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San Jose PPP and EIDL Loan Fraud Lawyers

DOJ Investigation for PPP Loan Fraud: Expectations and Defenses to Consider

The Paycheck Protection Program (PPP) was a relief measure meant to cushion businesses affected by the COVID-19 pandemic. Unfortunately, this program was not immune to fraudulent activities that could compromise its integrity. Various cases of PPP loan fraud have been registered, and the US Department of Justice (DOJ) has taken an active role in pursuing those involved. PPP loan fraud is a severe offense that attracts criminal charges, penalties, and loss of program eligibility. A DOJ investigation for PPP loan fraud can be a challenging process, and legal representation is critical. This article will detail what to expect during a PPP loan fraud investigation by the DOJ and possible defense strategies to help you navigate the process with ease.

The seriousness of PPP Loan Fraud to the DOJ

The DOJ is committed to pursuing individuals and companies suspected of submitting fraudulent loan applications and certifications, and misusing PPP loan funds. PPP loan fraud is a significant problem that threatens the effectiveness of the Paycheck Protection Program. In case of a PPP loan fraud investigation by the DOJ, it means that there is substantial evidence against you or your business. As a result, adequate preparation for the next steps is essential.

DOJ Actions on PPP Loan Fraud Cases

PPP loan fraud has become a widespread problem, and the authorities have not been lenient in pursuing culprits. Several individuals and companies have been charged with PPP loan fraud, including creating shell companies and falsifying payroll information, diverting PPP loan funds to pay for personal expenses, attempting to acquire multiple PPP loans fraudulently, and other forms of PPP loan fraud. The DOJ’s aggressive strategy also involves working with other federal agencies, such as the SBA, FDIC, FBI, and IRS to identify and prosecute fraudulent activities against the PPP.

Possible Defenses during the DOJ PPP Loan Fraud Investigations

The risks of PPP loan fraud charges are severe and require a reputable defense attorney who has in-depth experience in this area. Alternatively, several defense strategies can apply, depending on the specific allegations against you or your business. Some of these strategies include:

Paycheck Protection Program Compliance Defense

One of the significant lines of defense is demonstrating compliance with PPP terms. If you obtained a PPP loan lawfully, established a secure account, and adequately documented PPP funds’ proper use, presenting evidence of compliance could lead to a quick resolution. However, working with the DOJ requires caution since revealing sensitive information inadvertently could worsen your case.

Lack of Intent to Defraud Defense

Federal criminal offenses such as PPP loan fraud require intent to defraud. Therefore, if you were not eligible for PPP loans and received them inadvertently, misused the funds unintentionally, or filed a fraudulent forgiveness certification without malicious intent, such information could form the basis of a defense against the charges.

Potential Federal PPP Loan Fraud Investigations Charges

PPP loan fraud attracts multiple federal charges that could carry heavy penalties, fines, and even result in jail time. Below are some of these charges.

|Charges|Details|
| —— | —— |
| Making False Statements to the Small Business Administration (SBA) | Submitting false statements is a federal offense under 18 U.S.C. § 1014. Making false statements in loan applications, Borrower Application Forms, and loan forgiveness certifications are among the statements that can attract charges under this provision.|
| Making False Statements to an FDIC-Insured Bank | Both individuals and companies could face charges for submitting fraudulent statements to their PPP lenders.|
|Bank Fraud| Submitting false information to PPP lenders could lead to bank fraud charges under 18 U.S.C. § 1344.|
|Wire Fraud| The federal wire fraud statute, 18 U.S.C. § 1343, criminalizes the use of the internet and other channels to defraud or obtain property and money through misrepresentations.|
|Aggravated Identity Theft| Criminalizes the use of another person’s identity for illegal purposes, aggravating the offense when committed in conjunction with another offense.|
|Tax Evasion| This offense comes into play when an individual fails to file their tax returns or avoids tax obligations, among other violations.|
|Making False Statements to Federal Agents| Making false statements to federal agents during a PPP loan fraud investigation or audit is also a federal offense under 18 U.S.C. § 1001.|
|Conspiracy and Attempt| Conspiracy charges could result from multiple actors’ collective efforts to defraud the PPP program. Additionally, the statute prohibits attempting to engage in fraud even without actual fraud.|
|False Claims Act Violations| PPP loan fraud could also violate the False Claims Act that seeks to deter defrauding federal programs.|

Conclusion

PPP loan fraud is a severe federal offense that could have significant implications for individuals and businesses. Todd Spodek Law Firm can offer credible legal representation and has a team of experienced attorneys who have successfully represented clients in PPP loan fraud investigations. Defending yourself against these allegations requires an attorney with expertise in PPP loan fraud investigations. If you are facing PPP loan fraud investigations or any other legal issues, contact us for a consultation.