How to Respond to DOJ Inquiry About PPP Loan Forgiveness
So your probably staring at a letter from the Department of Justice asking questions about your PPP loan forgiveness or requesting documents related to your application, and your wondering whether you have to respond, what you should say, and whether this means your about to be charged with a federal crime. The answer depends entirely on what type of communication you received, what its asking for, and whether the DOJ considers you a target of a criminal investigation versus simply a witness or subject whose information they need as part of a broader inquiry.
Not all DOJ contact is the same, and your response strategy differs dramatically depending on whether you received a target letter (meaning prosecutors believe you committed a crime and have substantial evidence against you), a subject letter (meaning your conduct is under investigation but they haven’t decided whether to prosecute), a grand jury subpoena (requiring you to testify or produce documents under oath), or a Civil Investigative Demand (seeking documents as part of a False Claims Act investigation). Each type of inquiry has different legal implications, different deadlines, and different strategic considerations for how to respond.
We represent business owners and executives who’ve received DOJ inquiries about there PPP loans, and we know that how you respond in the first days after receiving the inquiry can determine whether you end up with criminal charges, massive civil liability, or whether the matter gets resolved without prosecution. The biggest mistakes we see are people trying to explain there way out of trouble by talking to investigators without counsel, people destroying documents they think are incriminating, and people ignoring the inquiry hoping it will go away. All three of those approaches will make your situation dramatically worse.
The DOJ is actively investigating PPP loan fraud and has made prosecution of pandemic relief fraud a top enforcement priority. They’ve filed thousands of criminal cases and obtained billions in civil settlements, and they’re using sophisticated data analytics to identify potentially fraudulent loans. If you’ve received an inquiry about your forgiveness application, its because something about your loan triggered there interest—whether that’s discrepancies between your application and tax records, use of funds that doesn’t match your certifications, whistleblower allegations, or red flags in your application that suggest fraud. How you respond will shape whether you face prison time and financial ruin, or whether you can resolve the matter and move on with your life.
What Is a DOJ Target Letter and What Does It Mean?
A target letter is an official written notification from the Department of Justice informing you that you are considered a “target” of a federal criminal investigation, which is the most serious designation you can receive and means prosecutors believe you committed a crime and have substantial evidence to support charges. If you’ve received a target letter related to your PPP loan forgiveness, your facing imminent risk of federal indictment and you need to take immediate action to protect your rights and explore options for avoiding prosecution.
The DOJ defines a target as a person whom prosecutors have substantial evidence linking to the commission of a crime and who is a putative defendant. This isn’t just someone they want to interview or whose conduct they’re examining—its someone they believe is guilty and against whom they’re actively building a criminal case. Target letters are typically sent in white-collar crime investigations like wire fraud, bank fraud, and making false statements, which are the most common charges in PPP fraud cases.
Target letters typically include several key pieces of information: the specific criminal statutes the government believes you violated, the subject matter of the investigation (in your case, your PPP loan and forgiveness application), an invitation to meet with prosecutors or testify before the grand jury (which you should almost NEVER do without your attorney negotiating terms and protections), and a deadline by which you need to respond if you choose to engage with the government. The deadline is usually 10 to 20 days, although extensions are typically granted if you notify DOJ that your retaining counsel.
Receiving a target letter doesn’t mean you’ve been charged—its actually a warning that charges are coming unless something changes. In some cases, target letters are sent because prosecutors are required to notify you before seeking a grand jury indictment for certain types of offenses, or because they’re giving you an opportunity to cooperate, provide information that might change there assessment, or negotiate a resolution before charges are filed. In other cases, target letters are fishing expeditions where prosecutors want to see if you’ll make admissions or provide evidence they don’t yet have.
The most critical thing to understand about a target letter is that anything you say or do in response can and will be used against you in the criminal prosecution that’s likely coming. If you call the prosecutor to explain your side of the story, those statements can be quoted in your indictment and used as evidence at trial. If you provide documents in response to the letter, those documents become prosecution evidence. If you agree to meet with investigators without proper safeguards, you risk making false statements during the interview, which is itself a federal crime carrying five years in prison even if the underlying conduct wasn’t criminal.
What Is the Difference Between a Target and a Subject?
Understanding the distinction between a target and a subject is important because it affects your level of criminal exposure and the appropriate response strategy, although both designations mean your in the government’s crosshairs and need legal representation immediately. A subject is someone whose conduct falls within the scope of the investigation but against whom prosecutors don’t yet have sufficient evidence to establish probable cause for criminal charges, while a target is someone prosecutors believe they can prove committed a crime.
