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Utah PPP and EIDL Loan Fraud Lawyers

DOJ Investigations for PPP Loan Fraud: What You Need to Know

The Paycheck Protection Program (PPP) was created to assist businesses during the COVID-19 pandemic by providing forgivable loans that cover payroll and related expenses. Unfortunately, the program is susceptible to fraud that puts the millions of dollars in federally-backed and forgivable loans at risk. Many borrowers could be ineligible, and some may use PPP funds for personal and impermissible expenses.

The U.S. Department of Justice (DOJ) is actively pursuing allegations of PPP loan fraud. When federal investigators gather enough evidence, the DOJ files criminal complaints and prosecutes federal offenses. The DOJ is also collaborating with other federal law enforcement agencies, including 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) to identify violators of PPP regulations.

The DOJ is Highly Aggressive in Their Investigations

Malfeasance in the PPP results in a sizeable cost that affects communities nationwide, and the DOJ aims to stamp out all forms of PPP loan fraud through aggressive prosecution of loan recipients and companies that use forged loan applications and unauthorized funds.

The DOJ is committed to pursuing individuals and companies involved in the submission of fraudulent loan applications, falsifying payroll documents, unauthorized use of PPP funds or any fraudulent certification of loan forgiveness. The department declared in a recent press release that there would be “aggressive targeting of anyone who defrauds this critical program” because it was designed to help Americans struggling with financial hardship during the pandemic.

PPP Loan Fraud Defenses and Allegations

A DOJ investigation into PPP fraud is severe and should not be taken lightly. There are many potential defenses against allegations of PPP loan fraud that attorneys use when representing clients in such an investigation. These defenses include:

Paycheck Protection Program (PPP) Compliance

The first line of defense for borrowers accused of loan fraud is to demonstrate compliance with the PPP terms. If a company obtained a PPP loan lawfully, established a separate PPP loan account, and appropriately documented its use of PPP funds, proof of compliance could lead to a relatively efficient fee resolution.

Lack of Intent to Defraud

Generally, federal statutes compel criminal culpability to require intent in fraud instances. However, if a company obtained a PPP loan inadvertently while ineligible, misused PPP funds unknowingly, or submitted a fraudulent forgiveness certification unintentionally, the accusation of intent to defraud would fall away, with no criminal charge.

Potential Charges in a PPP Loan Fraud Investigation

DOJ investigators into PPP loan fraud can possible trigger civil and criminal charges for before-standing federal statutes, such as:

РMaking false statements to the SBA, which is a federal criminal offense under 18 U.S.C. § 1014

РMaking false statements to an FDIC-insured bank under 18 U.S.C. § 1014

РBank fraud under 18 U.S.C. § 1344, which pertains to the use of fraudulent pretenses, representations or promises to defraud any financial institution of its funds

Wire fraud under 18 U.S.C. § 1343, which prohibits the use of the internet to obtain money or property using false or fraudulent means

Aggravated identity theft under 18 U.S.C. ¬ß 1028A, which pertains to the wrongful possession, use, or transfer of another person’s identification in connection with bank and wire fraud

Tax evasion under 26 U.S.C. § 7201, which pertains to payroll tax and income tax evasion by failing to report income processed with PPP loan funds

Making false statements to federal agents under 18 U.S.C. § 1001, which pertains to falsification, concealment, or cover-up of material facts or fraudulent statement or representation knowingly using a false writing or document that contains false or fictitious statements or entries during a federal inquiry.

Conspiracy under 18 U.S.C. ¬ß¬ß 371 and 1349, which refers to the prosecution of multiple individuals and businesses’ involvement in attempts to fraudulently obtain federal funds in relation to PPP without requiring the establishment of a PPP loan for a charge of conspiracy.

Attempt under 18 U.S.C. § 1349, which imposes penalties for the unsuccessful effort to commit PPP loan fraud.

False Claims Act violations under 31 U.S.C. §§ 3729 Р3733 in case of unintentional PPP loan fraud in forgivable loan application or forgiveness certification, while intentional PPP loan fraud could cause criminal prosecution.

Engaging a skilled and experienced law firm is vital when you are facing DOJ investigations for PPP loan fraud, and Todd Spodek Law is the ideal law firm for the job. Our legal team is experienced in dealing with DOJ investigations and can take you through the legal process to achieve the possible result. Contact us today for a consultation.