What Are the Federal Charges for PPP Loan Fraud?
So your probably wondering what specific criminal charges your facing if federal prosecutors decide to indict you for your PPP loan, and your trying to understand whether your looking at a few years in prison or whether this is the kind of case that could result in decades behind bars. The answer depends on exactly what conduct the government believes you engaged in, how much money was involved, whether you acted alone or as part of a conspiracy, and whether prosecutors decide to charge you with just the basic fraud offenses or whether they add additional charges like money laundering, identity theft, or tax evasion.
The Department of Justice has made PPP fraud prosecution a top priority, and they’re using the full arsenal of federal criminal statutes to pursue cases. The most common charges are wire fraud and bank fraud, which each carry maximum sentences of 30 years in federal prison plus fines of up to $1 million per count. But prosecutors don’t stop there—they routinely add charges for making false statements, conspiracy, money laundering, and aggravated identity theft, and when you stack all these charges together, the potential exposure can easily exceed 50 or even 100 years in prison if your convicted on all counts.
What makes PPP fraud cases particularly dangerous is that a single fraudulent loan application can give rise to multiple criminal counts, and each count carries its own separate penalty that can be stacked on top of the others. If you submitted a PPP application with false information, that’s bank fraud. If you sent that application electronically or made phone calls to your lender about it, that’s wire fraud. If you signed certifications that contained lies, that’s making false statements. If you used someone else’s Social Security number or identity on the application, that’s aggravated identity theft with a mandatory two-year consecutive sentence. And if you took steps to hide or move the money after you received it, that’s money laundering with 20 years per transaction.
We represent clients facing federal PPP fraud charges, and we know that understanding what your actually charged with is the first step in developing an effective defense strategy. The specific charges matter enormously because they affect what the prosecution has to prove, what defenses are available, what mandatory minimum sentences might apply, and what your realistically looking at for sentencing if your convicted. Some charges require proof of specific intent to defraud, while others only require proof that you made false statements regardless of whether you intended to deceive anyone. Some charges have mandatory consecutive sentences that must be added on top of other penalties, while others can run concurrently. The details matter, and you need experienced federal defense counsel who understands these statutes and how prosecutors use them in PPP cases.
What Is Bank Fraud and How Does It Apply to PPP Loans?
Bank fraud under 18 U.S.C. § 1344 is one of the most commonly charged offenses in PPP fraud cases, and it’s the go-to statute for prosecutors because it carries severe penalties—up to 30 years in federal prison and fines of up to $1 million—and because its broad enough to cover virtually any fraudulent conduct involving financial institutions. In the PPP context, bank fraud charges arise because PPP loans were made by banks and other financial institutions, even though the loans were backed by the SBA and ultimately funded by taxpayers.
The bank fraud statute makes it a crime to knowingly execute, or attempt to execute, a scheme to defraud a financial institution or to obtain money or property from a financial institution by means of false or fraudulent pretenses, representations, or promises. What this means in practical terms is that if you made false statements on your PPP application with the intent to get a loan from a bank, your guilty of bank fraud even if the SBA was ultimately on the hook for the money and even if the bank didn’t actually lose anything because the loan was guaranteed.
To prove bank fraud, prosecutors must show that you knowingly participated in a scheme to defraud, that you did so with intent to defraud the financial institution, and that you made material false statements or representations as part of the scheme. In PPP cases, the false statements typically involve things like inflating your payroll costs to qualify for a larger loan, claiming employees who didn’t exist or who didn’t work for you, certifying that your business was in operation when it wasn’t, lying about whether you had other sources of funds available, or misrepresenting your eligibility under program rules.
The “materiality” requirement is important—the false statements have to be significant enough that they would have affected the lender’s decision whether to approve the loan or the amount they approved. If you made minor errors that didn’t change the outcome, that’s not bank fraud. But if you inflated your payroll figures by 50% and got a much larger loan as a result, or if you lied about your business being in operation and wouldn’t have been eligible otherwise, those are clearly material false statements that support bank fraud charges.
One count of bank fraud can cover the entire scheme involving a single PPP loan, or prosecutors might charge multiple counts if there were multiple distinct fraudulent acts—for example, one count for the initial application and a separate count for the forgiveness application. With a maximum of 30 years per count, the exposure adds up quickly, especially when combined with other charges.
What Is Wire Fraud and Why Is It Charged in PPP Cases?
Wire fraud under 18 U.S.C. § 1343 is charged in virtually every PPP fraud case because PPP applications were submitted electronically, which means they were transmitted over the internet or through phone lines, which satisfies the wire communication element of the statute. Wire fraud carries the same penalties as bank fraud—up to 30 years in prison when it affects a financial institution and fines of up to $1 million—and it gives prosecutors a powerful tool for charging conduct that might not fit neatly within other fraud statutes.
