FEDERAL CRIMINAL LAWYERS

You received a letter from the SBA Office of Inspector General about your PPP loan

You received a letter from the SBA Office of Inspector General about your PPP loan. Then FBI agents showed up at your business. Now the IRS is requesting documents. You’re terrified: why are three different federal agencies investigating the same PPP loan? Thanks for visiting Spodek Law Group – a second generation law firm with over 50 years of combined experience. Our managing partner, Todd Spodek, has many, many, years of experience defending clients in high-profile federal fraud cases covered by NY Post, Newsweek, and other national outlets – including Anna Delvey and juror misconduct allegations in the Ghislaine Maxwell trial. This article explains the eight federal agencies that investigate PPP fraud, how they coordinate, and the difference between civil audit and criminal investigation.

Federal Agencies

When you’re under investigation for PPP fraud, you’re facing a coordinated federal task force involving eight separate agencies. The SBA Office of Inspector General (SBA-OIG) is the primary oversight agency, using data analytics to flag fraudulent loans by comparing application data against IRS tax returns and Social Security death records. When SBA-OIG detects fraud, it refers cases to FBI and DOJ for criminal prosecution.

The FBI conducts criminal investigations, with White Collar Crime division handling corporate fraud. FBI has jurisdiction over all federal fraud investigations. The DOJ prosecutes through U.S. Attorney’s Offices in all 94 federal districts. The IRS Criminal Investigation investigates cases involving tax fraud or false tax documents. The Secret Service investigates financial crimes, particularly identity theft and organized fraud rings. The Postal Inspection Service has jurisdiction over mail fraud. The FDIC OIG investigates fraud involving FDIC-insured banks. The DOL OIG investigates false payroll representations.

Eight agencies. All coordinated. One investigation.

Task Force

On May 17, 2021, Attorney General Merrick Garland established the COVID-19 Fraud Enforcement Task Force to marshal DOJ resources in partnership with agencies across government. This inter-agency partnership includes DOJ Criminal Division, Civil Division, U.S. Attorneys, FBI, IRS-CI, Homeland Security Investigations, SBA-OIG, DOL-OIG, and HHS-OIG. The Task Force created shared database tools, reviewing approximately 15 million PPP and EIDL loans.

The Task Force established five regional strike forces located in District of Maryland, Southern District of Florida, District of New Jersey, District of Colorado, and Eastern/Central Districts of California. According to the COVID-19 Fraud Enforcement Task Force 2024 Report, more than 3,500 defendants have been charged, over $1.4 billion in stolen relief funds have been seized or forfeited, and more than 400 civil lawsuits filed. The SBA Office of Inspector General investigations resulted in over 1,200 criminal indictments and nearly 700 convictions.

Here’s how coordination works: SBA-OIG uses data analytics to flag fraudulent loan, refers to FBI for criminal investigation. FBI conducts interviews, executes search warrants, gathers financial records. If case involves tax fraud, IRS-CI joins investigation. U.S. Attorney’s Office coordinates all agencies and decides whether to file criminal charges or civil lawsuits. Agencies share databases – SBA shares loan data, IRS shares tax returns, Secret Service shares identity theft data, banks report suspicious activity. When you receive contact from multiple agencies, they’re building one comprehensive case, not three separate investigations. The trap closes. Coordinated investigation. Coordinated prosecution. Coordinated enforcement.

Civil vs Criminal

Civil or criminal. That’s the question.

Understanding the difference between civil audit and criminal investigation is critical. A civil audit is conducted by SBA Loan Review Division (not SBA-OIG) to verify your PPP loan was used for authorized purposes and determine forgiveness eligibility. Purpose is loan compliance review, not criminal prosecution. Outcome: repayment demand, denial of forgiveness, or civil penalties – no criminal charges, no prison. You can negotiate repayment. Letter comes from “SBA Loan Review” or “SBA Office of Capital Access.”

A criminal investigation is conducted by SBA-OIG and FBI to determine whether you committed federal crimes – wire fraud under 18 U.S.C. § 1343, bank fraud under 18 U.S.C. § 1344, or false statements under 18 U.S.C. § 1014. Purpose is to build criminal case for prosecution. Result: federal indictment, prison sentences up to 30 years, mandatory restitution, asset forfeiture. Your Fifth Amendment right applies – you cannot be forced to provide evidence against yourself. Cannot negotiate away criminal charges, only plead to lesser charges. Letter comes from “SBA Office of Inspector General” or “FBI.”

How to identify which type: look at source of contact. If from SBA-OIG, FBI, IRS-CI, Secret Service, or Postal Inspection, it’s criminal investigation. If from SBA Loan Review or SBA Office of Capital Access, it’s civil audit. Criminal investigations involve search warrants, grand jury subpoenas, FBI interviews. Civil audits involve document requests and compliance reviews. In civil audit, cooperation resolves matter – in criminal investigation, any statement used to prosecute you. This destroys your defense.

Detection

Understanding how federal agencies detect PPP fraud and what authority they have to seize your assets helps evaluate exposure. SBA-OIG uses automated data analytics systems comparing your PPP application data against multiple government databases. System flags your loan if business doesn’t appear in IRS tax records for 2019, if EIN doesn’t match business name in IRS databases, if payroll figures on PPP application don’t match payroll reported on 2019 tax returns, if business formed after February 15, 2020 eligibility cutoff, or if multiple PPP loans submitted from same IP address. This is how most PPP fraud cases begin – not through manual review, but through automated systems detecting data mismatches. Data analytics. Algorithmic detection.

Other detection methods include whistleblower tips from former employees, business partners, or ex-spouses who report fraud to SBA-OIG hotline. Banks flag suspicious activity when they observe luxury purchases immediately after PPP funds deposited, large wire transfers to foreign accounts, or cash withdrawals inconsistent with normal business operations. Federal agents monitor social media – if you claimed economic necessity but posted photos on Instagram of luxury vacations, expensive cars, or jewelry purchases during 2020-2021, investigators use this as evidence you didn’t need the loan. Cooperating witnesses – co-conspirators who plead guilty early – provide evidence about organized fraud schemes.

Federal agencies have extensive authority to seize assets connected to PPP fraud. Before indictment, FBI or Secret Service can obtain seizure warrant from federal magistrate judge and seize assets if they show probable cause assets are proceeds of fraud. After conviction, court orders forfeiture of all proceeds from PPP fraud, including funds in bank accounts, real estate purchased with PPP money, vehicles, luxury items, and business assets. Your assets disappear. As of 2024, COVID-19 Task Force seized or forfeited over $1.4 billion. Even after assets seized and forfeited, you still owe mandatory restitution of full loan amount. DOJ can file civil asset forfeiture lawsuits under 31 U.S.C. § 3729 (False Claims Act) even without criminal conviction – civil standard of proof is lower (preponderance of evidence instead of beyond reasonable doubt), which means DOJ can seize assets in civil case even without enough evidence for criminal conviction. Asset seizure. Civil forfeiture. No conviction required.

Closing

Don’t talk to SBA-OIG, FBI, or IRS without attorney. Don’t assume civil audit letter means you’re safe from criminal prosecution. Don’t provide documents to multiple agencies without coordinating responses. Don’t. Fifth Amendment. Your Fifth Amendment right protects you – SBA-OIG can open criminal investigation at any time – inconsistent statements used against you. Unlike other law firms who don’t understand complex coordination between SBA-OIG, FBI, IRS-CI, Secret Service, and COVID-19 Task Force, Spodek Law Group has defended clients against simultaneous multi-agency investigations – we coordinate responses to all agencies. We are available 24/7 for a risk-free consultation. Call now: 212-300-5196.