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Protect Your Business: What You Need to Know About DOJ Investigations for PPP Loan Fraud

The COVID-19 pandemic has significantly impacted various businesses. The U.S. government implemented the Paycheck Protection Program (PPP) to aid businesses that were struggling financially amidst the ongoing economic downturn. However, some individuals used fraudulent means to obtain PPP funds. Consequently, the U.S Department of Justice (DOJ) has started investigating companies and individuals suspected of PPP loan fraud and has filed criminal charges against several offenders.

If your business is facing a DOJ investigation due to PPP loan fraud, it is crucial to know your rights and what you are up against. Here are some critical things that you need to keep in mind.

The DOJ Treats PPP Fraud Seriously

With the recent widespread news of fraudulent activities in acquiring PPP loans, it comes as no shock that the DOJ is cracking down on the offending parties. The DOJ is aiming to prosecute any business or individual that has defrauded the crucial PPP.

The DOJ is Currently Pursuing PPP Loan Fraud Charges

The DOJ has filed charges in numerous PPP loan fraud cases. The DOJ takes a severe stance against fraudulent activities, such as creating shell companies or falsifying payroll information. It is also taking action against individuals suspected of trying to obtain multiple PPP loans or using PPP funds to cover personal expenses.

Multiple Law Enforcement Agencies are Working in Partnership Against PPP Loan Fraud

The DOJ is not the only agency that is working to combat fraud concerning the Paycheck Protection Program. Other federal agencies that are working in conjunction with the DOJ include the 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).

Potential Defenses Against DOJ PPP Loan Fraud Investigations

When a business or individual is facing a DOJ PPP loan fraud investigation, they can assert several defenses. Here are some of the most common ones:

Demonstrate PPP Compliance

Your first line of defense is to prove that you are compliant with the PPP’s terms. Ensure that your company lawfully acquired the PPP loan, established a segregated PPP loan account, and documented the appropriate use of your PPP funds. Demonstrating compliance could help you resolve your investigation quickly. However, be cautious when providing information to the DOJ, as once you submit information, you cannot retrieve it. If you inadvertently disclose an incriminating piece of information, it could increase your and your company’s risk of prosecution for PPP loan fraud.

Lack of Intent to Defraud

Federal criminal culpability typically requires the intent to defraud. If you accidentally acquired a PPP loan despite your ineligibility, used PPP funds improperly, or submitted a fraudulent forgiveness certification, your lack of intent could provide a defense to the charges. However, unintentional fraud could still pave the way for civil prosecution, penalty fines, treble damages, loss of federal program eligibility, and other penalties.

Potential Charges in Federal PPP Loan Fraud Investigations

PPP loan fraud can trigger civil and criminal charges under several pre-existing federal statutes. Here are some of them:

* 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)

If you are facing a DOJ investigation for PPP loan fraud, it is essential to have a skilled attorney by your side. The investigation can be intimidating and overwhelming, but with the aid of an experienced legal professional, you will have the chance of fighting allegations of wrongdoing successfully.

At Spodek Law Group, our trusted lawyers have a successful track record of defending businesses and individuals against accusations of PPP loan fraud and related crimes. We have a personalized and aggressive approach to defending your rights and freedom, and we will use our experience to guide you through the DOJ investigation process.
Table of Potential Charges in Federal PPP Loan Fraud Investigations:

| **Charge (Code)** | **Description** |
| ——————————| ——————————————————————————|
| Making False Statements to the Small Business Administration (SBA) (18 U.S.C. ¬ß 1014)| Anyone who knowingly makes any false statement or report for the purpose of influencing the SBA’s actions |
| Making False Statements to an FDIC-Insured Bank (18 U.S.C. § 1014)| Anyone who submits false information to financial institutions insured by the Federal Deposit Insurance Corporation (FDIC) |
| Bank Fraud (18 U.S.C. § 1344) | Anyone who knowingly executes or attempts to execute a scheme or artifice to defraud a financial institution |
| Wire Fraud (18 U.S.C. § 1343)| Anyone who uses the internet to defraud and obtain property by means of false or fraudulent pretenses, representations, or promises |
| Aggravated Identity Theft (18 U.S.C. ¬ß 1028A)| Anyone who uses someone else’s means of identification in connection with specific felony offenses |
| Tax Evasion (26 U.S.C. § 7201) | Anyone who willfully attempts in any manner to evade or defeat any tax imposed by the Internal Revenue Code |
| Making False Statements to Federal Agents (18 U.S.C. § 1001)| Anyone who makes any materially false, fictitious, or fraudulent statement or representation, or conceals or covers up a material fact by any trick, scheme, or device with intent to defraud |
| Conspiracy (18 U.S.C. § 371 and 18 U.S.C. § 1349) | Multiple individuals or businesses engaging in efforts to fraudulently obtain federal funds under the PPP |
| Attempt (18 U.S.C. § 1349) | Anyone who attempts to commit PPP loan fraud unsuccessfully |
| False Claims Act Violations (31 U.S.C. §§ 3729 – 3733)| Anyone who commits fraud targeting federal government programs may face civil and criminal penalties |

In conclusion, keep in mind that if you find yourself facing a DOJ investigation for PPP loan fraud, you can assert several defenses. With the aid of experienced attorneys at Spodek Law Group, you will have the chance of fighting allegations of fraud successfully.