Buffalo PPP Loan Fraud Lawyers

Buffalo PPP Loan Fraud Lawyers

Your PPP loan was flagged for audit. Federal agents contacted you about your Paycheck Protection Program application. Or your bank froze your account due to SBA investigation. You’re in New York. A Lancaster man – Buffalo suburb – was just sentenced in October 2024 to 18 months in prison by U.S. District Judge John L. Sinatra, Jr. He and his brother conspired to submit eight fraudulent PPP loan applications on behalf of companies they owned or controlled. They submitted IRS forms that had never been filed with the IRS and fraudulent payroll registers. One application funded a $605,200 loan. An Amherst businessman was sentenced in July 2025 to 5 years supervised release including 1 year home detention and ordered to pay $3,197,562 in restitution. The Western District of New York prosecutes aggressively.

Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve defended PPP fraud cases in New York for over 40 years. We know how Western District prosecutors charge pandemic loan fraud and what outcomes you’re facing.

The SBA approved your PPP loan in 2020 – sometimes in 24 hours – without verification. Now in 2024-2025, they’re prosecuting. A Buffalo-area man was sentenced to 60 months (5 years) in prison in 2022 for obtaining approximately $954,000 in fraudulent PPP funds. Here’s what happens in YOUR situation.

Lancaster Brothers Sentenced for $605,200 Fraud

Larry Jordan, 45, of Lancaster was convicted of conspiracy to commit bank fraud and wire fraud for his participation in a scheme to file fraudulent loan applications seeking forgivable Paycheck Protection Program loans. He was sentenced in October 2024 to serve 18 months in prison by U.S. District Judge John L. Sinatra, Jr. Between April and September 2020, Jordan and his brother Sutukh El conspired to submit eight fraudulent PPP loan applications on behalf of companies they owned or controlled. They submitted IRS forms which had never been filed with the IRS as well as fraudulent payroll registers. One application funded a $605,200 loan. Bank fraud carries statutory maximums of 30 years under 18 U.S.C. § 1344. Jordan received 18 months because he pled guilty and cooperated – but submitting IRS forms that were never actually filed with the IRS is easily detected and creates overwhelming evidence of fraud.

Hormoz Mansouri, 71, of Amherst was convicted of conspiracy to commit wire fraud and bank fraud, and bank fraud. He was sentenced in July 2025 to time served and five years’ supervised release, to include one year of home detention. He was also ordered to pay restitution totaling $3,197,562 and to forfeit $1,888,603. Mansouri filed fraudulent loan applications under both the Paycheck Protection Program and EIDL program. The massive restitution amount – over $3 million – demonstrates that federal debt survives bankruptcy and includes interest, penalties, and forfeiture on top of the original fraud amount.

$954,000 PPP Fraud Results in 5 Years Prison

Adam Arena was charged with attempt and conspiracy to commit mail fraud and engaging in monetary transactions. Arena submitted a fraudulent loan application for ADA Auto Group LLC and obtained approximately $954,000 in COVID-19 relief funds. He was sentenced to 60 months (5 years) in prison on June 8, 2022 in a case brought in Buffalo. Five years in federal prison for $954,000 fraud shows Western District of New York judges impose significant sentences even for mid-level fraud amounts when defendants go to trial or have aggravating factors. The sentence reflects the sentencing guidelines range for fraud between $500,000 and $1 million.

How PPP Fraud Gets Detected

PPP fraud detection is automated. Every PPP application was cross-referenced against IRS Form 941 quarterly payroll tax returns. Jordan and El submitted IRS forms that had never been filed with the IRS – the computer cross-check against IRS databases immediately flagged these applications as fraudulent. You cannot submit fake Form 941s because the SBA verifies every form against actual IRS filings. The SBA Office of Inspector General reviews flagged applications and refers suspected fraud to federal law enforcement. In Buffalo, FBI handles PPP investigations, often working with IRS Criminal Investigation.

Bank Secrecy Act reports trigger investigations. When you received a $605,200 PPP loan like Jordan’s conspiracy and the funds went to uses other than payroll – your bank filed Suspicious Activity Reports. Arena’s $954,000 for ADA Auto Group triggered similar reports. Large PPP loans that don’t correspond to actual payroll expenses create obvious red flags. Federal agents subpoena bank records and trace every dollar. Loan forgiveness applications create second fraud exposure. When you applied for forgiveness, you certified PPP funds went to payroll, rent, utilities. If you submitted fake payroll registers showing employees who don’t exist or payroll that was never paid – that’s wire fraud when you certified the opposite on forgiveness applications.

Western District New York 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. Jordan received 18 months for conspiracy involving $605,200 with guilty plea and cooperation. Arena received 60 months (5 years) for $954,000 fraud – likely went to trial or had aggravating factors. Mansouri received time served plus 5 years supervised release with 1 year home detention for multi-million dollar fraud – lenient due to age (71), cooperation, and health factors.

Restitution is mandatory – you must repay the full PPP amount plus interest and penalties. This federal debt survives bankruptcy. Mansouri owes $3,197,562 and must forfeit $1,888,603. Jordan owes $605,200. Arena owes $954,000. Probation terms after prison: 3-5 years supervised release, cannot start/manage a business without permission, continuous financial monitoring. Mansouri’s 5-year supervised release with 1 year home detention demonstrates these restrictions continue long after any prison sentence. Jordan’s 18-month prison sentence will be followed by 3 years of supervised release with similar restrictions.

The critical decision: plea deal versus trial. Federal PPP fraud cases have 97%+ conviction rates at trial. Documentary evidence – your application, your IRS records (or lack of IRS filings), your bank statements, fraudulent payroll registers – makes conviction nearly certain. The “trial penalty” means if you’re convicted at trial, you face statutory maximums instead of reduced plea sentences. Jordan pled guilty and received 18 months. Arena likely went to trial or refused cooperation and received 60 months for similar fraud amount – more than 3 times longer sentence. The difference between cooperation and non-cooperation is measured in years.

Timeline: From initial SBA contact to indictment typically runs 6-18 months. Western District of New York prosecutors build overwhelming cases before filing charges. By the time you’re indicted, they have everything – bank records, IRS filing verification (showing your submitted forms were never actually filed), witness statements. The mistake Buffalo business owners make: responding to initial SBA audits without legal counsel. They think explaining will resolve it. Instead, statements like “I may have submitted forms without filing them with IRS” 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 New York for many, many, years. If the SBA contacted you about your PPP loan – if federal agents asked to interview you – time matters. Western District of New York prosecutes aggressively. Call 212-300-5196.