The Payment Protection Program is a program created by Congress to help business owners financially survive the pandemic. A PPP loan is forgivable, but the funds could only be used to cover certain eligible expenses, such as paying salaries, rent, or other eligible business expenses.
What Are Some Things You Have Seen Related to PPP Loan Fraud Investigations?
PPP loan fraud investigations have been in the news a lot lately. Multiple individuals have been charged nationally with PPP fraud. The usual scenario is an applicant using forged documents or forged tax returns to establish their eligibility for the PPP loan. Though each case is unique, I have seen people receive millions of dollars to cover business expenses they did not have. Instead, they would use the money for personal expenses, like buying a Bentley or a mansion.
Is the U.S. Department of Justice Cracking Down on PPP Loan Applications and Other Fraudulent Activities?
The United States Department of Justice is investigating and prosecuting these cases. However, there are millions of applications, and the government does not have the capacity to double-check every single application. Therefore, to find more offenders, the government has started relying on computers and algorithms to flag suspicious applications. When the government gets a reason to believe that there was fraudulent activity, they will commence an investigation.
What Federal Charges Could Someone Be Facing When They Are Charged with PPP Loan Fraud?
PPP is a federal program; you are borrowing money from the Small Business Administration (SBA), which is a federal agency. When you apply for the program, you sign various statements attesting that the application you are signing is true and correct. If the government later catches you lying, you can be prosecuted. In addition, the government can charge all types of fraud crimes against the United States involving PPP loans, including engaging in wire fraud and bank fraud.
What Should Someone Expect If They Are Contacted by Authorities Regarding Their PPP Loan Application?
Do not say anything to the authorities if they reach out. Contact your attorney immediately.
What Are My Obligations to Comply with Investigators in a PPP Loan Fraud Investigation?
There is no obligation to provide the government with any information unless you get a subpoena to produce some documents or to testify at a grand jury, or unless government agents enter your home pursuant to a search warrant. If you want to give up information voluntarily, that is an option, though it’s probably not a good idea until you have spoken with a criminal defense attorney. My advice is to discuss your situation with your attorney before complying with any requests. Together, you and your attorney can develop a strategy to respond and limit your criminal exposure. Whether or not to comply with law enforcement demands is not a decision you should make on your own.
If I Unintentionally Committed an Error on the Application Form, Is That a Valid Defense in a PPP Loan Fraud Case?
The government is not looking to prosecute applicants who made innocent mistakes on their forms. The government and U.S. Attorney’s Office are looking to prosecute fraudsters who intentionally filed fraudulent applications with the intention of enriching themselves. Those are the people we see on the news being prosecuted. Those are the people whom the government alleges got millions of dollars and, instead of paying their employees, bought a house. I have not seen any case where someone was prosecuted for making an innocent mistake.
My Business Partner Applied for and Received a PPP Loan. Could I Be Charged with Fraud If They Did Something Illegal?
You can be charged, but being charged with a crime does not mean being convicted. A charge is an accusation, and whether the government is going to be able to prove it is a separate issue. Depending on the circumstances, anybody can be charged with anything, but it doesn’t mean that the government will win. That’s why you need a good attorney who will fight for you and help you win your case.
For more information on PPP Loan Fraud Cases in Federal Court, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (718) 989-2908 today.