Facing Federal Paycheck Protection Program (PPP) Fraud Charges?

Seeking Immediate Counsel from a Federal Defense Lawyer is Imperative

The earlier you receive expert counsel, the more likely your matter will end favorably. If you’re facing prosecution, contact us immediately.

Federal Paycheck Protection Program (PPP) Fraud Charges in New York

PPP fraud refers to the illegal schemes devised by individuals or organizations to exploit the Paycheck Protection Program (PPP) for personal gain. It involves intentionally providing false information, misusing funds, or creating fraudulent businesses to secure PPP loans. PPP fraud undermines the program's purpose, deprives legitimate businesses of assistance, and diverts taxpayer dollars into the hands of fraudsters.

The Paycheck Protection Program was introduced in response to the economic challenges caused by the COVID-19 pandemic. With the onset of the COVID-19 pandemic, the United States government put into place numerous methods for individuals and businesses to obtain relief loans in order to offset devastating losses due to long-lasting shutdowns.

Aimed at helping small businesses, the PPP provided forgivable loans to eligible businesses to cover payroll and other expenses. Unfortunately, the process and qualifications to obtain SBA Loans by way of EIDL and PPP applications are vague, vast, and tedious. Many individuals and companies hurried these applications along without the assistance of an accountant or lawyer, and many of those applications were subsequently approved by the government.

However, in recent months, federal agents, prosecutors, and IRS officials have now scrutinized these applications more carefully, and have begun charging many individuals with committing PPP fraud. Since its creation, the CARES Act has been blamed for creating opportunities for possible fraud. As a result, and because billions of dollars were disbursed with little oversight, many loan recipients will be investigated by federal authorities for potential fraud.

Pursuant to 18 U.S.C. 371 is any conspiracy that has as its object any federal offense against the United States or any fraud or deceit committed against it. Federal prosecutors and agents will target a person or business that violated the terms and conditions of the PPP program by doing any of the following acts:

• submitting false information on a PPP loan application,
• applying for a PPP loan from several lenders (loan stacking),
• fraudulent loan certification,
• using PPP funds for an unapproved purpose,
• lying to federal agents during a PPP loan fraud audit.

To be convicted of this crime, the government must prove that you agreed with one or more other people to commit an illegal act and that you took some action towards carrying out that plan. 

Within the realm of PPP loan fraud, federal prosecutors have set out to show that you and another created a plan to fill out fraudulent PPP loan applications or used SBA/PPP loan money in a way that it was not intended for (i.e. personal expenses as opposed to business).

Pursuant to 18 USC 1349, an attempt made by an individual to commit a federal fraud is viewed as the same as actually succeeding in that crime. Hence, the penalty is the same.

Sentencing & Penalties in New York

According to media outlets, the Department of Justice has now charged individuals with committing bank fraud, wire fraud, and money laundering as it relates to these CARES Act loans, totaling some $175 million dollars. Thus far, the government has honed in on individuals and companies who have made multiple loan applications, sometimes on behalf of others in exchange for a percentage of the money that they ultimately recover. This has been referred to as “clone loans” and “loan stacking.”

The government has also looked at material misrepresentations within loan applications, particularly as it relates to a company’s purported loss of income during the time period which the loan sought to offset.

Lastly, the government has honed in on improper use of loan money, which is typically suspected when individuals use these monies to pay off recent personal expenses or other debts.

Under 18 U.S.C. 371, a conviction of conspiracy can result in a maximum of 5 years in prison and significant fines, even if the plan does not succeed. On the other hand, the penalty for conviction under 18 U.S.C. 1349 could be significantly less or more, depending on the underlying crime you're charged with.

Notably, 18 U.S.C. 1349 makes you eligible for the same sentence for attempting to commit PPP loan fraud as if you had succeeded. If successful, you'd also have to pay back the money you took fraudulently.

How We Fight Paycheck Protection Program (PPP) Fraud Charges

Being charged with CARES Act fraud as it relates to an SBA, PPP, or EIDL loan is complex and requires meticulous defense. As stated, in its efforts to provide relief during COVID-19, the government created fast and loose regulations concerning these applications and has now zeroed in on people who have intentionally taken advantage of the system and even innocent individuals who they nevertheless suspect of doing the same.

It is critical that, if you are being investigated by way of a federal subpoena, you hire an experienced defense attorney to organize your records, consult with a forensic accountant, and respond appropriately. Many times, a strategic defense attorney can use to his or her advantage the voluminous accounting and bookkeeping records that everyday individuals and businesses have who are being targeted with PPP loan fraud.

Moreover, because many individuals and companies applied for complex PPP loans in a hurry and without guidance, defense counsel can make legitimate arguments that the defendant did not possess the requisite intent or knowledge in executing a loan for fraudulent purposes.

Your Defense Begins Now

Federal fraud attorneys and lawyers are instrumental in the fight against PPP fraud. Their expertise in white-collar crime, federal law, and the intricacies of fraud investigations enables them to play a vital role in bringing perpetrators to justice.

If you are accused of federal fraud charges related to the paycheck protection program (PPP), it is imperative that you hire a former prosecutor and prominent criminal defense attorney who has dealt with these offenses on both sides of the courtroom. The steps your defense attorney takes, by way of investigation and creative advocacy, will increase your chances of successfully walking away from these serious accusations and shape the rest of your life.

The sooner you put your case in the hands of an experienced criminal defense lawyer, the more opportunity you will have to work toward a favorable outcome. Contact The Law Offices of Jason Goldman today.