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What You MUST Know About DOJ Investigations Into PPP Loan Fraud

Since the beginning of the COVID-19 pandemic, small businesses have been experiencing financial crises. A government solution to this problem is the Paycheck Protection Program (PPP), an initiative that provides loans to help businesses endure economic hardship. Unfortunately, the illegal wrongdoing of some may lead to drastic measures being taken against fraudulent PPP loan claims. Leading this effort is the United States Department of Justice (DOJ), which is undertaking investigations into PPP loan fraud. Facing a DOJ investigation can be daunting and nerve-racking, but with knowledge comes power. In this article, we shall look at everything you need to unearth about DOJ investigations into PPP loan fraud.

DOJ is Focused on Prosecution

The DOJ is determined to bring to justice individuals and companies that make false claims and engage in PPP loan fraud. Such fraudulent activities cost the US government a substantial amount of money, hence the DOJ’s resolve to track down and prosecute fraudulent loan claimants. Specifically, the DOJ is currently focusing on individuals and businesses suspected of illegally obtaining loans or invading inappropriate expenses using PPP loan funds, as well as those who submit phony certifications for loan forgiveness.

Numerous PPP Loan Fraud Cases Have Been Brought

Many fraudulent PPP loan cases have been brought to the attention of the DOJ, leading to multiple charges being filed. Some of these fraudulent claims include filing phony payroll information to secure PPP loans, the utilization of PPP loan funds for personal expenses, and attempting to acquire multiple PPP loans illegally. The DOJ has warned that it is committed to tracking down and vigorously pursuing anyone defrauding the PPP program.

The DOJ is Collaborating with Other Federal Agencies

The DOJ is not working alone in its efforts to combat PPP loan fraud. It is collaborating with other federal agencies such as 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). The purpose of this collaboration is to identify and prosecute individuals and businesses illegally taking advantage of the loans offered under PPP.

The Risk is Real – But Defenses Exist

The risk of prosecution for PPP loan fraud is very high, but that does not mean that it is inevitable. There are defenses that individuals and businesses can utilize to defend themselves against PPP loan fraud. These defenses are primarily aimed at demonstrating compliance with the terms of PPP loans, proving a lack of fraudulent intentions, or challenging the charges set forth in the statutes governing PPP loans. A notable area where legal representation by an expert may prove invaluable is in Civil False Claims Act violations, where the penalties are severe.

Potential Federal Charges in PPP Loan Fraud Investigations

The following are some of the charges that organizations could be facing if under DOJ investigations for PPP loan fraud:

Penalty Description
Making False Statements to the Small Business Administration (SBA) (18 U.S.C. ¬ß 1014) Anyone lying or submitting false reports to the SBA “for the purpose of influencing in any way the action of the Small Business Administration” is subject to criminal penalties.
Making False Statements to An FDIC-Insured Bank (18 U.S.C. § 1014) Companies and individuals who submit false information to their PPP lenders or SBA can face criminal charges for making false statements.
Bank Fraud (18 U.S.C. § 1344) A criminal offense for defrauding or tampering with a financial institution or property owned by a financial institution through fraud or false representations or promises
Wire Fraud (18 U.S.C. ¬ß 1343) The use of any interstate communication device in the context of “any scheme or artifice to defraud, or . . . obtaining money or property by means of false or fraudulent pretenses, representations, or promises . . .” can result in criminal charges.
Aggravated Identity Theft (18 U.S.C. ¬ß 1028A) Companies and individuals who knowingly transfer, possess, or use someone else’s identification are subject to criminal charges
Tax Evasion (26 U.S.C. § 7201) Federal tax evasion statutes forbid trying to dodge tax imposed by the Internal Revenue Code.
Making False Statements to Federal Agents (18 U.S.C. § 1001) Multiple individuals and businesses collectively involved in fraudulent attempts to receive federal PPP funds can face penalties.
Conspiracy (18 U.S.C. § 371 and 18 U.S.C. § 1349) Companies and individuals that engage in fraudulent attempts to obtain PPP funds using illegal means can face conspiracy charges.
Attempt (18 U.S.C. § 1349) Individuals or organizations that make unsuccessful attempts to commit PPP loan fraud can face federal charges.
False Claims Act Violations (31 U.S.C. §§ 3729 Р3733) Fraudulent or unintentional PPP loan fraud may result in substantial civil penalties, fines, and damage claims under the False Claims Act.

In conclusion, comprehending the DOJ investigation process for PPP loan fraud is imperative to protect yourself and your business. It is necessary to work with knowledgeable lawyers who fully understand the law and can draft a strong defense for your case. Todd Spodek is a reputable law firm experienced in handling PPP loan fraud investigations, offering professional guidance on avoiding legal issues arising from PPP loan fraud. Now that you know about potential PPP loan fraud charges and your defenses, you can make an informed decision about your business’s legal position.