San Jose PPP and EIDL Loan Fraud Lawyers
The Paycheck Protection Program (PPP) loan fraud is a serious federal crime that occurs when small businesses, reeling from the devastating impact of COVID-19, cheat the Small Business Administration (SBA) out of stimulus money through false pretenses. The CARES Act, signed into law on March 27th, 2020, offered eligible small businesses up to $10 million in loans to cover vital expenses such as payroll, mortgages, rent, and utilities for eight weeks, with the possibility of loan forgiveness if the funds were used for “qualified expenses.”
However, not all businesses are eligible for this relief. Only those affected by COVID-19 and with fewer than 500 full-time employees can apply for these loans. And those who cheat the system by making false statements or overvaluing securities risk severe consequences. Federal punishments for PPP loan fraud include potential prison time, fines, and repayment of the loan, with embezzlement carrying even harsher penalties of up to $10,000 and/or five years in prison.
Despite these grave risks, some businesses may be tempted to fraudulently obtain PPP funds in the desperate hope of staying afloat. But the consequences of getting caught are dire. The SBA’s Office of Inspector General has issued 11 reports detailing widespread fraud and abuse in the PPP loan program, with thousands of cases referred to the Department of Justice for criminal prosecution.
However, there may be defenses available to those facing PPP loan fraud charges. A defendant may argue that they had no intent to defraud or that the SBA made a mistake. For example, a business owner may accidentally provide false information on their loan application due to the complexity of the process and stress of the current situation. It’s important to keep all records such as email communications, voicemails, bank statements, accounting notes, receipts, and bills as they may serve as valuable proof of innocence.
Furthermore, non-citizens convicted of CARES Act fraud are vulnerable to deportation, as fraud involving more than $10,000 is considered an aggravated felony and a crime involving moral turpitude. Therefore, it is crucial for aliens facing criminal charges to consult with legal counsel as soon as possible.
It’s important to note that the Paycheck Protection Program was implemented as a critical lifeline for small businesses during an unprecedented crisis. However, it’s also important to remember that fraudulently obtaining these funds not only harms the government and the integrity of the program but also undermines the efforts to help the legitimate small businesses that are struggling to survive.
As the nation continues to grapple with the devastating economic impact of the COVID-19 pandemic, small businesses have been hit especially hard. In an effort to provide crucial financial relief, the government created the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Congress authorized over $950 billion in forgivable loans to help small businesses maintain their workforce, have access to working capital, and keep operations running normally.
However, as the government began distributing these funds, it quickly became apparent that some parties were taking advantage of the program, fraudulently obtaining money they didn’t qualify for. In response, the government has launched an aggressive campaign to investigate and prosecute these allegations of PPP loan fraud, with entire sections of the Department of Justice dedicating themselves to these investigations.
If you find yourself facing PPP loan fraud charges, the stakes are high. Penalties for conviction can include severe fines, home detention, community confinement, restitution, supervised release, and lengthy imprisonment. For immigrants, the consequences can be even more dire, as fraud involving more than $10,000 is considered an aggravated felony and a crime involving moral turpitude, making non-citizens vulnerable to deportation.
At our law firm, we understand the gravity of the situation and are prepared to fight tirelessly on your behalf. We will gather all necessary information, including all evidence the government has against you, to review whether you have a strong defense against any allegations of fraud. We will then reach out to the federal prosecutor or agents assigned to your case and provide them with information that can make a beneficial impact on your case.
There are several acts and omissions that can result in PPP fraud allegations, including but not limited to: -Loan Application Fraud: Companies that falsely claim eligibility on loan applications could be prosecuted. This includes misrepresenting information such as the number of employees vs. contractors and presenting inaccurate payroll costs to increase the loan amount. -Loan Stacking: Loan stacking occurs when an applicant receives PPP loans from multiple lenders. Companies that receive funds from more than one lender may face PPP fraud investigations since the federal government can track the distribution of all funds from the Paycheck Protection Program. -Fraudulent Loan Certification: PPP loan applicants had to certify various facts, such as the accuracy of all business documents provided and the intention to use the money for business purposes such as payroll. Knowingly certifying an inaccurate statement can lead to fraud charges. -Using Funds for Ineligible Purposes: Companies receiving federal funds through the PPP are restricted to using those funds for specific purposes, namely payroll, mortgage interest, rent, and utilities. Any other use of PPP funds is unlawful and could result in fraud allegations. -Concealing or Misrepresenting Information During Audit: Companies that receive PPP loan funds are likely to face audits and investigations. If your company is audited or investigated, you need to be extremely careful not to reveal potentially harmful information, but you should also avoid misrepresenting facts or concealing pertinent information. Material misrepresentations, however slight, may result in additional charges such as making false statements to a federal agent.
Don’t let these charges ruin your life. Contact our law firm today and let us put our experience and knowledge to work for you. We will fight to protect your rights and your future.