PPP Loan Fraud Investigations in 2023 – What to Know

With the extension and amendments of the Paycheck Protection Program (PPP) in subsequent legislation, federal agencies have doubled down on their efforts to investigate alleged fraudulent activities associated with the program. Many people are now getting notice of being under investigation for fraud under the program.  

 

The Paycheck Protection Program (PPP), instituted as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, was designed to offer a financial lifeline to small businesses adversely affected by the economic crisis resulting from the COVID-19 pandemic. Despite its well-intended objectives, the program experienced instances of misuse, leading to the current wave of federal investigations into PPP loan fraud. For anyone who may have applied for or received PPP loan funds, understanding the possible criminal fraud charges involved and the effective defense is crucial for business owners.  

 

At Stechschulte Nell Law in Tampa, we believe everyone should have access to reliable, accurate information about the nature of criminal charges and the defenses that may apply to each unique case. Here, our attorneys explain the current state of PPP loan fraud investigations, relevant criminal charges, and potential legal defense strategies. If you have questions about being under government investigation due to your PPP loan, contact our office for a full case analysis. 

 

 

The Current State of PPP Loan Fraud Investigations 

 

With the extension of the Paycheck Protection Program (PPP) in subsequent legislation, federal agencies have doubled down on their efforts to investigate what they believe to be fraudulent activities associated with the program.  

 

The Department of Justice (DOJ), Small Business Administration (SBA) Office of Inspector General, and Federal Bureau of Investigation (FBI) are among the key agencies spearheading these investigations. Using advanced data analytics and specially designed computer algorithms along with traditional investigative techniques, the government has improved its ability to identify suspicious cases and prosecute various types of PPP loan fraud. These cases range from false information on loan applications to misuse of funds. 

 

 

Criminal Charges Involved in PPP Loan Fraud 

 

Violations of PPP guidelines can result in various criminal charges, both federal and state. Some of the most common federal charges include: 

 

1. Wire Fraud (18 U.S.C. § 1343) Submitting fraudulent information electronically, such as false payroll data, can lead to wire fraud charges. Convictions can result in fines and imprisonment for up to 20 years. 
2. Bank Fraud (18 U.S.C. § 1344) Knowingly engaging in a scheme to defraud a financial institution, such as providing false information to a bank that issues PPP loans also carries severe penalties, including substantial fines and up to 30 years in prison. 
3. False Statements to Federal Agencies (18 U.S.C. § 1001) Submitting false information to the SBA or another federal agency overseeing the PPP can result in a fine and imprisonment for up to 5 years for each count in the indictment. 
4. Conspiracy Charges In cases where multiple parties collaborate to commit fraud, conspiracy charges can be included in an indictment, which often compounds the severity of the penalties. 

 

Defenses to a Charge of PPP Loan Fraud 

 

Facing criminal charges related to Paycheck Protection Program (PPP) loan fraud is a frightening experience because the penalties can affect the rest of your life and that of your family.  

 

However, experienced PPP fraud defense lawyers, including the attorneys at Stechschulte Nell in Tampa, know that there are effective legal defenses that can be used to challenge the allegations, depending on the circumstances of each case: 

 

Lack of Intent: One of the key elements in most fraud charges is proving that the defendant had the intent to deceive or defraud. If this intent is lacking — for example, if inaccuracies in the application were due to clerical errors and were not deliberately falsified — this could serve as a viable defense. 

Good Faith Use: For those accused of misusing PPP loan funds, demonstrating that the funds were used in a good faith effort to retain employees or maintain business operations could potentially negate charges. 

Reliance on Professional Advice: Business owners often rely on accountants or legal advisors when filling out complex loan applications. Demonstrating that any inaccuracies were the result of following professional advice would very likely mitigate culpability. 

Ambiguities in PPP Guidelines: Given the rapid rollout of the PPP and subsequent updates, many of the guidelines were initially unclear. One effective defense involves arguing that any alleged violation resulted from these ambiguities rather than fraudulent intent. 

Coercion or Duress: Though difficult to prove, demonstrating that one was forced into fraudulent actions under threat could serve as a defense if sufficient facts support the claim. 

 

The Importance of an Experienced PPP Fraud Criminal Defense Lawyer 

 

For anyone facing allegations of fraud, the ramifications can be severe, involving multiple types of criminal charges, each carrying substantial penalties. Getting the best, experienced criminal defense counsel is the most important objective for anyone charged with PPP loan fraud. 

 

The stakes are high. Having a skilled Paycheck Protection Program (PPP) defense lawyer who understands the legal complexities of fraud cases can ensure that an accused defendant gets the strongest legal defense and a chance at the best possible outcome. 

 

If you need help with your PPP case, call our PPP Loan Fraud Defense Lawyers in Tampa at 813-280-1244 today.