CALIFORNIA CRIMINAL LAWYERS

San Diego PPP and EIDL Loan Fraud Lawyers

What to Expect During a DOJ Investigation for PPP Loan Fraud
The COVID-19 pandemic caused an economic downturn, and the Paycheck Protection Program (PPP) was a financial lifeline for many struggling businesses. Participating in the federally-backed forgivable loan program allowed businesses to keep their employees on payroll and avoid layoffs. However, reports of PPP loan fraud have made headlines, which led the U.S. Department of Justice (DOJ) to commence an investigation.
Being targeted for a DOJ investigation regarding PPP loan fraud could be a severe matter, which can result in significant financial and legal outcomes. Below are some vital considerations to keep in mind if your company or you are affected by a PPP loan fraud investigation.

The DOJ’s Aggressive Pursuit of PPP Loan Fraud
The DOJ is actively and aggressively prosecuting PPP loan fraud cases. The cost and publicity of PPP-targeted fraud have prompted the DOJ to focus its efforts on individuals and enterprises suspected of submitting fraudulent loan applications and misusing PPP loan funds.
The DOJ is also targeting individuals and businesses suspected of submitting fraudulent certifications for PPP loan forgiveness. In a statement, the DOJ pointed out that “The Paycheck Protection Program was designed to help Americans struggling with financial hardship during the pandemic. Our office will be aggressive in targeting anyone who defrauds this critical program.‚Äù

A Stringent Approach to PPP Loan Fraud Cases
The DOJ has already impleaded many PPP loan fraud cases. Charges include the creation of shell companies, falsifying payroll and loan-related documents to receive PPP loans, using PPP loan funds for personal expenses, attempting to obtain multiple PPP loans, and various other types of PPP loan fraud.
Numerous Federal Agencies Working with the DOJ
The DOJ is not the sole agency involved in combatting PPP loan fraud. Several federal agencies have also dedicated themselves to identifying and prosecuting individuals and businesses that illegally took advantage of PPP loans. These agencies 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).

Possible PPP Loan Fraud Defenses
In the event of a PPP loan fraud investigation against you or your company, you may have several possible defenses available, including:
PPP Compliance: One possible argument in favor of PPP loan fraud defense is demonstrating compliance with PPP’s terms. By providing proof of such compliance, you may be able to achieve a more efficient resolution. However, it’s crucial to be careful while explicitly providing information to the DOJ. Inadvertently disclosing incriminating information could increase your chances of prosecution for PPP loan fraud.
Absence of Intent to Defraud: In general, criminal offenses require intent to defraud. If you obtained a PPP loan despite being ineligible, used PPP funds improperly or submitted a fraudulent forgiveness certification but lacked intention, you can use it as part of your defense. However, even unintentional fraud can result in prosecution as a civil offense. Civil violations of the False Claims Act and other statutes can result in enormous fines, treble damages, loss of federal program eligibility, and other penalties.

Likely Types of Federal Charges in PPP Loan Fraud Investigations
Although the CARES Act, which established the Paycheck Protection Program, does not contain provisions that make PPP loan fraud a felony, defrauding the program could trigger civil or criminal charges under several prevailing federal regulations. Following could be some possible offenses in addition to PPP loan fraud:
– Making False Statements to the Small Business Administration (SBA)
– Making False Statements to an FDIC-Insured Bank
– Bank Fraud
– Wire Fraud
– Aggravated Identity Theft
– Tax Evasion
– Making False Statements to Federal Agents
– Conspiracy
– Attempt
– False Claims Act Violations
Many of these charges carry significant penalties that could harm individuals and companies negatively. It’s necessary to employ experienced attorneys with knowledge about PPP loans to increase the likelihood of a favorable outcome during PPP loan fraud investigations.

Conclusion
PPP loans have been a valuable source of financial relief for many companies during these trying times. However, allegations of fraud related to these loans have caught the attention of government agencies, resulting in investigations and criminal charges. Working with experienced attorneys knowledgeable about PPP loans to provide a strong and effective defense can increase the chances of a favorable outcome in PPP loan fraud investigations. Knowing the potential risks and defenses allows individuals and companies to navigate the complexities and reduces their chances of legal and financial issues.