Criminal Defense Lawyers

This article walks you through exactly what to expect during a federal PPP fraud investigation—every stage of the process, what agencies are involved, what they already know, what charges you might face, and what you absolutely must do (and avoid doing) to protect yourself.

The Investigation Timeline: Where Are You in the Process?

Federal PPP fraud investigations follow a predictable pattern, but what’s changed dramatically in 2025 is the speed. Based on analysis of cases tracked nationwide, the median time from initial referral to indictment has decreased by 45% compared to 2022-2023. What used to take 8-12 months now takes 4-6 months. The DOJ’s PPP Strike Force is moving faster than ever because they have dedicated resources and are prioritizing cases before statute of limitations becomes an issue.

Here’s what the typical investigation timeline looks like:

Phase 1: Covert Investigation (Months 1-2)

This is the phase you know nothing about. The SBA Office of Inspector General refers your case to the FBI or IRS Criminal Investigation based on a Suspicious Activity Report (SAR) filed by your bank, an audit flag, or a tip to the SBA OIG hotline. You receive no letter. You receive no warning. You go about your daily life completley unaware that federal agents are building a case against you.

During this phase, agents are issuing subpoenas to banks and financial institutions—subpoenas that go directly to the bank, not to you. They’re pulling your complete bank records, tracking exactly where every dollar of PPP funds went. They’re comparing your PPP loan application to your actual payroll records and tax filings.

Phase 2: Record Collection and Analysis (Months 3-4)

By now, agents have your bank records, tax returns, payroll records, and the original PPP loan application. They’re building timelines. They’re creating charts showing money flows. If you bought a car, took a vacation, paid personal expenses, or did anything inconsistent with your claimed payroll—they’re documenting it.

This is the critical intervention window, if only you knew about it. But you don’t. Your sitting at home or running your business while federal agents are mapping out exactly how you allegedly committed fraud.

Phase 3: Witness Interviews (Months 4-6)

Now the investigation expands to people around you. Federal agents begin interviewing witnesses—current employees, former employees, your accountant, your bookkeeper, your business partners. These witnesses are not represented by counsel. They’re terrified of being charged themselves. And they tell the FBI everything they know.

Your former bookkeeper who helped prepare payroll documents? She’s been interviewed. Your business partner who co-signed the loan application? He’s been subpoenaed. Your accountant who filed your taxes showing different numbers than your PPP application? The FBI has already talked to her.

Many, many people learn about investigations during this phase—not because agents contacted them directly, but because a witness called to warn them. “The FBI just asked me about your PPP loan. You need a lawyer.”

Phase 4: Target Decision (Months 6-8)

The prosecutor makes the critical decision: present the case to a grand jury for indictment, or initiate cooperation discussions. If you haven’t engaged defense counsel by this point, the window for negotiating an information (rather than a full grand jury indictment) is likely closed.

At this stage, the government has essentially completed their investigation. They have all the documentary evidence they need. They have witness statements. They have your tax returns. They have your bank records. The only thing left is the formal charging decision.

Phase 5: Disclosure (Months 9-12)

This is when you finally find out. Either you receive a target letter from the U.S. Attorney’s Office informing you that you’re the target of a grand jury investigation, or—worse—a sealed indictment has been prepared and federal agents show up to arrest you.

By the time you learn about the investigation, its substantially complete. The government isn’t contacting you to gather information. They’re contacting you because they’ve already gathered enough information to charge you.

What Triggers a PPP Fraud Investigation?

If you’re under investigation, you’re probably wondering: why me? What triggered this? Understanding the triggers helps you understand what evidence the government likely has.

Loan Size Trigger

The SBA is auditing all companies that received PPP loans of $2 million or greater. If your loan was above this threshold, you were automatically flagged for enhanced scrutiny. This doesn’t mean everyone with large loans committed fraud—but it does mean the SBA is looking carefully at every large loan for any red flags.

Suspicious Activity Reports (SARs)

Banks are required to file SARs when they detect potentially fraudulent activity. If your bank saw something suspicious—unusual fund movements, rapid transfers out of the account, payments that didn’t look like legitimate payroll—they filed a report. That report went to FinCEN, then to the FBI. You were never notified the SAR was filed.

SBA OIG Hotline

In the first year after PPP launched, the SBA OIG hotline saw a 19,500% increase in volume over prior years. More than 238,000 calls were received, resulting in approximately 40,000 actionable complaints. If a disgruntled employee, ex-business partner, or competitor called the hotline about your PPP loan, that complaint went directly to investigators.

Data Analytics Red Flags

According to the GAO, data analysis of PPP and EIDL data identified over 3.7 million unique recipients with fraud indicators out of 13.4 million total recipients. Fraud indicators include: businesses that appear not to exist, businesses with employee counts that don’t match tax filings, multiple applications from the same individuals, applications submitted shortly after business formation.

