PPP Loan Fraud

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by | October 8, 2024

What is the Paycheck Protection Program?

The Paycheck Protection Program (PPP) was a relief program enacted by Congress through the CARES Act. It was a COVID-19 pandemic-era program that helped small businesses keep employees on the payroll during the pandemic. The Small Business Administration (SBA) administered the loans and offered forgiveness for businesses that used the loans for approved purposes. While the PPP ended in May of 2021, federal law enforcement agencies have been scrutinizing applicants and recipients ever since.

Several federal agencies are investigating PPP loan applicants and recipients. Some of the agencies include the Federal Bureau of Investigation (FBI), U.S. Department of Justice (DOJ), the Small Business Administration Office of Inspector General (SBA OIG), and the Internal Revenue Service Criminal Investigation Division (IRS CI). These agencies continue to scrutinize documents and transactions related to PPP loans and send cases to the United States Attorney’s Office for prosecution.

PPP Loan Fraud Investigations 

Investigations into potential acts of PPP fraud take many forms. Investigators are looking into each of the stages of the PPP loan process to find violations from during the initial application process all the way up to loan forgiveness. They are also looking into how small businesses used the PPP loan funds to ensure that businesses spent the money they received for approved purposes.

Federal investigations into potential acts of fraud typically focus on whether applicants and recipients: 

  • Included false statements on PPP loan applications
  • Used PPP loan funds for unauthorized purposes
  • Falsely certified that their business was eligible for PPP loan forgiveness
  • Made false statements to investigators 
  • Used non-employee’s information to falsify payroll records 
  • Submitted multiple PPP loan applications to lenders

Potential Consequences of PPP Loan Fraud Charges

If you are charged with PPP loan fraud, you can face both criminal and civil penalties. The federal government takes fraud charges very seriously, so convictions for these types of crimes can result in felony convictions. These types of charges are serious for individuals as well since felony convictions carry with them many collateral consequences. A felony conviction can have impacts on your professional life. For example, it can impact future employment and your ability to obtain and maintain security clearances or professional licenses. Not only that, but courts often order restitution in these types of cases, which can result in additional financial pressures. 

Some common charges for PPP loan fraud include: 

Wire Fraud, 18 U.S.C § 1343, which is punishable by imprisonment up to 20 years and up to a $500,000 fine.

Bank Fraud, 18 U.S.C § 1344, which is punishable by imprisonment up to 30 years and up to a $1 million fine.

Aggravated Identity Theft, 18 U.S.C § 1028A, which carries a mandatory term of imprisonment of 2 years, consecutive to any other term imposed.

Making False Statements to Federal Agents, 18 U.S.C § 1001, which is punishable by imprisonment up to 5 years and up to a $250,000 fine.

Attempt and Conspiracy, 18 U.S.C § 1349, which carries the same imprisonment and monetary penalties as the underlying offense.

How a Federal Criminal Defense Attorney Can Help 

If law enforcement officials or the United States Attorney’s Office have contacted you or sent you a target letter, contact us today for a free consultation. It is important to speak with an attorney to take proactive steps to avoid or mitigate civil and criminal liability. Our criminal defense attorneys can assist you or your business with cases in the District Court for the Eastern District of Virginia and the District Court for the District of Columbia. Our office is conveniently located less than a mile and a half from the Alexandria Division of the District Court for the Eastern District of Virginia.