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PPP Loan Fraud Investigations: What You Must Know
The COVID-19 pandemic has disrupted both small and large companies. The financial assistance the Paycheck Protection Program (PPP) provided was a blessing to many businesses struggling to stay afloat. However, like any system, the PPP was riddled with fraudulent activities, making it a prime target for scammers. As such, the Department of Justice (DOJ) has taken it upon itself to investigate and prosecute individuals and companies involved in PPP Loan Fraud.
The DOJ’s determination to hold defaulters accountable attests to the vast sums of money involved in PPP loan fraud. Furthermore, the attention paid to government PPP loan fraud fraudsters’ by the public has resulted in the DOJ’s stringent investigation proceedings.
The DOJ is making good on its promise of prosecuting any person or entity suspected of PPP loan fraud. Already, they have filed criminal complaints and multiple charges against businesses and individuals guilty of submitting fraudulent PPP loan applications and misusing the funds. Some of these charges relate to individuals’ attempts to receive multiple PPP loans and using the funds for personal luxuries.
Partnering With Other Federal Law Enforcement Agencies Against PPP Loan Fraud
To ensure that it effectively combats PPP loan fraud, the DOJ is collaborating with other federal agencies, such as 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).
Available Defenses Against DOJ PPP Loan Fraud Investigations
Allegations of PPP loan fraud are serious, and businesses and individuals facing these charges must be strategic in their defense. Available defenses include those specific to the Paycheck Protection Program as they apply to the relevant statutes’ stated charges. One popular defense is showing that a business received a lawful PPP loan and indeed made the appropriate use of the funds. Achieving this might include taking steps such as creating a PPP loan account or documenting the correct use of the funds, all of which might prove a business’s compliance.
Apart from the above defense, companies and individuals facing PPP loan fraud charges might assert a lack of intent, claiming that their actions were unintentional. Notably, successful criminal culpability requires proof of intent to defraud, making civil liability for False Claims Act violations and other relevant statutes more appropriate for unintentional fraud. Nonetheless, it is crucial to note that civil violations of the False Claims Act attract enormous fines, lead to treble damages, and disqualify a business from federal programs, among other severe penalties.
Potential Charges in Federal PPP Loan Fraud Investigations
Understandably, the DOJ takes PPP loan fraud seriously; therefore, it is essential to know the possible charges in such cases. PPP loan fraud is covered under various pre-existing federal statutes, and even though the Coronavirus Aid, Relief, and Economic Security (CARES) Act that created the PPP lacked penal provisions, several statutes cover PPP loan fraud charges, including:
| Statute | Type of Charge |
|---|---|
| 18 U.S.C. § 1014 | Making False Statements to the Small Business Administration (SBA) |
| 18 U.S.C. § 1014 | Making False Statements to an FDIC-Insured Bank |
| 18 U.S.C. § 1344 | Bank Fraud |
| 18 U.S.C. § 1343 | Wire Fraud |
| 18 U.S.C. § 1028A | Aggravated Identity Theft |
| 26 U.S.C. § 7201 | Tax Evasion |
| 18 U.S.C. § 1001 | Making False Statements to Federal Agents |
| 18 U.S.C. § 371, and 18 U.S.C. § 1349 | Conspiracy |
| 18 U.S.C. § 1349 | Attempt |
| 31 U.S.C. §§ 3729 – 3733 | False Claims Act Violations |
The DOJ has already charged PPP loan fraud cases under several of these statutes. All penalties for PPP Loan Fraud-related charges are severe and depend on the specifics of the case. The legal consequences of a successful charge may include civil suits, enormous fines, jail terms, and loss of money or property. It is crucial to contact experienced attorneys who hold considerable experience in PPP loan fraud cases to handle such charges properly.
What to Do When Facing a DOJ Investigation for PPP Loan Fraud
If you are the target of a DOJ investigation on PPP loan fraud or suspect you might be facing such charges, it is vital to consult with an experienced defense attorney. Spodek Law Group has a team of criminal defense attorneys trained to handle such investigations and vigorously defend your rights in court. Contact us for a free consultation today.
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