Specific Red Flags That Trigger Investigation

The following red flags put targets on the government’s radar:

• No documented policies and procedures for PPP compliance
• Evasiveness or inability to produce documentation when requested
• Payroll records that don’t match loan amounts
• Business formation dates close to application dates
• Applications through multiple lenders
• Use of funds inconsistent with stated payroll purposes

As one federal investigator noted: “Two or more red flags? Assume your file is being queued for SBA audit.”

Which Federal Agencies Are Investigating You?

PPP fraud investigations involve multiple federal agencies working together, often sharing information and coordinating their efforts. Understanding who’s involved helps you understand the scope of what you’re facing.

SBA Office of Inspector General (OIG)

The SBA OIG is typically where investigations begin. They conduct initial audits, review loan applications, and make referrals to criminal investigators. The SBA OIG has the authority to subpoena documents, interview witnesses, and build cases that get handed off to the FBI and DOJ.

FBI

The FBI handles criminal investigations of PPP fraud. Their agents are the ones knocking on doors, interviewing witnesses, and executing search warrants. FBI involvement means the government is treating your case as a serious criminal matter, not just an administrative issue.

IRS Criminal Investigation (IRS-CI)

If theres a tax angle to your PPP fraud—and there often is, since PPP applications required representations about payroll that should match tax filings—IRS-CI gets involved. They specialize in following the money and can bring additional charges for tax fraud or tax evasion.

COVID-19 Fraud Enforcement Task Force

Created specifically to coordinate pandemic relief fraud prosecutions, this task force brings together the FBI, IRS-CI, SBA OIG, and other agencies. They share information, coordinate investigations, and prioritize cases for prosecution.

DOJ Criminal Division Fraud Section

The Department of Justice’s Criminal Division has dedicated strike forces focused on PPP fraud. They’ve already prosecuted over 150 defendants in more than 95 criminal cases and seized over $75 million in fraudulently obtained PPP funds.

In the Middle District of Florida alone, the COVID-19 Fraud Task Force has charged 109 defendants for fraud schemes including PPP fraud. Of those 109 defendants, 74 have already been found guilty.

What the Government Already Knows Before Contacting You

This is the part that shocks most people. By the time you receive any indication you’re under investigation—a target letter, an agent’s business card, a call from a panicked witness—the government has already built a substantial portion of their case. They’re not contacting you to gather information. They’ve already gathered it.

Heres what they typically have before you ever know your being investigated:

Your Complete Bank Records

Every deposit, every withdrawal, every transfer. Federal agents have subpoenaed your bank directly—not you, the bank—and obtained years of transaction history. They know exactly where every dollar of PPP funds went. If you transferred money to personal accounts, bought a car, paid for a vacation, made any payment that wasn’t legitimate payroll—they have the records.

Your Tax Returns

IRS-CI has pulled your tax returns for the relevant years. They’re comparing what you told the SBA on your PPP application—about number of employees, about average monthly payroll—to what you reported to the IRS. Any discrepancy is potential evidence of fraud.

The Original PPP Application

They have the application you submitted. Every representation you made. Every certification you signed. If you claimed ten employees when you had three, if you inflated your payroll numbers, if you checked boxes that weren’t true—its all documented.

Witness Statements

Your former employees have been interviewed. Your bookkeeper has been interviewed. Your accountant has been interviewed. These witnesses—who are terrified of being charged themselves—have told the FBI everything they know about your business operations, your payroll practices, and your PPP loan use.

By the time agents knock on your door or call your lawyer, they aren’t fishing for information. They’ve already caught the fish. They’re just ready to close the net.

What Criminal Charges You Might Face

PPP fraud isn’t a single crime—its typically charged under multiple federal statutes, each carrying severe penalties. Understanding the charges helps you understand the stakes.

Wire Fraud (18 USC § 1343)

The most common PPP fraud charge. Because PPP loan applications were submitted electronically and funds were transferred by wire, almost every PPP fraud case includes wire fraud charges. Maximum penalty: 20 years in prison (or 30 years if the fraud affected a financial institution). Fine up to $1,000,000.

Bank Fraud (18 USC § 1344)

Because PPP loans went through banks and lending institutions, bank fraud charges often apply. Maximum penalty: 30 years in prison. Fine up to $1,000,000.

False Statements (18 USC § 1001)

Making false statements to federal agencies—including on SBA loan applications—is a separate federal crime. Maximum penalty: 30 years in prison when connected to a financial institution. This charge also applies if you lie to federal agents during the investigation—even if you’re innocent of the underlying fraud.

Money Laundering (18 USC § 1956/1957)

If you used PPP funds to purchase real estate, vehicles, or other assets, or if you moved funds through multiple accounts to conceal their source, money laundering charges may apply. Maximum penalty: 20 years in prison.

