CALIFORNIA CRIMINAL LAWYERS

South Carolina PPP and EIDL Loan Fraud Lawyers

Protecting Yourself Against DOJ Investigations for PPP Loan Fraud

The Paycheck Protection Program (PPP) was designed to provide much-needed financial support to small business owners struggling in the wake of the COVID-19 pandemic. Unfortunately, it has become a breeding ground for fraud. It is believed that several hundred million dollars worth of forgivable loans were issued to businesses, individuals, and expenses that do not qualify under the PPP. As a result, the Department of Justice (DOJ) is aggressively investigating PPP loan fraud.

If you are under DOJ investigation for PPP loan fraud, you need to take swift action to protect yourself and your business. In this article, we’ll share important information you need to know, including the DOJ’s commitment to prosecuting PPP loan fraud, potential charges and defenses to PPP loan fraud allegations, and how experienced legal counsel can help you navigate the situation.

The DOJ is Serious About Prosecuting PPP Loan Fraud

The DOJ is not taking PPP loan fraud lightly. Criminal charges are being issued against individuals and companies suspected of violating the terms and conditions of the PPP, committing fraud to obtain loans or loan forgiveness, or intentionally abusing the program. In a recent press release, the DOJ stated, “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.”

Charges Already Filed in Numerous PPP Loan Fraud Cases

The DOJ has already filed criminal charges in several PPP loan fraud cases. These include individuals suspected of creating shell companies, submitting fraudulent certifications for loan forgiveness, seeking multiple loans, and using loan funds for personal expenses. These cases show that the DOJ is actively pursuing PPP loan fraud investigations and will relentlessly prosecute those found guilty.

Collaboration with Other Federal Agencies

The DOJ is not alone in prosecuting PPP loan fraud. The SBA-OIG, FDIC-OIG, FBI, and IRS-CI are all working to identify fraudulent PPP loan applications and prosecute suspected fraudsters. Federal agencies and law enforcement are collaborating to ensure accurate and fair prosecution that upholds the rules of the PPP.

Potential Defenses Against PPP Loan Fraud Allegations

It is important to understand that individuals and companies accused of PPP loan fraud have several potential defenses. That said, early intervention by experienced legal counsel is crucial in outlining one’s case and identifying the most appropriate defense. It is crucial to have an attorney who understands the intricacies of the Paycheck Protection Program (PPP) and who knows who to defend your interests.

Paycheck Protection Program Compliance

One of the ways to defend PPP loan fraud allegations is to demonstrate your PPP compliance. You must ensure that your PPP loan applications are valid and lawful, use the funds appropriately, and properly document the loan funds’ usage. By carefully articulating this information to show compliance and avoid providing incriminating evidence, you can successfully defend yourself against charges of PPP loan fraud.

Lack of Intent to Defraud

To be found guilty of PPP loan fraud, you must have intentionally defrauded. If your company has inadvertently submitted a fraudulent loan application or used PPP loan funds unlawfully, it may serve as a potential defense against the charges. That said, unintentional fraud can still attract penalties for civil charges of False Claims Act violations, which can incur severe penalties.

Potential Charges in PPP Loan Fraud Investigations

Violating the PPP can result in both civil and criminal charges under existing federal laws. Here are some potential charges that individuals and businesses under investigation may face:

Making False Statements to the SBA

It is illegal to make false statements or other material misrepresentations to the SBA. False PPP loan application submissions or submitting fraudulent PPP loan forgiveness certifications can result in penalties under 18 U.S.C. § 1014.

Bank Fraud

Individuals or businesses facing allegations of PPP loan fraud may also face bank fraud charges for submitting false information to financial institutions under 18 U.S.C. § 1344.

Wire Fraud

Wire fraud is the use of electronic means to commit fraud. Submitting false information on a PPP loan application or using electronic means to carry out fraud schemes can result in penalties under 18 U.S.C. § 1343.

Aggravated Identity Theft

PPP loan fraud cases that include identity theft may lead to Aggravated Identity Theft charges, which includes using another person’s identity for personal financial gain. False submissions on PPP loan applications, under the guise of someone who does not own the company, can also result in Aggravated Identity Theft charges.

Tax Evasion

PPP loans recipients may face tax evasion charges if they fail to report income derived from PPP loan-funded business activities or evade payroll tax.

Making False Statements to Federal Agents

Individuals or businesses may face criminal penalties for making false statements or writing false documents during a federal PPP loan fraud investigation or an audit under 18 U.S.C. § 1001.

Conspiracy and Attempt

Individuals or businesses involved in planned efforts to fraudulently obtain federal funds under the PPP may face both conspiracy and attempt criminal charges.

False Claims Act Violations

In some cases, the DOJ may use False Claims Act violations to hold businesses and individuals civilly accountable for PPP fraud – this is especially where the fraud occurs accidentally.

Conclusion

PPP loan fraud is a severe issue that could lead to significant financial and legal consequences. If your business is under investigation for PPP loan fraud, it’s crucial to take action and protect your interests. Our experienced legal team can help you navigate the complexities of PPP fraud matters and mitigate the potential consequences. Contact us today for a confidential consultation to evaluate your case.