CALIFORNIA CRIMINAL LAWYERS

Seattle PPP and EIDL Loan Fraud Lawyers

Defending yourself Against PPP Loan Fraud Allegations: Insights on What to Expect and How to Protect Your Business

The COVID-19 pandemic dealt a significant blow to the economy, forcing businesses to shut down and sending many employees to the unemployment line. The Paycheck Protection Program (PPP) provided a lifeline for many businesses struggling to keep afloat, but it also opened the door to fraudulent activities. The Department of Justice (DOJ) is taking PPP loan fraud seriously and has already charged individuals and companies with various PPP loan fraud cases.

As a business owner, facing a DOJ investigation for PPP loan fraud is nerve-wracking and overwhelming. However, you should stay calm and seek legal representation immediately. This article will provide you with insights into what to expect during a DOJ investigation for PPP loan fraud and the possible defense strategies you can use.

PPP Loan Fraud: A Serious Problem

PPP loan fraud is a federal offense that poses a severe threat to the Paycheck Protection Program’s effectiveness. The DOJ is actively seeking out individuals and companies suspected of PPP loan fraud, including creating shell companies, falsifying payroll information, misusing PPP loan funds, and obtaining PPP loans fraudulently. The DOJ collaborates with other federal agencies such as the SBA, FDIC, FBI, and IRS to identify and prosecute fraudulent activity against the PPP.

DOJ Investigation Stages

Once you become a subject of a DOJ investigation, you can expect to go through the following stages:

1. Investigation Stage:

During this stage, the DOJ investigators will collect information and evidence that will be used to support the allegations. You may receive a subpoena or a civil investigative demand, requiring you to provide documents and information relevant to the case. At this point, you should contact an attorney with expertise in PPP loan fraud investigations to guide you on what documents should be provided.

2. Charges Stage:

If the DOJ investigators find enough evidence to support the allegations, they may file charges against you. The charges may include making false statements to the SBA or banks, bank fraud, wire fraud, tax evasion, and conspiracy charges. You must take the charges seriously as they could lead to severe consequences such as heavy fines, penalties, and even imprisonment.

3. Plea Bargain or Trial Stage:

Depending on the circumstances surrounding your case, your attorney may negotiate with the DOJ prosecutors for a plea bargain. A plea bargain can help to reduce the charges, avoid a trial, and achieve a favorable outcome.

Defense Strategies for PPP Loan Fraud Allegations

If you’re facing a DOJ investigation for PPP loan fraud, you need to work with an experienced defense attorney who can develop a defense strategy tailored to your case. Below are some defenses you can use:

1. PPP Loan Compliance:

One of the critical defenses is demonstrating compliance with PPP terms. If you obtained a PPP loan lawfully, established a secure account, and documented PPP funds’ appropriate use, evidence of compliance can lead to a quick resolution. Your attorney can help you gather the necessary documentation and present it to the DOJ investigators.

2. Lack of Intent to Defraud:

Federal criminal offenses require intent to defraud. Therefore, if you received PPP loans that you were ineligible for or misused the funds unintentionally, that could form the basis of a defense against the charges.

PPP Loan Fraud Federal Charges and Penalties

PPP loan fraud cases attract several federal charges that carry heavy penalties and fines. Below are the charges you may face in a PPP loan fraud investigation:

Federal Charges | Description | Penalties
— | — | —
Making False Statements to the Small Business Administration (SBA) | Submitting false statements in PPP loan applications, Borrower Application Forms, and loan forgiveness certifications | Imprisonment up to 5 years and $250,000 fine or both
Making False Statements to an FDIC-Insured Bank | Submitting false statements to your PPP lenders | Imprisonment up to 5 years and $250,000 fine or both
Bank Fraud | Submitting false information to PPP lenders | Imprisonment up to 30 years and $1,000,000 fine or both
Wire Fraud | Using the internet or other channels to defraud, extract PPP loan funds | Imprisonment up to 20 years and $250,000 fine or both
Aggravated Identity Theft | Using another person’s identity for illegal purposes | Mandatory imprisonment of 2 years and $250,000 fine or both
Tax Evasion | Filing fraudulent tax returns or avoiding tax obligations | Imprisonment up to 5 years and $100,000 fine or both
Making False Statements to Federal Agents | Making false statements to federal agents during PPP loan fraud investigations | Imprisonment up to 5 years and $250,000 fine or both
Conspiracy and Attempt | Attempting to engage in fraud even in absence of actual fraud | Same penalties as the specified offense
False Claims Act Violations | Defrauding federal programs | Civil penalties up to $23,331 per false claim

Conclusion

PPP loan fraud allegations carry severe federal charges that can have significant implications for individuals and businesses. If you’re facing a DOJ investigation, you should seek legal representation immediately. The Todd Spodek Law Firm has a team of experienced attorneys who have successfully represented clients in PPP loan fraud investigations. Contact us for a consultation to protect your rights and preserve your freedom.