SBA OIG Investigation Letter: Should I Respond Without a Lawyer?
Letter from SBA Office of Inspector General. “Discrepancies in your loan application require your response within 30 days.” Attached document request: bank statements, tax returns, payroll records. You think: cooperate, clear this up.
Stop. Criminal investigation. The SBA Office of Inspector General doesn’t send letters for administrative review. Todd Spodek and our team have defended federal fraud cases for many, many, years – from high-profile prosecutions like Anna Delvey to business owners facing SBA OIG investigations. We’re a second generation law firm with over 50 years combined experience. Many of us used to be prosecutors. Call 212-300-5196 before responding.
What an SBA OIG Investigation Letter Means
The SBA Office of Inspector General is law enforcement – special agents with federal arrest authority who investigate federal crimes. They work with FBI, Department of Justice, IRS Criminal Investigation, and U.S. Attorneys’ Offices. Is an OIG investigation serious? Yes. OIG doesn’t contact borrowers for routine matters.
Your loan was flagged through SBA’s four-step process. First, AI algorithms scanned your application for anomalies – mismatches between your application and IRS records, discrepancies between certified payroll and actual 941 filings. Second, human analysts marked it “likely fraudulent.” Third, SBA referred your file to OIG. Fourth, OIG special agent opened criminal investigation.
By the time you receive an OIG letter, they already have everything. Your PPP or EIDL application. Bank records showing every transaction. Tax returns 2018-2021. Quarterly 941 filings. Forgiveness application. SBA’s analytics report showing exact discrepancies.
Examples: Certified $400K quarterly payroll, 941s show $40K. Claimed 40 employees, IRS shows 4. Applied for business that ceased 2019. Certified payroll use, bank traced funds to crypto, luxury cars.
In Central District of California, cases prosecuted by U.S. Attorney’s Office Major Frauds Section, where OIG coordinates with FBI Los Angeles Field Office (11000 Wilshire Boulevard, Suite 1700, LA 90024) and IRS Criminal Investigation (300 North Los Angeles Street, LA Federal Building).
Your Fifth Amendment Rights
The Fifth Amendment states: “No person…shall be compelled in any criminal case to be a witness against himself.”
Absolute right to refuse OIG interview. Absolute right to refuse to answer questions. Absolute right to refuse to produce documents. Your invocation of Fifth Amendment rights cannot be used as evidence at trial.
Can you choose not to talk to an OIG investigator? Yes. Do I have to answer to an OIG? No. Zero legal obligation to respond to OIG letter. Zero obligation to produce documents without subpoena.
In federal employment context, OIG provides Garrity or Kalkines warnings. Garrity warning: employee can refuse without discipline due to Fifth Amendment, but if voluntarily participate, statements can be used criminally. For PPP/EIDL borrowers, you have Garrity-style rights – can refuse without penalty, but if you talk, everything used against you.
If OIG contacts you: “I am exercising my Fifth Amendment right to remain silent. I will not answer questions or produce documents without my attorney. Direct all communication to my lawyer.” Stop talking.
Many fear refusing makes them “look guilty.” Wrong. Your refusal cannot be mentioned at trial. But your statements to OIG will be used to destroy you. Everything.
Why Responding Without a Lawyer Destroys Your Case
Every statement to OIG agents becomes prosecution evidence. OIG agents document everything – contemporaneous notes become trial evidence. Any inconsistency becomes additional charge.
False statements to federal agents under 18 USC 1001 carries five years prison – separate from underlying fraud. 2025 data: prosecutors add false statements charges in 73% of PPP cases where defendant spoke without counsel. You say 25 employees, IRS shows 15 – false statement. Funds went to payroll, bank shows personal wire – false statement.
OIG letter requests documents. Every document you voluntarily produce becomes admissible evidence. You hand prosecution the evidence to convict you.
Talking to OIG destroys defenses your attorney could present. Good faith defense – you relied on confusing SBA guidance. But you told OIG “I knew payroll was overstated.” Defense gone. Honest mistake – calculation errors without fraud intent. But you produced documents to OIG showing you knew. Defense obliterated.
92% of defendants who talked to OIG without lawyer were indicted in 2023-2025 PPP cases, Central District of California. Cooperation without counsel doesn’t help, it ruins your defense, obliterates every argument we could make for you.
Underlying charges severe. 18 USC 1344 bank fraud: 30 years. 18 USC 1343 wire fraud: 20-30 years.
What Happens During an OIG Investigation
What happens after an OIG investigation? Investigation continues 60-180 days. OIG special agents interview employees, vendors, customers, accountant. They subpoena additional bank records you never see. They coordinate with IRS-CI for forensic financial analysis, tracing how you spent PPP/EIDL funds. They calculate alleged loss amount – drives sentencing under federal guidelines if convicted.
OIG refers case to Department of Justice. In Los Angeles, cases go to U.S. Attorney’s Office Central District of California, Major Frauds Section. AUSA evaluates evidence and decides whether to prosecute. Cases proceed in Edward R. Roybal Federal Building (255 East Temple Street, Los Angeles).
Before grand jury indicts you, DOJ may send target letter – formal notice you’re investigation target, government intends to seek indictment. Target letters typically give 14-30 days to respond before grand jury. This is critical window. Only opportunity to present evidence to prosecutor BEFORE indictment, while you have leverage. Once indicted, prosecutor publicly committed, leverage gone.
Your attorney can submit white paper to AUSA presenting: relied on confusing SBA guidance that changed weekly 2020-2021, relied on accountant/attorney advice, good faith belief business would continue despite lockdowns, contemporaneous documentation. Constitutional defense: GAO audit March 2025 found SBA submitted 3 million COVID-EIDL referrals to OIG, but 2 million were not actionable due to poor data quality – duplicates, errors, insufficient information. Prosecuting borrowers based on flawed AI algorithms and broken databases violates due process. Government’s own watchdog confirmed investigation process is defective.
If indicted, you appear for arraignment at Edward R. Roybal Federal Building. Magistrate reads charges, you enter not guilty plea, judge sets bail (surrender passport, financial monitoring). Case moves through discovery. Plea negotiations occur in 94% of federal cases. If convicted, you’re sentenced under U.S. Sentencing Guidelines § 2B1.1 based on loss amount.
Statute of limitations: 10 years under PPP and Bank Fraud Enforcement Harmonization Act of 2022. PPP/EIDL loans from 2020 prosecuted through 2030. OIG investigations continuing through 2025 and beyond. More information at U.S. Attorney’s Office Central District of California.
Why You Need Lawyer NOW
Waiting destroys options. OIG letter may give 30-day deadline. Target letter gives 14-30 days before grand jury. Once indicted, prosecutor committed, leverage gone.
Generic lawyers don’t understand SBA OIG investigations. Don’t understand SBA regulations and CARES Act guidance. Don’t know how OIG builds criminal referrals. Don’t have relationships with AUSAs in Major Frauds Section. Don’t appear regularly in Edward R. Roybal Federal Building.
Todd Spodek and our team have defended federal fraud cases for many, many, years. High-profile cases like Anna Delvey. Business owners facing investigations. Second generation law firm, 50+ years combined experience. Many of us used to be prosecutors – know how DOJ builds SBA OIG cases, what evidence they value, what defenses work. We work with SBA OIG and AUSA in Central District of California. Appear in federal court weekly. Work with forensic accountants to document good faith reliance on confusing SBA guidance.
Don’t respond to OIG. Call 212-300-5196.