CALIFORNIA CRIMINAL LAWYERS

Iowa PPP and EIDL Loan Fraud Lawyers

DOJ Investigation for PPP Loan Fraud: What Business Owners Need to Know

When businesses apply for a Paycheck Protection Program (PPP) loan to survive the impact of the COVID-19 pandemic, they are seeking a lifeline to stay afloat. Unfortunately, some businesses have chosen to cheat the system by utilizing PPP funds for unauthorized purposes. Those accused of such fraudulent activities may find themselves being investigated by the U.S. Department of Justice (DOJ). The DOJ aims to prosecute those responsible for PPP loan fraud by pursuing charges and issuing criminal complaints for multiple federal offenses.

In this article, we will discuss what business owners need to know if they are facing a DOJ investigation for PPP loan fraud, including the DOJ’s intention and commitment to prosecuting individuals and companies for PPP loan fraud, the potential charges in federal PPP loan fraud cases, and the strategies our attorneys employ when representing clients accused of PPP loan fraud by the DOJ.

The DOJ’s Commitment and Intention to Prosecute Those Responsible for PPP Loan Fraud
The DOJ is taking PPP loan fraud very seriously and is actively pursuing charges against individuals and companies who have submitted fraudulent loan applications and utilized PPP loan funds for unauthorized or personal expenses. The DOJ‚Äôs focus also includes targeting individuals and companies who submitted false certifications for PPP loan forgiveness. In a recent press release, DOJ emphasized the importance of PPP, stating, “The Paycheck Protection Program was designed to help Americans struggling with financial hardship during the pandemic. Our office will be aggressive in targeting anyone who defrauds this critical program.”

The DOJ is Actively Pursuing Charges in Numerous PPP Loan Fraud Cases
The DOJ has already filed charges in several cases of PPP loan fraud, including those who created shell companies and falsified payroll information, used PPP loan funds for personal expenses, attempted to obtain multiple PPP loans, and others.

The DOJ is Collaborating with Other Federal Agencies to Target All Forms of PPP Loan Fraud
The DOJ is working in collaboration with other federal agencies that equally share its commitment to identifying and prosecuting those who have taken advantage of the federally-backed loans offered under the PPP. These agencies include the U.S. Small Business Administration Office of Inspector General (SBA-OIG), Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), Federal Bureau of Investigation (FBI), and Internal Revenue Service Criminal Investigations (IRS-CI).

Potential Charges in Federal PPP Loan Fraud Investigations
Although the CARES Act does not contain penal provisions for PPP loan fraud, it does not mean that businesses can engage in fraudulent activities and avoid possible legal consequences. Below are the potential charges that a business may face if found guilty of PPP loan fraud.

| Statute | Description of Offense |
| — | — |
| 18 U.S.C. § 1014 | Making False Statements to SBA |
| 18 U.S.C. § 1014 | Making False Statements to FDIC-Insured Bank |
| 18 U.S.C. § 1344 | Bank Fraud |
| 18 U.S.C. § 1343 | Wire Fraud |
| 18 U.S.C. § 1028A | Aggravated Identity Theft |
| 26 U.S.C. § 7201 | Tax Evasion |
| 18 U.S.C. § 1001 | Making False Statements to Federal Agents |
| 18 U.S.C. § 371 and 18 U.S.C. § 1349 | Conspiracy |
| 18 U.S.C. § 1349 | Attempt |
| 31 U.S.C. §§ 3729 Р3733 | False Claims Act Violations |

Defenses to Be Considered During DOJ PPP Loan Fraud Investigations
If you are being investigated by the DOJ for PPP loan fraud, do not lose hope. Several defenses can be considered during the investigation. Below are some of the defenses that our attorneys rely on when defending clients accused of PPP loan fraud:

Paycheck Protection Program Compliance
If your company lawfully obtained a PPP loan, established and maintained a separate PPP loan account, and documented the use of PPP funds for eligible expenses, demonstrating compliance with PPP terms could lead to a swift resolution of the case. However, voluntary disclosure of incriminating information while affirmatively providing data to the DOJ could increase the risk of prosecution for PPP loan fraud.

Lack of Intent to Defraud
Criminal culpability typically requires the intent to defraud under federal law. If you are charged with PPP loan fraud due to unintentional means (such as inadvertently obtaining a PPP loan despite being ineligible or using PPP funds improperly), you may rely on your lack of intent to provide a defense against the charges. Please note that unintentional PPP loan fraud is still punishable as a civil offense and subjects you to substantial statutory fines, treble damages, program disqualification, and other penalties.

Hire a Skilled Attorney to Represent You in DOJ PPP Loan Fraud Investigations
Being investigated by the DOJ for PPP loan fraud can be detrimental to your business, reputation, and freedom. Hence, it is crucial to seek legal representation immediately. Our experienced criminal defense attorneys specialize in helping individuals and businesses navigate PPP loan fraud investigations. We can handle the case and devise a defense strategy that can help reduce or eliminate criminal sanctions, civil penalties, and other adverse outcomes. In addition to scrutinizing the evidence to find exculpatory evidence or defense arguments, we can negotiate plea deals and advocate on your behalf. Please contact us today to schedule a free consultation if you are facing DOJ PPP loan fraud charges.