What Are the Charges for PPP Loan Fraud?
What are the Charges for PPP Loan Fraud? Experienced white-collar crime counselors from Scrofano Law PC can provide information and advice. Call us today!
What Are PPP Loans?
In 2020, the federal government established the Paycheck Protection Program (PPP) as a $953 billion business loan program through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This program was designed to help self-employed workers, sole proprietors, nonprofit organizations, and tribal businesses continue to pay their employees.
PPP loans gained popularity because they allowed business owners to have their loans forgiven if they retained their workforce, maintained every employee’s salary, and covered their business expenses. Loan amounts were based on the average payroll cost and the number of employees. It was a requirement that PPP loan recipients use 60 percent of the loan to cover payroll expenses. Rent, utilities, and mortgage interest could be covered with the remaining 40%.
As a result of the low-cost loans offered under the PPP program, many struggling companies have been able to stay afloat. These low-interest rates have also attracted scam artists along the way, causing widespread fraud as people attempt to obtain PPP loans fraudulently.
What Causes PPP Loans to Be Flagged?
Several reasons may alarm the Small Business Administration over a PPP loan. Loan applications could be flagged for several reasons, including the following:
- The business submitted several PPP loan applications to various lenders.
- A fraudulent PPP loan application was submitted by the business.
- It was not a comprehensive PPP loan application.
- PPP loan funds were used for unauthorized expenditures.
- The business submitted a fraudulent PPP loan forgiveness certification.
Charges Associated With Fraudulent PPP Loans
Although the CARES Act is not a penal statute and has no criminal enforcement provisions, PPP loan fraud may still be prosecuted. Justice Department prosecutes pandemic-related fraud using pre-existing laws, including statutes related to:
- Bank fraud
- Wire fraud
- Mail fraud
- Tax evasion
- Identity fraud, identity theft, or aggravated identity theft
- Computer fraud
- Lying to federal agents
What Happens if You Fraudulently Get a PPP Loan?
If you intentionally omit information or make false statements when applying for a PPP loan, you may face criminal penalties, civil penalties, or financial penalties. The most severe consequences involve crimes such as wire fraud, mail fraud, and bank fraud.
For instance, making a false statement to a financial institution or the SBA can result in a hefty fine (up to $1 million) or imprisonment for up to 30 years.
The consequences of PPP loan fraud are not necessarily limited to those who benefit from federal PPP loan fraud. A conviction for conspiracy or attempted fraud could result in the same penalties. The reasoning behind these penalties is that even if the crime failed, you would have still been able to receive the funds if the fraud had succeeded.
If a PPP Loan Is Flagged as Possibly Fraudulent, What Happens?
If your PPP loan has been flagged, you may receive a subpoena or other civil investigative demand. Depending on which agency is investigating you, there are various ways in which an investigation can go.
An experienced PPP loan fraud defense attorney can guide and assist you if you are under investigation for PPP fraud.
How Are PPP Loans Handled After They Are Flagged?
Once a PPP loan has been flagged, it is primarily up to the investigating agency to determine how it will be handled. Also, the federal agency responsible for your case will depend on the type of PPP loan fraud involved, that is, whether it is wire fraud, bank fraud, or mail fraud.
If the SBA flags your PPP loan, they may request a federal search warrant. Usually, this is where the investigation into fraudulent PPP loans begins.
If your PPP loan has been flagged, it is critical that you immediately seek legal counsel from an experienced PPP loan fraud attorney.
What Are the Possible Defenses to PPP Loan Fraud Accusations?
With the help of an experienced PPP loan fraud attorney, you may be able to reduce the charges or have them dropped entirely. These include:
Lack of intent: To be considered PPP loan fraud, your actions must have been intended to gain federal funding by trickery, deception, or subterfuge (fraud). The jury may consider defenses such as carelessness, negligence, or accidents.
Defendant’s error: It may be possible to argue that an application was filled incorrectly by you
Deception: If you believe you were eligible to apply for the loan, you can claim deception on your part
Illegal search: If federal agents obtained evidence illegally or conducted an investigation without a warrant, such evidence would be invalid, and it is possible for the case to be dismissed.
Coercion: Coercion can be used to claim that you were forced to participate in fraudulent application processes.
Honest communication: If you disclosed your true intentions for the funds, you did not commit fraud
If you are facing a fraud charge in Virginia, it is critical to contact experienced fraud defense lawyers as soon as possible to build your defense for a successful outcome.
How a Criminal Defense Attorney Can Help You
If you are the target of a PPP loan fraud investigation, you may want to avoid talking to any law enforcement officers or government employees, especially in the absence of your lawyer.
Working with an aggressive lawyer with experience in federal criminal cases can give you the best chance of success. Our attorneys can assist you if you are accused of loan fraud or violating a social distancing law in Washington, DC. Don’t hesitate to contact us to schedule a free in-depth case assessment.
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