Think of it this way: a subject might become a target as the investigation progresses and more evidence is gathered, or they might be cleared entirely if the investigation doesn’t develop evidence of wrongdoing. A target, on the other hand, is someone prosecutors have essentially already decided to charge absent some major change in circumstances—like cooperation that leads to bigger targets, new evidence showing innocence, or a negotiated resolution that makes prosecution unnecessary.
Subject letters are less common than target letters, but if you receive one related to your PPP forgiveness application, it typically means prosecutors are investigating whether you made false statements about your use of loan funds, inflated your eligible expenses, or otherwise misrepresented facts in your forgiveness application, but they haven’t yet concluded that they have enough evidence to charge you. The letter might request that you provide documents, answer written questions, or make yourself available for an interview.
The danger with being designated a subject is that people often think it means they’re not in serious trouble, so they cooperate with the investigation without fully protecting there rights. But anything you say as a subject can be used to turn you into a target, and making statements to federal investigators without your attorney present is almost always a mistake. Even if you think your cooperating and helping to clear your name, investigators are trained to elicit statements that can be used against you, and they’re not required to tell you when your answers are incriminating.
Whether your designated as a target or a subject, the strategic considerations are similar: hire experienced federal criminal defense counsel immediately, don’t make any statements to investigators without your attorney’s involvement and approval, preserve all documents related to your PPP loan, and evaluate whether there are legitimate defenses to the allegations or whether negotiated resolution makes more sense than letting the government continue investigating and building its case.
What Is a Grand Jury Subpoena and Should I Comply?
A grand jury subpoena is a legal order requiring you to either testify before a grand jury or produce documents and records for the grand jury’s review as part of its investigation into potential criminal charges. Grand jury subpoenas are extremely serious because they have the force of a court order, and failing to comply can result in contempt of court charges, fines, and even imprisonment, but complying without proper legal guidance can result in self-incrimination that leads to your indictment.
There are two types of grand jury subpoenas: subpoena ad testificandum, which requires you to appear and testify before the grand jury, and subpoena duces tecum, which requires you to produce specified documents and records. In PPP fraud investigations, document subpoenas typically request your loan application and all supporting documentation, your forgiveness application and supporting documents, payroll records, tax returns, bank statements, and business records showing how loan proceeds were used. Testimony subpoenas require you to appear before the grand jury and answer questions under oath about your loan, your business, and your conduct.
The critical question when you receive a grand jury subpoena is whether your a target of the investigation or simply a witness. If your a witness—meaning you have information about someone else’s conduct but your not suspected of wrongdoing yourself—then complying with the subpoena may be required and appropriate, although you should still consult with an attorney to ensure your protected. But if your a target or subject of the investigation, testifying before the grand jury is almost always a terrible idea because the proceeding is controlled by the prosecutor, you don’t have the right to have your attorney in the room with you, and anything you say can be used against you in a subsequent prosecution.
You have the right to assert your Fifth Amendment privilege against self-incrimination in response to a grand jury subpoena. This means you can refuse to testify on the grounds that your testimony might incriminate you, and the government cannot force you to testify or use your refusal to testify as evidence against you at trial. However, asserting the Fifth Amendment in response to a grand jury subpoena is a significant decision that should only be made with your attorney’s advice, because it signals to prosecutors that you believe you have criminal exposure, and it may accelerate there decision to seek an indictment.
For document subpoenas, you generally must produce responsive documents unless they’re protected by attorney-client privilege, work product protection, or other legal privileges. However, the scope of the subpoena can often be negotiated—your attorney can work with prosecutors to narrow overly broad requests, establish reasonable deadlines for production, and ensure that privileged materials aren’t disclosed. In some cases, we can negotiate to provide documents without you having to testify, which protects you from making oral statements that could be used against you while still demonstrating cooperation with the investigation.
What Is a Civil Investigative Demand?
A Civil Investigative Demand (CID) is a formal investigative tool used by the Department of Justice in False Claims Act investigations, and it requires you to produce documents, answer written interrogatories, or sit for oral testimony under oath about allegations that you defrauded the government. CIDs are civil in nature—they’re part of an investigation into whether you violated the False Claims Act’s prohibitions on submitting false claims to the government, not whether you committed criminal offenses—but the same conduct often gives rise to both civil False Claims Act liability and criminal prosecution, so receiving a CID means your facing serious legal exposure on both fronts.