The wire fraud statute prohibits using wire communications—including internet transmissions, emails, phone calls, text messages, and electronic fund transfers—to execute a scheme to defraud or to obtain money or property by false pretenses. The key element is that there was a wire communication in furtherance of the fraud scheme. In PPP cases, this element is almost always satisfied because applications were submitted through online portals, emails were exchanged with lenders, electronic signatures were used, and loan funds were transferred electronically to bank accounts.
Prosecutors love wire fraud charges because they can charge a separate count for each wire communication related to the fraud scheme. If you submitted your PPP application online, that’s one count of wire fraud. If you sent follow-up emails to your lender providing additional information, each email could be a separate count. If you electronically signed documents, that’s another count. If the loan proceeds were wired to your account, that’s another count. We’ve seen cases where prosecutors charged 10 or 20 counts of wire fraud based on a single PPP loan because there were multiple electronic communications involved in obtaining and receiving the loan.
Like bank fraud, wire fraud requires proof of intent to defraud—meaning you knew the statements were false and you intended to deceive the lender to get money you weren’t entitled to. Innocent mistakes, even if they result in you getting more money than you should have, aren’t wire fraud unless the government can prove you acted knowingly and with fraudulent intent. This is where your defense focuses on showing that errors in your application were good-faith mistakes based on confusion about complex program rules, reliance on professional advice, or misunderstanding of requirements rather than intentional lies designed to steal money.
What Are False Statements Charges Under 18 U.S.C. § 1001 and § 1014?
False statements charges are extremely common in PPP fraud cases, and they’re dangerous because they’re easier for prosecutors to prove than fraud charges and because they don’t require proof that you benefited financially from the lies. There are two main false statements statutes that apply to PPP cases: 18 U.S.C. § 1001, which covers false statements to federal agencies generally, and 18 U.S.C. § 1014, which specifically covers false statements to financial institutions.
Section 1001 makes it a crime to knowingly and willfully make materially false statements to any federal agency, including the SBA. This statute carries up to five years in prison per count. In PPP cases, Section 1001 charges typically arise from the certifications you made on your application—certifying that your business was in operation, that you needed the loan due to economic uncertainty, that you would use the funds for authorized purposes, and that you were eligible under program rules. If those certifications were false and you knew they were false when you made them, that’s a violation of Section 1001 even if you never received a loan.
Section 1014 is more serious and carries up to 30 years in prison because it specifically targets false statements made to obtain money from financial institutions. This statute applies when you made false statements on your PPP application that was submitted to a bank or lender, and its designed to protect the integrity of financial institutions by punishing people who lie to get loans. The penalties are severe because Congress wanted to deter fraud against banks, and in the PPP context, prosecutors use Section 1014 aggressively because every PPP loan involved a financial institution even though the SBA was the ultimate guarantor.
What makes false statements charges particularly dangerous is that you can be prosecuted even if your scheme failed—you don’t have to successfully obtain the loan to be guilty of making false statements, you just have to have made the false statements with knowledge that they were false. And unlike fraud charges which focus on schemes and intent to defraud, false statements charges focus on individual lies, which means prosecutors can charge multiple counts based on each separate false certification or representation you made.
What Is Conspiracy and How Does It Increase Criminal Exposure?
Conspiracy charges under 18 U.S.C. § 371 or 18 U.S.C. § 1349 are charged in PPP cases where prosecutors believe multiple people worked together to commit fraud, and conspiracy charges are powerful prosecutorial tools because they allow the government to charge people who played supporting roles in the fraud even if they didn’t directly submit applications or receive loan proceeds. Conspiracy also extends the statute of limitations and makes it easier to admit certain evidence at trial.
Section 371 is the general conspiracy statute and prohibits conspiring to commit any federal offense or to defraud the United States. It carries up to five years in prison and fines of up to $250,000. Section 1349 specifically covers conspiracy to commit wire fraud or bank fraud and carries the same penalties as the underlying fraud offense—up to 30 years in prison. Prosecutors typically use Section 1349 in PPP cases because the penalties are much harsher and because it ties the conspiracy charge directly to the fraud scheme.
