CALIFORNIA CRIMINAL LAWYERS

San Francisco PPP and EIDL Loan Fraud Lawyers

What the DOJ Investigation for PPP Loan Fraud Entails and How to Effectively Defend Yourself

The Paycheck Protection Program (PPP) has been a savior for many businesses grappling with the economic fallout of the COVID-19 pandemic. As a federally-backed, forgivable loan program, the PPP has been successful in supporting companies to retain employees and avert the need for significant job losses. However, there have been reports of fraudulent activities, which have caught the attention of the U.S. Department of Justice (DOJ) that is actively investigating cases of PPP loan fraud.

If you or your company is being investigated by the DOJ for PPP loan fraud, it is a critical issue with substantial legal and financial implications. Therefore, this article will cover essential information that you need to know regarding PPP loan fraud investigation and how to mount a potential defense against any allegations.

The DOJ’s Focus in PPP Loan Fraud Investigations

The DOJ is keen on investigating and prosecuting suspected cases of PPP loan fraud. Due to the high cost of the program and the extensive publicity garnered, individuals or companies believed to be submitting fraudulent loan applications and misappropriating PPP loan funds are the target of the investigation. Moreover, the DOJ is pursuing individuals and companies suspected of submitting misleading certifications for PPP loan forgiveness, indicating that its goal is to hunt down PPP program abuse. As stated in a DOJ Press release, “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.”

PPP Loan Fraud Cases Already Filed by the DOJ

The DOJ has already filed charges in numerous cases of PPP loan fraud, such as submitting fake payroll information, falsifying details to access PPP loans, using PPP loan funds for personal use, attempting to obtain several PPP loans, and other forms of PPP loan fraud. Therefore, it is crucial to mount a strong defense once you are under investigation for PPP loan fraud.

Multiple Federal Agencies Are Collaborating with the DOJ

The DOJ is not working alone in addressing PPP loan fraud. Other federal agencies are also committed to identifying and prosecuting individuals and companies accused of unlawfully exploiting PPP loans. These federal agencies include 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).

Viable Defenses for Companies Accused of PPP Loan Fraud

If you or your company is under investigation for PPP loan fraud, available defenses may be available to mitigate any charge. An example of a defense could be demonstrating compliance with the PPP program’s terms. Nonetheless, it is essential to be wary when providing information voluntarily to the DOJ since it may lead to inadvertently disclosing incriminating information, which could enhance the risk of prosecutions from PPP loan fraud. Another defense that could be employed is to argue a lack of intent to defraud. It is imperative to note that normally, criminal culpability requires intent to defraud. Therefore, If you obtained a PPP loan despite being ineligible, used PPP funds improperly, or submitted a fraudulent forgiveness without any intent to deceive, this could help prove your defense. However, unintentional fraud can still be prosecuted as a civil offense, with civil violations of the False Claims Act and other statutes carrying enormous fines, loss of federal program eligibility, treble damages, and other penalties.

Potential Federal Charges in PPP Loan Fraud Investigations

While the CARES Act that created the PPP program contains no penalties for PPP loan fraud, fraudulent activities under the scheme can trigger civil and criminal charges under pre-existing federal statutes. Below are several potential charges in federal PPP loan fraud investigations:
– 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

Most of these charges carry significant penalties that can adversely impact individuals and companies. Thus, to increase the chances of a favorable outcome in PPP loan fraud investigations, it is critical to work with experienced attorneys who are abreast of PPP loans to provide a strong and effective defense.

Conclusion

In conclusion, PPP loans have undoubtedly been a tremendous financial relief for many businesses enduring the economic crisis caused by the COVID-19 pandemic. However, there have been reports of fraudulent activities related to these loans, drawing the attention of government agencies and resulting in investigations and criminal charges. Therefore, it is essential to work with experienced attorneys with a track record of representing clients investigated or charged with PPP loan fraud to increase the chances of a positive outcome. Armed with knowledge of potential defenses, individuals and companies can navigate these complexities and reduce their chances of legal and financial difficulties.