In the PPP forgiveness context, CIDs are typically issued when the government believes you may have made false statements in your forgiveness application, claimed ineligible expenses for forgiveness, or otherwise defrauded the PPP program in connection with obtaining forgiveness of your loan. The CID will specify what documents you need to produce, what questions you need to answer in writing, or whether you need to appear for a deposition where DOJ attorneys will question you under oath.
Unlike voluntary inquiries where you can choose whether to respond, CIDs are legally enforceable—if you don’t comply, the government can seek a court order compelling compliance, and if you still refuse, you can be held in contempt. However, you have important rights when responding to a CID, including the right to object to requests that are overly broad, unduly burdensome, or seek privileged information, and the right to negotiate the scope and timing of your response.
The deadline to respond to a CID is typically 20 to 30 days from the date of issuance, but extensions are routinely granted if you notify the DOJ attorney who issued the CID that you need additional time to retain counsel and prepare your response. DO NOT let the deadline pass without responding or requesting an extension, because that gives the government grounds to seek immediate court enforcement and eliminates your opportunity to negotiate more favorable terms.
Your response strategy for a CID should be developed with experienced counsel because how you respond affects both your civil False Claims Act exposure and your potential criminal liability. In many cases, the approach is to provide documents that demonstrate your loan was legitimate and properly used while avoiding making substantive statements that could be misinterpreted or used against you. In other cases, if there are problems with your forgiveness application, the CID response is an opportunity to explore settlement of the civil liability before criminal charges are filed.
Should I Talk to DOJ Investigators Without a Lawyer?
No. The answer is almost always NO, you should not talk to DOJ investigators, FBI agents, or federal prosecutors about your PPP loan forgiveness without having an experienced federal criminal defense attorney represent you and either be present for any interview or negotiate specific terms and protections before you make any statements. This is true even if you think you didn’t do anything wrong, even if you believe you can clear up a misunderstanding by explaining your situation, and ESPECIALLY if investigators tell you that getting a lawyer makes you look guilty or that they just want to hear your side of the story.
Federal investigators are not your friends, and they’re not trying to help you. Their job is to build criminal cases, and they’re highly trained in interrogation techniques designed to elicit incriminating statements even from people who think they’re being careful. The Supreme Court has recognized that even innocent people can make statements during custodial interrogation that appear incriminating or that can be used against them, which is why you have the constitutional right to remain silent and to have an attorney present during questioning.
One of the most dangerous federal criminal statutes is 18 U.S.C. § 1001, which makes it a crime to make false statements to federal investigators. You don’t have to be under oath, you don’t have to sign anything, and you don’t have to be trying to deceive anyone—if you make a statement to a federal agent that turns out to be inaccurate or that investigators believe is false, you can be prosecuted for false statements even if the underlying conduct they were investigating wasn’t criminal. We’ve seen countless cases where people who weren’t targets of an investigation ended up being prosecuted for false statements they made during voluntary interviews when they were trying to cooperate.
Investigators often use tactics designed to get you to talk without a lawyer. They might show up at your home or business unannounced and act friendly and casual, suggesting that its just a routine inquiry and there’s no need for lawyers. They might tell you that if you have nothing to hide, you should be willing to answer questions. They might imply that refusing to talk or insisting on having a lawyer makes you look guilty. They might claim that they’re just trying to clear up some confusion and that talking to them will make the problem go away. DO NOT FALL FOR THESE TACTICS.
Your constitutional rights include the right to remain silent and the right to have an attorney present during questioning, and exercising those rights cannot be used as evidence of guilt at trial. When investigators contact you, the appropriate response is: “I want to speak with my attorney before I answer any questions.” You don’t need to explain why, you don’t need to justify your decision, and you don’t need to engage in any further conversation. Then immediately contact a federal criminal defense lawyer who can assess your situation, communicate with investigators on your behalf, and determine whether there’s any benefit to providing information or whether the strategy is to assert your Fifth Amendment rights.
What Happens If I Ignore the DOJ Inquiry?
Ignoring a DOJ inquiry is one of the worst things you can do, and it will almost certainly result in more serious consequences than you’d face if you respond appropriately through legal counsel. What happens when you ignore DOJ contact depends on what type of inquiry you received, but none of the outcomes are good, and all of them involve escalation of the government’s investigation and increased likelihood of criminal charges.
