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Defending Your Business Against DOJ Investigations for PPP Loan Fraud
In response to the Covid-19 pandemic, the Paycheck Protection Program (PPP) was introduced to help struggling businesses pay their employees and remain operational. However, PPP soon became a target for fraud. Federal agents are now vigorously investigating and issuing criminal complaints and pressing charges against individuals and companies accused of PPP loan fraud.
If you or your business is under investigation by the U.S. Department of Justice (DOJ) for PPP loan fraud, it is vital to safeguard your interests. This article will equip you with information on what you can do to protect yourself and your business.
The DOJ is Serious about PPP Loan Fraud
The DOJ takes PPP loan fraud seriously due to its cost and the widespread publicity it has generated. The department is pursuing fraud cases aggressively and investigating them thoroughly. A recent press release from the DOJ indicates its stance on PPP loan fraud: “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.”
Various Defenses Against PPP Loan Fraud Charges
Individuals and businesses that are accused of PPP loan fraud have several potential defenses they can use in their favor during an investigation. The most reliable defense strategies include demonstrating compliance with PPP program regulations, revealing relevant facts that disprove intent to defraud, and having an in-depth understanding of defense strategies and federal statutes.
PPP Loan Fraud: Potential Charges
If found guilty of achieving PPP loans fraudulently, individuals and businesses may face a range of charges under pre-existing federal statutes. These charges carry significant penalties, including enormouse fines, treble damages, loss of eligibility for federal programs, and other strict consequences. Some potential charges that individuals and businesses may face include:
Making False Statements to the Small Business Administration (SBA) (18 U.S.C. § 1014)
Individuals and companies accused of PPP loan fraud can face criminal charges under 18 U.S.C. ¬ß 1014 if they are found to have made false statements or reports to influence the SBA’s action. This is applicable to statements made on borrower application forms and certifications for loan forgiveness.
Making False Statements to an FDIC-Insured Bank (18 U.S.C. § 1014)
Individuals and companies that submit false information to financial institutions can be prosecuted under 18 U.S.C. § 1014, which is often used together with false statements to the SBA.
Bank Fraud (18 U.S.C. § 1344)
Individuals and companies can be prosecuted under 18 U.S.C. § 1344 if they execute or attempt to execute a scheme or artifice to defraud a financial institution. This can include obtaining funds by false or fraudulent pretenses, representations, or promises.
Wire Fraud (18 U.S.C. § 1343)
Individuals and companies can be prosecuted under 18 U.S.C. § 1343 if they use the internet to commit any scheme or artifice to defraud or to obtain money or property under false pretenses.
Aggravated Identity Theft (18 U.S.C. § 1028A)
Under 18 U.S.C. § 1028A, individuals can face charges for using a means of identification belonging to another person to commit certain felony offenses, including bank and wire fraud.
Tax Evasion (26 U.S.C. § 7201)
Individuals and companies that attempt to evade or defeat tax can face charges under 26 U.S.C. § 7201. This includes payroll tax evasion, such as unlawfully claiming deductions for payroll expenses covered by PPP loans, and income tax evasion, such as failing to report income derived from business activities funded by PPP loans.
Making False Statements to Federal Agents (18 U.S.C. § 1001)
Individuals and companies can be charged under 18 U.S.C. § 1001 for falsifying, concealing, or covering up a material fact, and making a materially false, fictitious, or fraudulent statement or representation or document.
Conspiracy (18 U.S.C. § 371 and 18 U.S.C. § 1349)
Multiple individuals and companies involved in fraudulently obtaining federal funds through PPP can be prosecuted under 18 U.S.C. § 371 and 18 U.S.C. § 1349.
Attempt (18 U.S.C. § 1349)
Individuals can face charges under 18 U.S.C. § 1349 for attempting to commit PPP loan fraud.
False Claims Act Violations (31 U.S.C. §§ 3729 – 3733)
Fraud targeting a federal government program such as the PPP can lead to civil or criminal charges under the False Claims Act.
Why Choose Todd Spodek as Your Defense Attorney?
Todd Spodek Law Group has experience defending individuals and companies accused of PPP loan fraud. Our attorneys are committed to defending your rights, interests, and freedom. Our team’s deep understanding of the PPP program, defense strategies, and federal statutes makes us the most competent choice for your case. Contact us today for a confidential, no-obligation consultation.
| Potential Defenses | How They Work |
|---|---|
| Demonstrating compliance with the terms of the PPP program | Showcasing that you followed all PPP regulations to receive the loan. |
| Showing lack of intent to defraud | Presenting evidence that demonstrates you did not knowingly commit fraud. |
| Revealing relevant facts | Presenting relevant information (e.g., unintentional errors or misunderstanding of PPP program aspects), that dispel accusations. |
| Deep understanding of PPP program and federal statutes | An experienced legal team with a sophisticated understanding of the PPP program and federal regulations can have a dramatic impact on the outcome of an investigation. |
| Potential Charges | How They Work |
|---|---|
| Making False Statements to the Small Business Administration (SBA) (18 U.S.C. § 1014) | Expect to face criminal charges if found guilty of making false statements or reports that influenced the SBA’s action. |
| Making False Statements to an FDIC-Insured Bank (18 U.S.C. § 1014) | Submitting false PPP loan data to financial institutions can lead to prosecution under 18 U.S.C. § 1014. |
| Bank Fraud (18 U.S.C. § 1344) | Executing a scheme or artifice to defraud a financial institution, including obtaining funds by fraudulent pretenses, can result in prosecution under 18 U.S.C. § 1344. |
| Wire Fraud (18 U.S.C. § 1343) | Individuals and businesses that use the internet to defraud or obtain money or property under false pretenses can face charges under 18 U.S.C. § 1343. |
| Aggravated Identity Theft (18 U.S.C. § 1028A) | Identity theft can attract 18 U.S.C. § 1028A charges if the means of identification belongs to another person used illicitly for bank and wire fraud. |
| Tax Evasion (26 U.S.C. § 7201) | Individuals and organizations that evade or defeat taxes (income, payroll, etc.) may be charged under 26 U.S.C. § 7201. |
| Making False Statements to Federal Agents (18 U.S.C. § 1001) | Individuals and businesses may face charges for falsifying facts or making false statements to federal agents tasked with investigating PPP loan fraud. |
| Conspiracy (18 U.S.C. § 371 and 18 U.S.C. § 1349) | Multiple individuals or companies that collaborated to fraudulently obtain PPP loans may be prosecuted under 18 U.S.C. § 371 and 18 U.S.C. § 1349. |
| Attempt (18 U.S.C. § 1349) | Individuals that attempt to commit PPP loan fraud can be charged under 18 U.S.C. § 1349. |
| False Claims Act Violations (31 U.S.C. §§ 3729 – 3733) | Fraud targeting federal government programs may lead to criminal or civil charges under the False Claims Act. |
In conclusion, safeguarding yourself and your business during a PPP loan fraud investigation by DOJ is vital. The DOJ is pursuing PPP loan fraud cases aggressively, and these charges carry significant penalties.
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