To prove conspiracy, the government must show that two or more people agreed to commit a crime, that you were a member of the conspiracy, and that at least one member of the conspiracy committed an overt act in furtherance of the conspiracy. The agreement doesn’t have to be formal or explicit—prosecutors can prove conspiracy through circumstantial evidence showing that people were working together toward a common criminal goal. In PPP cases, conspiracy charges arise when business owners worked with accomplices to submit multiple fraudulent applications, when loan preparers or consultants helped clients fabricate documents or inflate figures, or when people recruited others to apply for loans and then kicked back portions of the proceeds.
The danger of conspiracy charges is that your held responsible for everything your co-conspirators did in furtherance of the conspiracy, not just your own conduct. If you agreed to work with someone to submit fraudulent PPP applications, and they submitted 50 applications while you only submitted one, you can be held criminally liable for all 50 as part of the conspiracy. This dramatically increases sentencing exposure because the total loss amount includes all the money obtained by all members of the conspiracy, and loss amount is one of the biggest factors in federal sentencing.
What Is Aggravated Identity Theft and When Is It Charged?
Aggravated identity theft under 18 U.S.C. § 1028A is one of the most serious charges that can be added to PPP fraud cases because it carries a mandatory minimum sentence of two years in prison that must run consecutively to any other sentence you receive. This means if your convicted of bank fraud and sentenced to five years, and your also convicted of aggravated identity theft, your actual sentence is seven years minimum—the judge has no discretion to make the sentences run concurrently or to reduce the identity theft sentence below two years.
Aggravated identity theft charges arise when you knowingly use another person’s identification information without authorization during the commission of certain predicate offenses, including bank fraud, wire fraud, and false statements offenses. In PPP fraud cases, this typically happens when people use stolen Social Security numbers, fabricated identities, or real people’s personal information without permission to submit fraudulent loan applications. If you created fake employees and used real people’s SSNs for those fake employees, that’s aggravated identity theft. If you applied for a PPP loan using someone else’s name and EIN, that’s aggravated identity theft. If you submitted multiple applications using stolen identities, that’s multiple counts of aggravated identity theft with the two-year mandatory minimum for each count stacking on top of each other.
The mandatory consecutive nature of the sentence is what makes this charge so devastating. Prosecutors use identity theft charges as leverage in plea negotiations because defendants know that going to trial and losing means automatically getting at least two additional years on top of whatever sentence they receive for the underlying fraud. We’ve seen cases where defendants were facing relatively moderate sentences for the fraud charges—maybe three to five years—but because of aggravated identity theft charges, there minimum exposure was seven to nine years before they even walked into court.
One important limitation on aggravated identity theft charges is that the government must prove you knew you were using another person’s identification information. If you made up a random Social Security number that happened to belong to someone, but you didn’t know it belonged to a real person, that’s not aggravated identity theft—though it could still be other identity-related offenses. The statute requires knowledge that your using someone else’s real identifying information without authorization.
How Does Money Laundering Apply to PPP Fraud?
Money laundering charges under 18 U.S.C. § 1956 or 18 U.S.C. § 1957 are added to PPP fraud cases when prosecutors believe you took steps to conceal the source or ownership of fraudulently obtained loan proceeds, and money laundering dramatically increases criminal exposure because it carries up to 20 years per transaction, and there can be dozens or even hundreds of transactions in a complex fraud case. Money laundering charges transform a fraud case into what prosecutors like to call an “enterprise” case with the potential for life sentences when all the counts are stacked together.
Section 1956 is the main money laundering statute and prohibits financial transactions involving proceeds of specified unlawful activity (including bank fraud and wire fraud) where the transaction is designed to conceal the source or ownership of the funds, or where you know the transaction is designed to avoid reporting requirements. In PPP cases, money laundering charges arise when you receive fraudulent PPP loan proceeds and then engage in financial transactions to hide what you did with the money or to make it appear legitimate.
Common money laundering scenarios in PPP cases include transferring funds between multiple bank accounts to obscure the trail, using PPP proceeds to purchase assets in other people’s names to hide ownership, making large cash withdrawals that can’t be traced, wiring money offshore or to accounts in other countries, using PPP funds to purchase cryptocurrency to obscure the source of funds, or structuring transactions to avoid bank reporting requirements by keeping them under $10,000. Each of these transactions can be charged as a separate count of money laundering with 20 years in prison per count.
Section 1957 is a simpler but still serious money laundering statute that prohibits engaging in monetary transactions of more than $10,000 involving proceeds of specified unlawful activity. You don’t have to be trying to conceal anything—just conducting a transaction over $10,000 using fraud proceeds is enough. This statute carries up to 10 years in prison per transaction, and prosecutors use it to charge luxury purchases made with PPP funds like buying cars, boats, real estate, or jewelry with the stolen money.
