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Protect Your Business: What to Do In Case of a DOJ Investigation for PPP Loan Fraud
The COVID-19 pandemic has not only resulted in a health crisis but also an economic one, leaving businesses struggling to survive. To aid these companies, the Paycheck Protection Program (PPP) was launched by the government, offering financial assistance through loans to help cover salaries and other expenses. Unfortunately, this program has also given rise to fraudulent activities that prompted the US Department of Justice (DOJ) to investigate PPP loan fraud, with accusations of a wide range of criminal offenses. If you are under investigation for PPP loan fraud, knowledge of your rights, the potential consequences of a conviction, and possible legal defenses is crucial.
The Office of Inspector General from the Small Business Administration (SBA) gives a list with possible indicators of fraud related to the PPP program. This includes funding applications significantly exceeding the usual loan amounts, weak financial standing even before the pandemic, nonexistent or exaggerated employee count, submission of falsified salary and grant information, activity and expenditure patterns that do not match business operations, previous involvement in fraud, and lack of transparency regarding financial records.
Take note of these important tips on what you should know to safeguard yourself and your business against a PPP loan fraud charge:
The DOJ Takes PPP Loan Fraud Charges Seriously
As the cost of PPP loan fraud continues to rise, with numerous reports of fraudulent activity, the DOJ is serious about investigating and prosecuting those suspected of violating federal laws. The DOJ has stated its commitment to charge individuals and companies that engage in fraudulent activities related to the PPP program. The agency promised to target and prosecute anyone who defrauds the program, attempting to protect against fraudsters taking advantage of the assistance that should go to legitimate business owners.
PPP Loan Fraud Cases Are Currently Under Investigation
Many PPP loan fraud cases are already underway, with the DOJ filing charges, accusations, and indictments against individuals or institutions that tried to defraud, falsify payroll records, or embezzle. A wide range of fraudulent activities in connection with PPP loans is being pursued by federal law enforcement agencies, and this could result in serious criminal charges.
DOJ Collaborates with Federal Agencies for PPP Loan Fraud Cases
The DOJ collaborates with other federal agencies, including IRS Criminal Investigation, FDIC Office of Inspector General, SBA Office of Inspector General, and the FBI, to identify and prosecute individuals or companies that violate the law and try to take advantage of PPP loan assistance.
Legal Defenses Against PPP Loan Fraud
Facing the prospect of PPP loan fraud charges is a serious matter, as the potential consequences are significant. However, you can seek help from expert lawyers who can use some of these defense strategies:
Demonstrate PPP Loan Compliance
Compliance with PPP loan terms is vital in defending oneself against fraud allegations. Borrowers who can demonstrate that they legally received PPP loans and properly documented the use of the funds in a separate PPP loan account can possibly resolve the matter efficiently. However, avoid volunteering self-incriminating information while providing information to the DOJ.
Lack of Intent to Defraud
Proving lack of intent is a potent defense in many federal criminal cases. Individuals or companies who prove they unintentionally and inadvertently obtained a PPP loan, unknowingly misused the loan funds, or accidentally made a false loan certification could potentially raise a defense. Despite a lack of intent, unintentional fraud remains subject to civil liabilities and civil violations of statutes such as the False Claims Act can lead to severe consequences.
Potential Charges for Federal PPP Loan Fraud Investigations
PPP loan fraud is not only against the PPP loan program statute but also may trigger other federal statutes, such as theft, tax evasion, fraud, or false claim violations, to name a few. Below are possible federal charges that prosecutors may use in pursuing PPP loan investigations:
| Offense | Statute |
|---|---|
| False Statements to SBA | 18 U.S.C. § 1014 |
| False Statements to 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. § 371/18 U.S.C. § 1349 |
| Attempt | 18 U.S.C. § 1349 |
| False Claims Act | 31 U.S.C. §§ 3729-3733 |
Contact Todd Spodek Law Group When Facing a DOJ Investigation for PPP Loan Fraud
If you or your business is under DOJ investigation for PPP loan fraud, the thing to do is to seek help from a highly experienced attorney. The Todd Spodek Law Group has an excellent team of lawyers that can provide you with legal advice, representation, and strategies to help protect you from the harsh consequences of PPP loan fraud charges. So don’t hesitate to reach out to their team for legal assistance.
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