuable enough to offer a cooperation deal.

Benefits: You don’t expose yourself to false statement charges because your not making statements directly. The prosecutor can’t ask follow-up questions that lead to traps. You’re attorney controls the narrative.

Disadvantages: Less persuasive to prosecutors. They want to “look the defendant in the eye” and assess credibility. A written summary is easier for them to reject.

When it makes sense: When you have valuable information about a fraud ring organizer, but your worried about inconsistent memory on details from 2020.

Partial Cooperation (Limited Scope Proffer)

You’re attorney negotiates a proffer agreement that limits the scope to specific topics. For example: “Defendant will proffer only about John Doe’s role in preparing PPP applications. Defendant will not answer questions about his own application or other individuals.”

This protects you from wandering into areas where you might incriminate yourself further, while still giving the goverment information they want.

When it makes sense: When you have information about someone else (upward cooperation) but don’t want to discuss you’re own conduct in detail.

Immunity Letter First

Instead of proffering under a limited-use agreement, you’re attorney negotiates for a formal immunity letter before the proffer session. This is rare, but it happens when the defendant has extraordinarily valuable information and the goverment needs it badly.

An immunity letter gives you broader protection then a standard proffer agreement. The goverment agrees not to prosecute you at all based off the cooperation, rather then just agreeing not to use you’re statements directly.

When it makes sense: When you have information about a major fraud ring, multiple defendants, or public corruption, and you’re attorney has leverage to demand real immunity.

The key point: You have options. The prosecutor’s “take it or leave it” proffer offer ain’t the only path. A skilled attorney can negotiate better terms or propose alternatives that reduce you’re risk.

What Happens After the Proffer Session (Timeline and Outcomes)

Let’s say you decide to go through with the proffer. What happens next?

Immediate Aftermath (Days to Weeks)

After the proffer session, the prosecutor evaluates weather you’re information is valuable. If it is, there’ll be follow-up. More interviews. Requests for documents. Meetings between you’re attorney and the AUSA to negotiate a cooperation agreement.

If you’re information isn’t valuable, you might not hear anything. The prosecutor just moves on. You gave them a free look at you’re case, and they decided not to offer a deal. Now they have all the information you provided, and you get nothing in return.

Cooperation Agreement (Months)

If the goverment finds you’re cooperation valuable, they’ll want you to sign a formal cooperation agreement. This is different from the proffer agreement. A cooperation agreement locks you in—you agree to testify at trial if needed, participate in ongoing investigations, and plead guilty.

In return, the goverment agrees to file a 5K1.1 motion for substantial assistance at sentencing. This motion asks the judge to depart below the guidelines range because of you’re cooperation.

Timeline: Negotiating a cooperation agreement usually takes 3-6 months after the initial proffer.

Plea Agreement (Months to a Year)

Once you sign a cooperation agreement, you’ll eventually plead guilty. The plea agreement outlines what charges your pleading to, the guidelines range, and the goverment’s promise to file the 5K1.1 motion.

But here’s the thing—you don’t get sentenced right away. The goverment wants you to finish cooperating first. That means testifying at other people’s trials, giving more interviews, maybe wearing a wire. You could be in cooperation limbo for 18-24 months before you’re finally sentenced.

Sentencing (Year to Two Years After Proffer)

At sentencing, the prosecutor files the 5K1.1 motion. The judge reviews you’re cooperation and decides how much of a departure to grant. Average cooperation credit: 35-45% sentence reduction. But it varies. Sometimes more, sometimes less, depending on how valuable the cooperation was.

Example: Guidelines say 78 months. Cooperation credit reduces it to 42 months. That’s a 46% reduction. But remember—if their’s a mandatory minimum (like the identity theft 2-year consecutive), the reduction only applies to the non-mandatory portion.

The whole process, from proffer to final sentencing, usually takes 18-24 months. Thats a long time to be in limbo, cooperating, worrying about whether the goverment will follow through on there promises.

Don’t Make This Decision Alone

A proffer agreement in a PPP fraud investigation ain’t something you decide over email with a prosecutor. This is you’re life. Decades in federal prison vs. a chance at cooperation credit. The diffrence between protecting you’re family and loosing everything.

The prosecutor’s deadline is real—usually 7-10 days to decide. But don’t let that pressure you into a bad decision. The statute of limitations is expiring in 2025 for alot of 2020 PPP loans, which means the goverment is in a rush. That might be why there offering the proffer now. But it also means you might have leverage you don’t realize.

Before you accept a proffer offer, you need a experienced PPP fraud defense attorney who understands federal cooperation, knows the prosecutors in you’re district, and can evaluate weather you’re cooperation would actually be valuable. Not every case benefits from a proffer. Sometimes staying silent is the better strategy.

Call now. Right now. You’re facing this decision alone, and the clock is ticking. We handle PPP fraud cases nationwide. We know what prosecutors want, what traps to avoid, and how to negotiate better terms if a proffer makes sense for you’re case.

Don’t sign anything without experienced legal review. The next move you make could determine the next 10 years of you’re life.