Criminal Liability for PPP Loan Fraud

As a business owner, you may have utilized the Paycheck Protection Program (PPP) to keep your company afloat during the COVID-19 pandemic. However, the federal government has been increasingly scrutinizing PPP loan recipients, leading to audits and criminal investigations. If you're facing allegations of misusing PPP funds, it's crucial to act swiftly and secure a strong legal defense.

Understanding PPP Loan Fraud

PPP loan fraud occurs when a business owner or individual makes false statements or misuses funds obtained through the Paycheck Protection Program. This program, established under the CARES Act, was designed to help businesses weather the economic impact of the COVID-19 pandemic. However, with billions of dollars distributed, the federal government has implemented strict oversight and enforcement efforts to identify fraudulent activity.

When a person is accused of PPP loan fraud, the consequences can be severe. Federal prosecutors may charge individuals with a range of serious criminal offenses, each carrying substantial penalties. Understanding the potential criminal liability associated with PPP loan fraud is crucial for anyone under investigation.

Common Types of PPP Loan Fraud

False Statements on Loan Applications

This includes providing inaccurate information about the number of employees, payroll costs, or business operations to secure a larger loan than you are entitled to. False statements can lead to charges of fraud against the Small Business Administration (SBA).

Misuse of PPP Funds

PPP loans must be used for specific purposes, such as payroll, rent, or utilities. Using the loan for personal expenses or unauthorized business costs can result in allegations of misuse of federal funds.

Identity Theft or Misrepresentation

Some individuals have been accused of applying for PPP loans using false identities or creating fictitious businesses to defraud the government. Identity theft and misrepresentation are serious offenses that carry additional penalties.

Submission of False Documentation

The government requires supporting documents, such as payroll records and tax forms, during the PPP loan application process. Submitting falsified documents can result in criminal charges for forgery or filing false claims.

Inflating Payroll or Employee Numbers

Overstating the number of employees or inflating payroll expenses to maximize the loan amount is another common form of fraud, leading to potential charges of wire fraud or bank fraud.

Criminal Liability of a PPP Loan Fraud Conviction

If convicted of PPP loan fraud, the penalties can vary depending on the specific charges and circumstances of the case. Below are the common charges and the corresponding criminal liabilities:

Wire Fraud (18 U.S.C. § 1343)

• Involves using electronic communications, such as emails or online platforms, to execute fraudulent schemes.
• Penalties: Up to 20 years in federal prison, fines, and restitution payments.

Bank Fraud (18 U.S.C. § 1344)

• Occurs when an individual defrauds a financial institution, such as a bank, in obtaining PPP loans.
• Penalties: Up to 30 years in federal prison, fines of up to $1 million, and restitution.

Making False Statements to a Federal Agency (18 U.S.C. § 1001)

• This charge applies when false information is provided to a federal agency, such as the SBA.
• Penalties: Up to 5 years in prison and significant fines.

Conspiracy to Commit Fraud (18 U.S.C. § 371)

• When two or more individuals conspire to commit PPP loan fraud, they may be charged with conspiracy, even if the fraud is not completed.
• Penalties: Up to 5 years in prison and fines.

Aggravated Identity Theft (18 U.S.C. § 1028A)

• Using or stealing someone else’s identity to apply for PPP loans can result in additional charges for identity theft.
• Penalties: Mandatory 2-year prison sentence, served consecutively with other charges, and fines.

Money Laundering (18 U.S.C. § 1956)

• Involves transferring or disguising illegally obtained PPP loan funds to make them appear legitimate.
• Penalties: Up to 20 years in prison, substantial fines, and forfeiture of assets.

Additional Consequences

In addition to the criminal penalties, a conviction for PPP loan fraud can also lead to:

• Restitution – The convicted individual may be required to repay the entire amount of the fraudulent loan, along with additional penalties.
• Asset Forfeiture – The government may seize property, bank accounts, or other assets obtained through fraudulent means.
• Permanent Damage to Reputation – A conviction can irreparably damage your personal and professional reputation, leading to loss of business, difficulty in securing future loans, and public distrust.

Why You Need a PPP Loan Fraud Defense Lawyer

If you're being investigated for PPP loan fraud, you need an experienced attorney who understands federal criminal law and the complexities of the CARES Act. At Varghese & Associates, P.C., PPP loan fraud defense lawyer team has successfully defended business owners in high-stakes fraud cases. We know how the federal government builds its case, and we use that knowledge to dismantle the prosecution's arguments.

Our defense strategy may include:

• Challenging the accuracy of the government's evidence
• Demonstrating legitimate business expenses
• Highlighting errors in the loan application process
• Negotiating favorable settlements or plea deals

Protecting Your Business and Your Freedom

Facing PPP loan fraud charges can be overwhelming, but you don't have to face it alone. At Varghese & Associates, P.C., we are committed to providing a robust defense to safeguard your reputation and your livelihood. As seasoned criminal defense attorneys in New York City, we have the experience and tenacity to fight for the best possible outcome.
Contact us today to discuss your case with a dedicated PPP loan fraud defense lawyer. You are innocent until proven guilty, and we will work tirelessly to defend your rights and protect your future.