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Signed into law on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was intended to provide much-needed relief to individuals and companies affected by the devastating COVID-19 pandemic. One of the central features of the CARES Act was the Paycheck Protection Program (PPP). Endowed with almost $350 billion in federal funds, the PPP aimed to provide critical financial support to small and medium-sized businesses grappling with the economic fallout from the pandemic. Despite the PPP’s massive size, its funds were exhausted in a matter of minutes. Financial institutions participating in the PPP were inundated with applications, and many eligible companies were left in the lurch. Given the nature of the PPP and the unprecedented pace at which its allocation was depleted, federal authorities are likely to subject many of the companies that received PPP loans to intense scrutiny to identify potential instances of fraud. In response to concerns about fraud and other issues that emerged during the PPP’s rollout, the U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC) is soliciting feedback from lenders to improve future programs and address the PPP’s flaws. Fraud identification is expected to be a key area of focus, given the chaotic nature of the application process and the existence of fraudsters who seek to exploit federal relief programs. Aside from concerns about fraud identification, there are other potential fraud issues related to PPP. Several government agencies are combing through PPP data to identify companies that may have unlawfully received funds. These companies face a high risk of prosecution, especially given the intense media scrutiny that the PPP received after its immediate depletion. It is crucial for these companies to engage experienced federal counsel to mitigate the risk of substantial penalties. The PPP was intended to provide a lifeline to small and medium-sized businesses struggling with the economic fallout from the COVID-19 pandemic. However, its hasty rollout and the subsequent depletion of its funds left many legitimate businesses in the lurch while opening the door for potential fraudsters. If your business is facing allegations of PPP fraud, it is essential to act quickly and strategically to mitigate the risk of criminal charges and other penalties.
If you, or a family member, is under investigation, or has had charges filed against him/her, then you need a top NYC criminal attorney to help you, and protect you. With over 50 years of combined experience, the Spodek Law Group understands the challenges. We understand the pressure you are under – a conviction can represent a financial, reputational, and personal, disaster. When you hire the Spodek Law Group, you’re hiring a firm that has handled cases on a national scale, and has the aggressiveness to represent you – and achieve the possible legal outcome. Bottom line, you’re hiring a criminal defense law firm who knows when to fight, and how to win.
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Very diligent, organized associates; got my case dismissed. Hard working attorneys who can put up with your anxiousness. I was accused of robbing a gemstone dealer. Definitely A law group that lays out all possible options and alternative routes. Recommended for sure.
- ROBIN, GUN CHARGES ROBIN"Todd is passionate about helping clients win. He is equally passionate about being honest, and ensuring his clients know what's going on at all times."
- Tammy Assault and Robbery
Todd Spodek, the managing partner of the Spodek Law Group, is a second generation criminal defense attorney who’s committed to helping innocent people accused of crimes. With over a decade of experience, Todd has earned a reputation as one of the most dedicated criminal defense attorneys in the country.At the Spodek Law Group, Todd takes the mission of the firm seriously. He’s dedicated to leveraging the law to help his clients get the legal outcome they need and deserve. Todd knows that being accused of a crime is a frightening experience, and that it can be devastating for the individual and their family. As such, he’s committed himself to helping each and every single person possible, without worrying about money.
Todd instituted a flexible payment plan as a way of ensuring that every person can get the quality service they deserve, regardless of their financial situation. This payment plan allows his clients to pay for their legal fees in installments, which can ease the financial burden of hiring a criminal defense attorney. Todd’s dedication to his clients has earned him the respect of judges, fellow prosecutors, attorneys, and clients alike. He’s a skilled negotiator and litigator who is known for his ability to achieve positive outcomes for his clients. Todd understands that every case is unique, and he works tirelessly to build a strong defense that is tailored to each client’s specific needs.
What Constitutes Paycheck Protection Program (PPP) Loan Fraud?
Under the Paycheck Protection Program (PPP), businesses are eligible to apply for federal funds to cover payroll costs and other expenses during the COVID-19 pandemic. Unfortunately, the PPP has also become a target for fraudsters who are attempting to exploit the program for personal gain. In this article, we’ll explore what constitutes PPP loan fraud and what companies need to do to avoid becoming targets of federal investigations.
There are various types of PPP loan fraud that can lead to allegations of federal fraud. The following are all possible allegations of fraud in relation to the PPP:
“Loan stacking” is an illegal practice where an applicant receives PPP loans from multiple lenders. The federal government has the ability to track the distribution of all funds from the Paycheck Protection Program, and companies that received funds from more than one lender may become early targets in the government’s efforts to prosecute PPP fraud.