If you received a target letter or subject letter and you simply ignore it, prosecutors will interpret your silence as unwillingness to cooperate, and they’ll proceed with seeking an indictment without giving you any opportunity to present your side, negotiate a resolution, or explore cooperation options. While you certainly have the right not to incriminate yourself, there’s a strategic difference between having your attorney communicate with DOJ to assert your rights and explain your position versus simply not responding at all. The latter approach forecloses any possibility of resolving the matter short of indictment.
If you received a grand jury subpoena and you ignore it, you can be held in contempt of court, which can result in fines and imprisonment until you comply with the subpoena. The government can also obtain an arrest warrant for you if you fail to appear for grand jury testimony as required by the subpoena. Ignoring a grand jury subpoena doesn’t make the problem go away—it adds a new federal crime (contempt) to whatever they were originally investigating, and it gives prosecutors additional leverage over you.
If you received a Civil Investigative Demand and you ignore it, the DOJ can seek a court order compelling you to comply, and if you still don’t respond, they can hold you in contempt and impose sanctions including fines and imprisonment. More importantly, your failure to respond eliminates any opportunity to negotiate the scope of the CID, to assert privileges over sensitive documents, or to settle the civil False Claims Act allegations before the government files a lawsuit or refers the matter for criminal prosecution.
Beyond the legal consequences of ignoring DOJ inquiries, there’s the practical reality that non-response signals to prosecutors that you have something to hide and that you’re not going to cooperate. This affects there charging decisions—prosecutors are more likely to file criminal charges against uncooperative subjects than against people who engage constructively through counsel. It affects plea negotiations if charges are filed—prosecutors give better deals to defendants who didn’t waste government resources by forcing them to use compulsory process. And it affects sentencing if your ultimately convicted—cooperation is a significant factor in sentencing, and obstruction through non-response cuts against you.
The right approach when you receive DOJ inquiry isn’t to respond personally or to ignore it—its to immediately hire an attorney who can assess the inquiry, communicate with prosecutors on your behalf, and pursue whatever strategy is most likely to minimize your exposure, whether that’s negotiating a resolution, asserting your rights and preparing for potential charges, or in appropriate cases, cooperating with the investigation under negotiated terms that protect your interests.
Should I Consider Voluntary Disclosure About My Forgiveness Application?
Voluntary disclosure—meaning proactively contacting the DOJ or SBA to admit errors or problems with your PPP loan forgiveness application before they discover them through investigation—can be an effective strategy in some circumstances, but its a high-risk decision that should only be made after careful analysis with experienced counsel because voluntary disclosure can also accelerate criminal prosecution if not handled properly. Whether voluntary disclosure makes sense depends on the nature of the problems with your application, whether the government already knows about them, and whether your disclosure is truly voluntary or is actually a response to an investigation that’s already underway.
The potential benefits of voluntary disclosure include demonstrating good faith and lack of criminal intent (if you self-report errors, its harder for prosecutors to argue you were trying to defraud the government), potentially avoiding criminal prosecution altogether if the government views the matter as an honest mistake rather than fraud, reducing civil penalties under the False Claims Act (the statute provides for reduced damages in some self-disclosure situations), and preserving your reputation and ability to continue doing business rather than being publicly accused of fraud.
However, voluntary disclosure also has significant risks. By disclosing problems with your forgiveness application, your providing the government with evidence of potential False Claims Act violations and possibly criminal conduct that they might not have otherwise discovered. If prosecutors don’t accept your characterization of the conduct as innocent mistakes, your voluntary disclosure becomes the foundation of there criminal case against you. Additionally, the disclosure might trigger expanded investigation into other aspects of your business or other government programs you’ve participated in, creating exposure you didn’t previously have.
For voluntary disclosure to make sense, several conditions generally need to be met. First, the disclosure needs to be truly voluntary, meaning you’re self-reporting before the government has contacted you or opened an investigation. If you’ve already received a DOJ inquiry, target letter, or subpoena, its too late for “voluntary” disclosure—at that point, your responding to an investigation, not volunteering information. Second, the issues you’re disclosing need to be the type that can credibly be characterized as errors or good-faith mistakes rather than intentional fraud. If you fabricated payroll records, created fake employees, or used loan proceeds to buy a yacht, no amount of voluntary disclosure will make that look like an honest mistake.
