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The U.S. Department of Justice is currently pursuing investigations, and pressing charges against companies and individuals that are suspected of committing PPP loan fraud. Being aware of the situation’s severity and having knowledge of potential defenses are crucial if you or your company is facing a DOJ investigation for PPP loan fraud. The DOJ is determined to prosecute all forms of PPP loan fraud actively, and is working alongside other federal law enforcement agencies to achieve this goal. If you are a part of a federal PPP loan fraud investigation, multiple charges may be pressed against you, including wire fraud, bank fraud, making false statements to the FDIC insured banks or the Small Business Administration; tax evasion; aggravated identity theft; and false claim act violations. While there are defenses, companies should exercise nuanced caution while furnishing information to the DOJ, as the inadvertent disclosure of incriminating information can increase the risk of prosecution.
The government estimates that over 4.9 million loans were lent to eligible businesses during the PPP program’s two rounds, which was a vital economic lifeline for struggling businesses during the COVID-19 pandemic. Unfortunately, there has been a sharp rise in PPP loan fraud investigations since the program’s inception.
When COVID-19 created a disastrous economic situation for businesses across America, the government immediately stepped in to assist with the Paycheck Protection Program (PPP). The goal of the PPP was to offer a much-needed assist to businesses for maintaining payrolls, rent, and utilities amid the COVID-19 outbreak. While several businesses genuinely benefited from this, many others took advantage of the opportunity to defraud the system. These fraudulent practices prompted the DOJ to investigate and charge businesses and individuals with PPP loan fraud violations.
If your business or you is/are facing a PPP loan fraud investigation, various charges can be brought against you. Each charge carries significant sentences of imprisonment and a hefty fine. Below are some of the lesser-known charges that can be brought against you in this scenario.
In false statements charges, the government charges defendants with posing false information to financial institutions. Business owners who lie about paying employees to get a PPP loan that they do not qualify for the basic requirement should be prepared to face false statements charges. In such situations, the SBA or FDIC can claim that the defendant made false statements in their PPP loan application, seeking funds from these institutions. Charges can be filed against business owners who inflate their payroll costs to secure larger loans than those that they qualify for under federal law.
Attempt charges are brough against individuals who try to commit PPP loan fraud but are unsuccessful. Charges of conspiracy are filed against two or more parties that work together to commit this crime.
A False Claims Act violation happens when a business knowingly makes false claims to the government regarding PPP loans, with the intention of financing their projects or running their company.
Aggravated identity theft charges are filed against individuals that use stolen identities to qualify for PPP loans.
Fraudulent applications and documents related to PPP loan applications fall under wire fraud and bank fraud charges. If you provided false statements or omitted important information to get a PPP loan, you could face bank fraud and wire fraud charges.
If you or your business is under a PPP loan fraud investigation, you can employ several defense strategies, such as demonstrating compliance with the PPP’s eligibility requirements and the laws that govern it. This defense strategy will help your business prove that they act in “good faith” to receive PPP loans. Additionally, demonstrating that the PPP loan was directly used to advance your business’s objectives and that the funds were allocated appropriately while they were under your supervision can strengthen the case’s defense.
It is essential to engage the services of an experienced attorney when facing a PPP loan fraud investigation. Attorneys can assist businesses in understanding the nature of the charges, prepare appropriate defense strategies, and help defend you against charges. As there are harsh penalties associates with PPP loan fraud, it is necessary to have the right legal representation. Therefore, organizations and individuals facing PPP loan fraud investigations should seek a skilled criminal defense lawyer as soon as possible.
To summarize, the DOJ is actively investigating and prosecuting companies and individuals associated with committing PPP loan fraud. There are several possible charges for fraudulent activities related to PPP loans, and defending against them requires a sound defense strategy, highlighting compliance and proper utilization of the PPP loan. Businesses undergoing PPP fraud investigation must engage the services of a seasoned lawyer to navigate through the legal process successfully.
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