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DOJ Investigations: Holding Fraudulent PPP Loan Recipients Accountable

Lockdowns and social distancing restrictions in response to the COVID-19 pandemic have had a devastating impact on small businesses across America. To help mitigate the economic fallout, the Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, creating the Paycheck Protection Program (PPP) to provide forgivable loans to small businesses and organizations to cover employee wages and other expenses. Unfortunately, the PPP was exposed to fraudulent activity, leading to further economic harm. As a result, the U.S. Department of Justice (DOJ) has intensified its investigations into cases involving potentially fraudulent use of PPP loan proceeds by businesses nationwide.

PPP loan fraud is a serious offense that the DOJ is aggressively targeting. Individuals and companies suspected of submitting fraudulent PPP loan applications or misusing the funds for improper purposes may face severe consequences upon conviction. Facing a DOJ investigation for PPP loan fraud requires experienced legal counsel to help navigate potential defenses.

The DOJ is collaborating with other federal law enforcement agencies, such as the U.S. Small Business Administration Office of Inspector General (SBA-OIG), the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), the Federal Bureau of Investigation (FBI), and the Internal Revenue Service Criminal Investigations (IRS-CI), to bring fraudsters engaged in PPP loan fraud to justice.

The consequences of a PPP loan fraud conviction include potential criminal charges such as making false statements to the SBA, making false statements to an FDIC-insured bank, bank fraud, wire fraud, aggravated identity theft, tax evasion, making false statements to federal agents, and conspiracy charges, all of which the DOJ is actively pursuing.

If your business is facing inquiries from the DOJ regarding alleged PPP loan fraud, the following sections describe what you need to know.

DOJ Investigations are a Clear Sign of the Seriousness of PPP Loan Fraud

Businesses facing DOJ investigations into PPP loan fraud must understand the severity of the potential legal consequences. The DOJ is taking fraudulent activity linked to PPP loans very seriously, and its investigatory arm is leaving no stone unturned. The failure to secure legal representation and take DOJ inquiries seriously could lead to further harm to your business and damage to your reputation.

The DOJ is Taking Aggressive Action against PPP Loan Fraud

The DOJ’s commitment to curbing PPP loan fraud is evident from the wide range of criminal complaints filed and the aggressive actions taken against companies and individuals. The DOJ is committed to investigating all forms of fraud linked to the program, and individuals and companies suspected of fraudulent PPP loan applications or misuse of funds will be held accountable.

The DOJ is Actively Pursuing PPP Loan Fraud Cases

Businesses under DOJ investigations for PPP loan fraud must understand that the risks are not theoretical but real. The DOJ has already filed charges in several cases involving PPP loan fraud, including allegations of using PPP funds to cover personal expenses, falsifying payroll information and shell company creation, and trying to obtain multiple PPP loans.

Federal Law Enforcement Agencies are Collaborating with the DOJ to Investigate PPP Loan Fraud

The DOJ is not working in isolation in its endeavors to detect and punish PPP loan fraud cases. The agency is working hand in hand with the U.S. Small Business Administration Office of Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, Federal Bureau of Investigation, and Internal Revenue Service Criminal Investigations. These agencies provide a powerful investigative force that the DOJ uses to bring forth conclusive evidence of fraudulent PPP loan applications and usages.

Potential PPP Loan Fraud Defenses

Businesses and individuals facing DOJ investigations regarding alleged PPP loan fraud may have a few potential defenses, including demonstrating PPP compliance, lack of intent to defraud, or other viable defenses. Experienced legal representation can identify potential defenses and develop an effective case strategy.

Potential Charges Linked to PPP Loan Fraud

PPP loan fraud cases and convictions carry potentially severe charges, including but not limited to, making false statements to the Small Business Administration (SBA), making false statements to an FDIC-insured bank, wire fraud, bank fraud, aggravated identity theft, tax evasion, making false statements to federal agents, and conspiracy. Any person, company, or entity subjected to DOJ scrutiny linked to PPP loans to investigate possible fraud should take this fact very seriously.

Conclusion

PPP loan fraud is a serious matter that the DOJ is aggressively pursuing. Businesses and individuals facing inquiries related to alleged fraudulent PPP loan applications must secure experienced legal representation to help navigate viable defenses and the potential consequences of a conviction. If you or your business is facing DOJ investigations related to PPP loan fraud, schedule a consultation with Spodek Law Group today, where we can put our successful record of defending clients facing federal charges to work for you.