Third, you need to be prepared to make full restitution as part of the disclosure. The government isn’t going to decline prosecution just because you admitted wrongdoing—they’ll want to see that you’re making the government whole by repaying improperly forgiven amounts plus interest. And fourth, you need experienced counsel to manage the disclosure process, because how you present the information, what you say about your intent and knowledge, and how you structure the resolution all affect whether the disclosure achieves its goal of avoiding prosecution or whether it backfires.
In our experience, voluntary disclosure works in cases where there are clear documentation errors or calculation mistakes in the forgiveness application that resulted in overstated eligible expenses, where the business owner can demonstrate they made good-faith efforts to comply with complex program rules, where the amounts involved are not massive, and where the client is prepared to repay the excess forgiveness plus agree to civil penalties without litigation. In cases involving fabricated documents, obvious fraud indicators, or large-scale abuse of the program, voluntary disclosure is unlikely to prevent prosecution and may simply accelerate it.
How We Help Clients Respond to DOJ Inquiries
When you hire us to represent you in response to a DOJ inquiry about your PPP loan forgiveness, we provide comprehensive legal counsel designed to protect your rights, minimize your criminal and civil exposure, and pursue the possible outcome given your specific circumstances. We’ve successfully represented clients in federal white-collar investigations and prosecutions, and we know how to navigate the complex intersection of criminal exposure, False Claims Act liability, and business realities that PPP fraud cases involve.
We start by conducting a thorough assessment of the DOJ inquiry and your potential exposure. We’ll review the specific communication you received to determine whether your a target, subject, or witness, what the government is asking for, and what deadlines apply. We’ll examine your PPP loan application and forgiveness application in detail, review your supporting documentation, and assess whether there are legitimate issues that need to be addressed or whether the government’s concerns are unfounded. This confidential analysis allows us to develop a strategic response plan tailored to your situation.
We handle all communications with the Department of Justice, FBI, SBA Office of Inspector General, and other federal agencies on your behalf. You will not speak directly with investigators or prosecutors—all contact goes through us, which protects you from making inadvertent statements that could be used against you and ensures that your constitutional rights are preserved. We’ll notify the government that we represent you, request extensions of any deadlines to allow time for proper preparation, and engage with prosecutors to understand there concerns and explore potential resolutions.
If the inquiry includes a subpoena or Civil Investigative Demand, we’ll prepare your response in a way that complies with legal requirements while protecting your interests. This includes reviewing requested documents for privilege and relevance, negotiating with the government to narrow overly broad requests, preparing privilege logs for any documents we’re withholding, and organizing and producing documents in a manner that presents your case favorably. If the inquiry requests your testimony, we’ll assess whether testifying makes sense or whether asserting your Fifth Amendment rights is more appropriate, and if testimony is necessary, we’ll prepare you thoroughly and negotiate terms that protect you.
We evaluate whether negotiated resolution makes sense or whether your case should be defended. If there are genuine problems with your forgiveness application and the evidence against you is strong, we’ll negotiate with prosecutors to resolve the matter through settlement, restitution, and civil penalties while seeking to avoid criminal charges. We can explore proffer agreements that allow us to present your side of the story in a protected setting, cooperation agreements if you have information about other wrongdoing, and deferred prosecution or non-prosecution agreements that resolve the matter without a conviction. Our goal is to achieve the most favorable resolution possible while preserving your freedom, your business, and your reputation.
If your case should be defended—because the allegations are wrong, because you have strong defenses, or because the government’s demands are unreasonable—we defend aggressively at every stage. If criminal charges are filed, we challenge the government’s evidence, file motions to suppress improperly obtained evidence, negotiate with prosecutors to seek dismissal or reduction of charges, and if necessary, take your case to trial. We’ve successfully defended federal fraud cases and obtained dismissals, acquittals, and favorable plea agreements for our clients.
Throughout the process, we provide honest, realistic advice about your options and likely outcomes. We’ll tell you when settlement makes sense and when fighting is the better choice. We’ll explain the potential consequences of different strategies and help you make informed decisions about how to proceed. And we’ll work efficiently to resolve the matter as quickly as possible, because prolonged federal investigations are expensive, stressful, and disruptive to your business and personal life.
If you’ve received a DOJ inquiry about your PPP loan forgiveness, don’t try to handle it yourself, don’t ignore it, and don’t talk to investigators without counsel. Contact us immediately for a confidential consultation, and let us protect your rights and develop a strategy to achieve the possible outcome in your case.