PPP loan applications have multiple eligibility criteria. Companies that misrepresented information on their loan applications in order to fraudulently claim eligibility could face prosecution as well. Misrepresenting information such as the number of employees, misclassifying employees as independent contractors, misrepresenting that they met the applicable Small Business Administration (SBA) employee-based size standards for eligibility in their particular industries, and misrepresenting the company’s payroll costs can all result in allegations of fraud.
PPP loan applicants were required to certify to various facts, and bad-faith certifications have the potential to lead to charges for federal fraud. Certifications include statements such as “Current economic uncertainty makes the loan necessary to support your ongoing operations,” and “All the information you provided in your application and all supporting documents and forms [are] true and accurate.”
Companies that received federal funds through the PPP are restricted to using those funds for specific purposes. Using PPP funds for any other purpose is impermissible and has the potential to lead to allegations of fraud.
Individuals who are personally involved in fraudulent activities related to the PPP can face tens of thousands of dollars in fines and up to five years of federal imprisonment. Company owners and executives could be at risk of hundreds or millions of dollars in criminal fines and decades behind bars.
Companies that are eligible for loan forgiveness must provide documentation that they have continually met the eligibility criteria and that they have used their PPP funds for authorized expenses.
Making false statements or withholding information you are required to disclose to federal authorities is itself a form of fraud, and you could potentially face individual prosecution for making false statements to federal law enforcement agents.
If you or your company is targeted in a PPP loan fraud audit or investigation, the single most important thing you can do is to engage experienced federal defense counsel right away. At Todd Spodek Law Firm, our federal defense attorneys are actively representing clients in a broad range of issues related to the novel coronavirus (COVID-19) pandemic, and we can use our experience to protect you.
When most small business owners and company executives applied for PPP loans, they had no idea they were potentially exposing themselves to criminal liability.
The CARES Act, which established the PPP, was designed to provide financial security to individuals and businesses that were struggling due to the pandemic’s economic impacts. However, with the PPP’s limited eligibility requirements and limited oversight at the time, the program was highly susceptible to fraud.
As a result, the SBA established a grace period during which individuals and businesses could return fraudulently obtained funds without penalty. Now that this period has expired, federal agencies such as the SBA-OIG and the DOJ are actively pursuing investigations to uncover PPP loan fraud, and many of these investigations are resulting in criminal charges.
PPP loan fraud refers to obtaining benefits under the program despite not being eligible to do so, and it can encompass both civil and criminal offenses. Any act undertaken in furtherance of efforts to either (i) obtain a PPP loan despite being ineligible, (ii) take advantage of a PPP loan for unauthorized purposes, or (iii) secure PPP loan forgiveness without eligibility can be prosecuted as PPP loan fraud.
Some examples of acts that are being prosecuted as PPP loan fraud include obtaining multiple PPP loans from multiple SBA 7(a) lenders, misrepresenting a company’s payroll or misclassifying employees, misrepresenting a company’s eligibility under the SBA’s employee-based size standards for particular industries, and using PPP loan funds for ineligible business purposes or for an illegal purpose.
If you or your company is accused of PPP loan fraud, it is important to take immediate action to protect yourself. The first and most critical step is to engage experienced federal defense counsel who can help you navigate the complex legal and regulatory issues involved in defending against fraud allegations.
At Todd Spodek Law Firm, we have extensive experience representing clients in federal criminal investigations and prosecutions, and we are committed to fighting for our clients’ rights and interests. Our attorneys are dedicated to providing personalized attention to each and every client, and we will work tirelessly to develop a customized legal strategy that is tailored to your specific circumstances.
Individuals and companies that are found guilty of PPP loan fraud can face severe consequences, including fines, restitution, and imprisonment. The exact penalties will depend on the specific nature of the offense, the amount of money involved, and other factors.
In addition to criminal penalties, PPP loan fraud can also result in civil liability, including the requirement to repay fraudulently obtained funds and the imposition of treble damages and penalties under the False Claims Act. These consequences can be devastating, both personally and professionally, and it is critical to take immediate steps to protect yourself if you are facing allegations of PPP loan fraud.
If you or your company is facing allegations of PPP loan fraud, the attorneys at Todd Spodek Law Firm can help. We have the experience and expertise necessary to defend against even the most complex fraud allegations, and we are committed to protecting our clients’ rights and interests throughout the legal process.
Contact us today to schedule a consultation and learn more about how we can help you navigate this challenging and uncertain time.
If you’re interested in getting legal help, schedule a risk free consultation by either filling out a contact form on our website, or by calling us.
PPP Fraud | EIDL Defense | Loan Fraud