The multiplication effect of money laundering charges is what makes them so dangerous. If you obtained $500,000 through PPP fraud and then made 20 different financial transactions moving or spending that money, prosecutors can charge 20 counts of money laundering with 20 years each, giving you a theoretical maximum exposure of 400 years in prison just for the money laundering charges alone, before even counting the underlying fraud offenses.
What Other Charges Can Be Added to PPP Fraud Cases?
Beyond the core charges of bank fraud, wire fraud, false statements, conspiracy, identity theft, and money laundering, prosecutors have a toolbox of additional federal criminal statutes they can use in PPP cases depending on the specific facts and how aggressive they want to be. These additional charges can include tax offenses, obstruction, forfeiture allegations, and even RICO charges in large-scale organized fraud schemes.
Tax evasion under 26 U.S.C. § 7201 or filing false tax returns under 26 U.S.C. § 7206 are charged when PPP fraud defendants either fail to report the fraudulently obtained loan proceeds as income or file false tax returns claiming business expenses or losses that were actually funded by PPP money. Tax charges carry up to five years per count for evasion and up to three years per count for false returns, and there investigated by IRS Criminal Investigation, which works closely with DOJ on PPP cases.
Obstruction of justice charges under 18 U.S.C. § 1503, witness tampering under 18 U.S.C. § 1512, or destruction of records under 18 U.S.C. § 1519 are added when defendants try to cover up their fraud after learning about investigations. If you destroyed documents, altered records, lied to investigators, or tried to get witnesses to lie for you, these obstruction charges can add 20 years or more to your potential sentence. The destruction of evidence charge is particularly broad and can be charged even if you destroyed records before you knew about an investigation, as long as prosecutors can prove you did it to impede a potential investigation.
Forfeiture allegations allow the government to seize any property that was purchased with PPP fraud proceeds or that was used to facilitate the fraud. Criminal forfeiture is part of the criminal case and results in the government taking assets through the judgment of conviction, while civil forfeiture can proceed separately and uses a lower standard of proof. If you bought a house, car, or other assets with fraudulent PPP funds, the government will seek forfeiture of those assets in addition to prison time and restitution.
How Long Is the Statute of Limitations for PPP Fraud?
The statute of limitations for PPP fraud prosecutions was originally five years for most of the criminal charges, but in 2022, Congress extended the statute of limitations to 10 years specifically for fraud offenses related to pandemic relief programs including PPP and EIDL loans. This means if you obtained a PPP loan through fraud in 2020 or 2021, the government has until 2030 or 2031 to bring charges against you, and for loans obtained in 2022 or later, the clock runs even longer.
The 10-year statute of limitations applies to bank fraud, wire fraud, false statements charges under Section 1014, and conspiracy charges related to these offenses. The extension was part of the COVID-19 relief fraud enforcement legislation and reflects Congress’s determination that pandemic fraud was serious enough to warrant longer prosecution windows. For other charges like false statements under Section 1001 or certain tax offenses, the standard five-year statute of limitations may still apply, although prosecutors typically charge the longer-limitation offenses to avoid time-bar issues.
What this means practically is that the government is still in the early stages of PPP fraud enforcement, and prosecutions are going to continue for many years. Just because several years have passed since you obtained your loan doesn’t mean your in the clear—investigators are still identifying fraudulent loans through data analysis, whistleblower reports, and cross-referencing of databases, and indictments are being filed now for conduct that occurred in 2020 and 2021. The 10-year limitation period gives prosecutors plenty of time to build cases methodically rather than rushing to beat a deadline.
The statute of limitations generally begins running from the date of the last act in furtherance of the fraud. For PPP loans, this might be the date you received the loan proceeds, the date you submitted your forgiveness application, or the date you were notified of forgiveness approval, depending on how prosecutors structure the charges. In conspiracy cases, the limitation period runs from the date of the last overt act by any member of the conspiracy, which can extend the deadline beyond when your own participation ended.
What Happens If I’m Convicted of Multiple Charges?
If your convicted of multiple charges stemming from your PPP loan fraud, the way those sentences are calculated and stacked together depends on whether the judge orders them to run consecutively (one after another) or concurrently (at the same time), and on whether there are any mandatory minimum or mandatory consecutive sentences that limit the judge’s discretion. Understanding how multiple sentences work is critical because it affects the total amount of time you’ll actually serve in federal prison.
For most fraud charges like bank fraud, wire fraud, false statements, and conspiracy, the judge has discretion to order sentences to run concurrently, meaning if your convicted of five counts and sentenced to five years on each count, you might only serve five years total if all sentences run at the same time. This is common when all the charges arise from a single scheme or course of conduct involving one PPP loan. However, judges can also order consecutive sentences if they believe the conduct warrants more punishment, and in cases involving multiple victims, multiple loans, or particularly egregious conduct, consecutive sentences become more likely.