Aggravated Identity Theft (18 USC § 1028A)

If you used fake employees, stolen identities, or fabricated Social Security numbers on your PPP application, identity theft charges apply. This carries a mandatory 2-year consecutive sentence—meaning it’s added on top of whatever sentence you receive for other charges. The judge has no discretion to reduce it or make it run concurrent.

Sentencing Realities in 2024-2025

Forget the maximum penalties for a moment. What sentences are federal judges actually imposing in PPP fraud cases right now? The answer is sobering—and it’s gotten worse.

Defendants sentenced in 2024-2025 are receiving prison terms 40% longer on average than defendants sentenced in 2021-2022 for identical conduct. Federal judges are including prison time in nearly every PPP fraud sentencing—regardless of the amount involved. The era of probation for PPP fraud is essentially over.

Recent Case Sentences (2024-2025):

• Georgetown, Texas couple (October 2024): Combined 32 years in federal prison for receiving approximately $3 million
• Bank branch manager (October 2024): 65 months in prison for 38 fraudulent PPP loans totaling $5 million
• Nevada man (August 2025): Over 15 years in prison for obtaining $11 million in PPP loans
• Cincinnati defendant (March 2025): 18 months in prison for a $21,000 PPP loan fraud

Even the “small” case—$21,000—resulted in federal prison time.

How Sentencing Guidelines Work

The Federal Sentencing Guidelines calculate your sentence based primarily on the “loss amount”—how much money was involved. For a defendant with no criminal history:

• Offense Level 12: 10-16 months
• Offense Level 18: 27-33 months
• Offense Level 24: 51-63 months
• Offense Level 30: 97-121 months (8-10 years)

Aggravated identity theft is particularly brutal—the mandatory 2-year consecutive sentence applies even if the judge wants to give probation on the fraud charges.

Critical Mistakes to Avoid Right Now

If you’ve just learned you might be under investigation—or if federal agents have contacted you—what you do in the next 24-48 hours could determine whether you spend years in federal prison.

Mistake #1: Talking to Federal Agents Without a Lawyer

This is the single biggest mistake defendants make. Federal agents are trained interrogators. They’ll tell you “We just want to understand what happened.” What they really mean is: “We’re building a case, and your statement will be Exhibit A at trial.”

Even if your completely innocent, talking to agents without a lawyer is dangerous. Many, many people have been charged with making false statements to federal agents (18 USC § 1001) even when they were never charged with the underlying fraud.

Invoke your right to remain silent. Invoke your right to counsel. Then stop talking.

Mistake #2: Destroying Evidence

The moment you learn you’re under investigation is not the time to delete emails, shred documents, or clean out your files. Obstruction of justice is a serious federal crime. And the government already has copies of everything important—they subpoenaed your bank, your accountant, and your business records months ago.

Mistake #3: Assuming Innocence Will Protect You

You may have made honest mistakes. The PPP program was rolled out in chaos with unclear guidance. But the government doesn’t care about your good intentions—they care about whether your representations on the loan application were accurate.

Defense Strategies and Your Options

The situation isn’t hopeless—but your options depend heavily on how early you engage a defense lawyer and what stage of the investigation you’re in.

Early Intervention (Before Indictment)

The best outcomes come from engaging a defense attorney before indictment. At this stage, your lawyer can contact the prosecutor to explore cooperation opportunities, negotiate a potential civil resolution instead of criminal charges, and ensure you don’t make the mistakes described above.

The cooperation window closes quickly. First defendants to cooperate get the best deals—once multiple co-defendants are providing information, your cooperation is worth less.

Cooperation (5K1.1 Motion)

If you provide “substantial assistance” to the government, prosecutors can file a motion allowing the judge to sentence you below the otherwise-mandatory guidelines. But cooperation must be done early to have maximum value.

The Statute of Limitations: Why This Is Happening Now

You might wonder: it’s 2025, and my PPP loan was in 2020. Isn’t it too late?

No. Congress extended the statute of limitations for PPP fraud from 5 years to 10 years in 2022. This means the government has until 2030-2032 to bring charges. They have plenty of time—and they’re using it.

What You Must Do Right Now

If you’ve just learned you may be under investigation for PPP fraud:

Do NOT speak to federal agents without a lawyer present.

Do NOT destroy any documents.

Do NOT discuss the investigation with anyone except your attorney.

Do contact a federal defense attorney immediately. Time is critical. Every day that passes without legal representation is a day the investigation advances without anyone protecting your interests.

The government has been building their case for months while you went about your life. They have resources, dedicated investigators, and a head start. You need someone fighting just as hard on your side—and you need them now, not after the indictment drops. The stakes are federal prison, measured in years or decades. The time to act is—