Austin PPP Loan Fraud Lawyers

Austin PPP Loan Fraud Lawyers

Your PPP loan was flagged for audit. Federal agents in Austin contacted you about your Paycheck Protection Program application. Or your bank froze your account due to SBA investigation. You’re in Texas. A Georgetown couple just 30 miles from Austin received 16 years each in federal prison for PPP fraud – combined 32-year sentence. That’s what the Western District of Texas is handing down in 2025.

Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve defended PPP fraud cases in Texas federal courts for over 40 years. We know how Austin federal prosecutors charge PPP fraud, what evidence they use, and what outcomes you’re realistically facing.

The SBA approved your PPP loan in 2020 – sometimes in 24 hours – without verification. Now in 2025, they’re prosecuting. A former FBI employee was sentenced in January 2025 for PPP fraud. If they prosecute their own agents, they’ll prosecute anyone.

The 32-Year Georgetown Sentence

Michael and Tiffany Fullerton of Georgetown were sentenced in October 2024 to 16 years each – combined 32 years in federal prison – for PPP fraud. They submitted six fraudulent applications using one existing and three dormant business names. They obtained approximately $3 million. They used the funds to attempt starting a marijuana grow and dispensary in Oklahoma, purchased a motor home, luxury watches, a boat, and made other personal expenditures. The judge sentenced them at the high end of federal guidelines – this is what happens when you use PPP funds for luxury purchases instead of payroll as certified on the application.

Christopher James Phillips, a former FBI employee from Schertz, was sentenced in January 2025 to 3 months home confinement and 5 years probation. Phillips formed a company and submitted a PPP application using his FBI credentials for identity verification. He received $37,500, then wired $25,000 to a personal trading account and lost it all on stock trades. He made a $5,117 auto loan payment and paid $8,500 toward his mortgage. He was ordered to pay $39,771 in restitution.

The sentencing disparity: Fullertons got 16 years each for $3 million; Phillips got home confinement for $37,500. Loss amount drives sentencing. But both cases show Western District of Texas prosecutes everyone – FBI employees, business owners, first-time offenders.

How PPP Fraud Gets Detected

PPP fraud detection is algorithmic. Every PPP application was cross-referenced against IRS Form 941 quarterly payroll tax returns. You claimed 15 employees on your PPP application. Your 941s show 4 employees. Computer flagged you immediately. The SBA Office of Inspector General reviews flagged applications and refers suspected fraud to federal law enforcement. In Austin, FBI handles PPP investigations, often working with IRS Criminal Investigation when tax fraud is involved.

Bank Secrecy Act reports also trigger investigations. When you withdrew large cash amounts, made luxury purchases, or transferred PPP funds to personal accounts – your bank filed Suspicious Activity Reports. Those go directly to federal law enforcement. The Georgetown couple’s purchases – motor home, luxury watches, boat – all flagged by banks.

Loan forgiveness applications create a second fraud opportunity. When you applied for forgiveness, you certified PPP funds went to payroll, rent, utilities. Federal agents subpoena bank records and trace every dollar. If funds went to personal credit cards or investments – that’s misuse, which becomes wire fraud when you certified the opposite.

Western District Texas Sentencing

PPP fraud sentencing follows the federal guidelines based on loss amount. Under $100,000 with cooperation: 6-18 months. $100,000-$500,000: 2-4 years. $500,000-$1 million: 4-7 years. Over $1 million: 5-10 years with plea, 10-20+ years if convicted at trial. The Fullertons got 16 years each because they went to trial with a $3 million loss and the fraud was egregious (luxury purchases, marijuana business in another state).

Restitution is mandatory – you must repay the full PPP amount plus interest. This federal debt survives bankruptcy. Phillips owes $39,771. The Fullertons owe over $3 million. Probation terms after prison: 3-5 years supervised release, cannot start/manage a business without permission, continuous financial monitoring.

The critical decision: plea deal versus trial. Federal PPP fraud cases have 97%+ conviction rates at trial. Documentary evidence – your application, your IRS records, your bank statements – makes conviction nearly certain. The “trial penalty” means if you’re convicted at trial, you face statutory maximums instead of reduced plea sentences. The Fullertons likely faced this – going to trial resulted in maximum sentences.

Timeline: From initial SBA contact to indictment typically runs 6-18 months. Western District of Texas prosecutors build overwhelming cases before filing charges. By the time you’re indicted, they have everything – bank records, IRS filings, witness statements. The mistake Austin business owners make: responding to initial SBA audits without legal counsel. They think explaining will resolve it. Instead, statements like “I may have inflated payroll numbers” become admissions of fraud. By the time they hire an attorney, they’ve confessed.

At Spodek Law Group – Todd Spodek has defended federal fraud cases in Texas for many, many, years. If the SBA contacted you about your PPP loan – if federal agents asked to interview you – if your bank account was frozen – time matters. Western District hands down serious prison sentences. Call 212-300-5196.