CALIFORNIA CRIMINAL LAWYERS

Omaha PPP and EIDL Loan Fraud Lawyers

The Department of Justice (DOJ) is taking Paycheck Protection Program (PPP) loan fraud seriously and is seeking to prosecute companies and individuals suspected of defrauding this critical program. The PPP loan fraud was designed to aid struggling businesses that were unable to pay their workers due to the COVID-19 pandemic’s economic aftermath. However, it became a breeding ground for fraud, with numerous ineligible companies and people obtaining a considerable portion of the forgivable, federally-backed loans issued under the scheme, including those for ineligible business and personal expenses.

The DOJ has already filed charges in several PPP loan fraud cases. Specifically, it has issued criminal complaints and pursued charges for a wide range of federal crimes against individuals and companies that are allegedly submitting fake loan applications and misusing PPP loan funds, including making fraudulent certifications for PPP loan forgiveness. A DOJ press release on the PPP program reads: “Our office will be aggressive in targeting anyone who defrauds this critical program.”

The DOJ is not working alone in combating PPP loan fraud. It is partnering with multiple other federal agencies committed to identifying and successfully prosecuting individuals and companies that have unlawfully taken advantage of the federally-backed, forgivable 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).

A DOJ PPP loan fraud investigation can result in significant risks for individuals and companies under scrutiny. The law office of Todd Spodek relies on multiple defenses specific to the Paycheck Protection Program and based on the particular charges put forward under the relevant statutes. In this regard, several potential defenses can be argued against allegations of PPP loan fraud.

One defense against PPP loan fraud allegations is Paycheck Protection Program Compliance. In this instance, demonstrating compliance with the PPP’s terms can serve as the first line of defense. If your company lawfully obtained a PPP loan, established a segregated PPP loan account, and carefully documented the appropriate use of its PPP funds, providing proof of compliance could lead to a comparatively swift resolution. It is important to note that companies must be cautious when affirmatively providing information to the DOJ, as inadvertently disclosing incriminating information could enhance the risk of prosecution for PPP loan fraud.

Another layer of defense is Lack of Intent to Defraud. Typically, federal criminal culpability requires an intent to defraud. If you inadvertently obtained a PPP loan despite being ineligible to do so or submitted a fraudulent forgiveness certification under the CARES Act, your lack of intent to defraud could serve as a defense to the charges listed above. However, unintentional fraud can still be prosecuted as a civil offense, and civil violations of the False Claims Act and other statutes can carry significant penalties.

PPP loan fraud does not contain penal provisions under the CARES Act, which created the program. Nonetheless, it can trigger civil and criminal charges under several pre-existing federal statutes, including:

Making False Statements to the Small Business Administration (SBA) (18 U.S.C. § 1014);
Making False Statements to an FDIC-Insured Bank (18 U.S.C. § 1014);
Bank Fraud (18 U.S.C. § 1344);
Wire Fraud (18 U.S.C. § 1343);
Aggravated Identity Theft (18 U.S.C. § 1028A);
Tax Evasion (26 U.S.C. § 7201);
Making False Statements to Federal Agents (18 U.S.C. § 1001);
Conspiracy (18 U.S.C. § 371 and 18 U.S.C. § 1349);
Attempt (18 U.S.C. § 1349);
False Claims Act Violations (31 U.S.C. §§ 3729 – 3733).

Many individuals and companies accused of PPP loan fraud may face allegations of tax evasion as well under 26 U.S.C. § 7201.

To wrap it up, a DOJ investigation for PPP loan fraud can have dire consequences for individuals and companies under scrutiny. It is crucial to work with experienced legal counsel who can provide guidance and defense throughout the process since defenses are available. Any communication with the DOJ must be taken very seriously, and individuals must work with attorneys who have experience in this type of investigation to ensure that their responses are appropriate and that their risk of self-incrimination is minimized. Partnering with experienced legal counsel to explore potential defenses and obtain the possible outcome is essential, as the DOJ aims to prosecute individuals and companies suspected of PPP loan fraud, and the consequences can be significant.