Money laundering sentences and aggravated identity theft sentences are often run consecutively because judges view them as separate criminal conduct beyond just the underlying fraud. If your convicted of bank fraud with a five-year sentence, plus three counts of money laundering with three years each, plus aggravated identity theft with a mandatory two years consecutive, you could be looking at 15 to 20 years total depending on whether the judge stacks some or all of the sentences.
Federal sentencing is governed by the U.S. Sentencing Guidelines, which are advisory but heavily influential in determining actual sentences. The guidelines calculate a sentencing range based on the offense level (which increases with the amount of loss involved) and your criminal history. For fraud cases, loss amount is the primary driver—losses under $150,000 result in relatively low offense levels, while losses over $1 million result in significant guideline enhancements. PPP fraud cases typically involve substantial losses because even small businesses could qualify for loans of $150,000 or more, which means guideline sentences are often measured in years rather than months.
Acceptance of responsibility can reduce your sentence by about 25% if you plead guilty and don’t go to trial, and cooperation with the government by providing substantial assistance in investigating or prosecuting others can result in departures below the guideline range. These factors can make an enormous difference in actual time served, which is why many defendants ultimately decide to plead guilty and cooperate rather than going to trial and facing dramatically higher sentences if convicted.
How We Defend Against Federal PPP Fraud Charges
When you hire us to defend you against federal PPP fraud charges, we provide aggressive, strategic defense representation designed to achieve the possible outcome, whether that’s getting charges dismissed, winning at trial, negotiating a favorable plea agreement, or minimizing your sentence if conviction is unavoidable. We’ve successfully defended clients in federal fraud cases including PPP prosecutions, and we understand both how prosecutors build these cases and how to dismantle them.
We start with a thorough investigation of the charges against you and the evidence the government has or claims to have. We’ll obtain discovery including your loan applications, bank records, witness statements, and expert analyses, and we’ll examine every element of every charge to identify weaknesses in the government’s case. Federal prosecutors must prove each element of each charge beyond a reasonable doubt, and if we can create reasonable doubt on any essential element, the charge fails.
Our defense strategy focuses on challenging the government’s evidence and the key elements they must prove. For fraud charges, we attack intent—showing that errors in your application were good-faith mistakes rather than intentional lies, that you relied on professional advice from accountants or consultants who prepared your application, that you reasonably believed you were eligible based on confusing SBA guidance, or that you didn’t benefit from any false statements because the loan was used for legitimate business purposes. For false statements charges, we challenge materiality—showing that even if some representations were technically inaccurate, they didn’t affect the outcome or weren’t significant enough to constitute criminal false statements.
We investigate the government’s evidence collection to identify constitutional violations that might result in suppression of evidence. If investigators obtained evidence through unlawful searches, improper subpoenas, or violations of your rights, we file motions to suppress that evidence and to exclude it from trial. If the government obtained statements from you through coercive interrogation or without proper Miranda warnings, those statements may be inadmissible. Evidence suppression can cripple the government’s case and force dismissal or favorable plea offers.
We evaluate whether negotiated resolution makes more sense than going to trial based on the strength of the evidence, the charges your facing, and your sentencing exposure. If the government has overwhelming evidence and you’re facing mandatory minimum sentences or guidelines calling for decades in prison, negotiating a plea agreement that resolves some charges, dismisses others, and includes a sentencing recommendation can dramatically reduce your exposure. We negotiate from a position of knowledge and strength, using our understanding of the case and the law to achieve the possible terms.
If your case goes to trial, we provide aggressive courtroom advocacy to fight every charge and create reasonable doubt in the minds of jurors. Federal trials are won through effective cross-examination of government witnesses, presentation of defense evidence and expert testimony, and compelling closing arguments that tell your story and expose weaknesses in the prosecution’s case. We’re experienced trial lawyers who aren’t afraid to take cases to verdict when that’s the right strategy.
Throughout the process, we work to minimize the collateral consequences of your case including protecting your assets from forfeiture, negotiating restitution amounts, preserving your ability to work and support your family, and protecting your reputation to the extent possible. Federal prosecutions are life-altering events, but with proper representation, you can get through them and move forward with your life.
If your facing federal charges related to your PPP loan, don’t wait to get legal help. The earlier we get involved, the more options we have to protect you and build your defense. Contact us immediately for a confidential consultation, and let us fight to protect your freedom and your future.