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The Paycheck Protection Program (PPP) was designed to keep businesses afloat during the economic crisis caused by the COVID-19 pandemic. However, it unfortunately became a magnet for fraudulent activity. Countless companies and individuals took advantage of the federally-backed, forgivable loans offered under the PPP, leading to widespread investigations by the U.S. Department of Justice (DOJ).
If you or your company is targeted in a DOJ PPP loan fraud investigation, it is important to understand the gravity of the situation. The DOJ is serious about prosecuting individuals and companies suspected of submitting fraudulent loan applications or misusing PPP funds, and they are working with other federal agencies to do so. Nonetheless, there are several defenses that a skilled attorney can use to help you avoid or minimize potential penalties.
The DOJ is intently focused on prosecuting all forms of PPP loan fraud, and it is actively pursuing charges in numerous cases. With millions of dollars in forgivable loans at stake, it’s no surprise that they are aggressively investigating individuals and companies suspected of submitting fraudulent applications or certifications for PPP loan forgiveness. In a recent press release, the DOJ stated,
“The Paycheck Protection Program was designed to help Americans struggling with financial hardship during the pandemic. Our office will be aggressive in targeting anyone who defrauds this critical program.”
Given the magnitude of the fraud committed under the PPP, the DOJ is working hard to ensure that those responsible face consequences. They are filing criminal complaints and pursuing charges under numerous federal offenses, including:
Making false statements or reports to the SBA or FDIC-insured banks is a federal crime under 18 U.S.C. §1014. This includes submitting a fraudulent application for a PPP loan or falsely certifying that you qualify for loan forgiveness. Companies and individuals who make such false statements can face significant legal repercussions.
Bank fraud, wire fraud, and tax evasion are also serious crimes that the DOJ is targeting in PPP loan fraud cases. Bank fraud involves using false or fraudulent means to obtain money from a financial institution, while wire fraud involves using the internet to deceive someone for financial gain. Tax evasion is the act of willfully attempting to evade or defeat payment of taxes owed to the government.
Aggravated identity theft is the act of knowingly transferring, possessing, or using someone else’s identification information without lawful authority in connection with a federal offense. In PPP loan fraud cases, individuals may be accused of using someone else’s identity to apply for a loan or forge documents.
The False Claims Act is a federal law that imposes civil and criminal penalties for defrauding federal government programs like the PPP. While unintentional errors on a PPP loan application or forgiveness certification can lead to civil charges, intentionally defrauding the program can lead to criminal prosecution.
If you or your company is being investigated for PPP loan fraud, it is crucial to work with an experienced lawyer who can help you build a strong defense. Some of the potential defenses include:
One of the strongest defenses for individuals and companies accused of PPP loan fraud is to demonstrate compliance with program rules. If a company can prove that it lawfully obtained a PPP loan, established a segregated PPP loan account, and documented the appropriate use of funds, this can lead to a successful resolution of the investigation.
Criminal culpability generally requires intent to defraud. In cases where a company inadvertently obtained a PPP loan despite being ineligible, or used PPP funds improperly, lack of intent could provide a defense against certain charges. However, it is important to remember that unintentional fraud can still result in civil charges, which can carry very significant penalties.
If you are the subject of a DOJ investigation for PPP loan fraud, time is of the essence. It is important to speak with an experienced lawyer who can advise you on how to respond to the investigation and build a strong defense. At Spodek Law Group, our attorneys have extensive experience handling federal criminal cases and can help you navigate this complex legal landscape. Contact us today to schedule a consultation.
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WE'RE HANDLING SOME OF THE LARGEST PPP FRAUD CASES NATIONWIDE