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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 South Carolina. Three brothers who operate a string of restaurants in the Charleston area were just sentenced in March 2025 for wire fraud conspiracy and wire fraud. They used PPP and EIDL loan funds to make personal car purchases and pay personal credit card expenses. The ringleader brothers received 24 months in federal prison. The third brother received 12 months and 1 day. They owe $1,268,386.50 in restitution. A Charleston-area woman received 80 months (6 years 8 months) in federal prison in 2023 for submitting over $11 million in fraudulent PPP and EIDL loan applications. The District of South Carolina prosecutes aggressively.
Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve defended PPP fraud cases in South Carolina for over 40 years. We know how District of South Carolina 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 2025, they’re prosecuting. Five Lowcountry residents were sentenced in June 2024 for their role in a COVID-19 loan fraud scheme. Sentences ranged from time served to 33 months in prison. Here’s what happens in YOUR situation.
William Chan, 40, and Siu Chan, 32, pleaded guilty to wire fraud conspiracy and were sentenced in March 2025 to 24 months imprisonment, followed by a three-year term of court-ordered supervision. The third brother, Ka Ho Chan, 33, pleaded guilty to two counts of wire fraud and was sentenced to 12 months and one day imprisonment, followed by a three-year term of court-ordered supervision. The brothers, along with other family members, operate a string of restaurants in the Charleston area. Evidence showed that William and Siu Chan applied for and received at least 22 PPP and EIDL loans totaling more than $2.5 million. The total amount of fraudulent loans and misuse of EIDL and PPP loan funds presented to the court during sentencing exceeded $2.8 million. The brothers used PPP and EIDL loan funds to make personal car purchases and pay personal credit card expenses. Using PPP funds for personal car purchases is wire fraud under 18 U.S.C. § 1343 when you certified on the application that funds would go to payroll, rent, and utilities. Personal credit card payments trigger automatic Suspicious Activity Reports from banks – every transaction to credit card companies from PPP accounts gets flagged.
Lori Hammond and three co-conspirators were sentenced in 2023 for a massive PPP fraud scheme. Hammond received 80 months (6 years and 8 months) imprisonment for submitting over $11 million in fraudulent PPP and EIDL loan applications. Eighty months in federal prison for $11 million in fraudulent applications shows District of South Carolina judges impose severe sentences for large-scale fraud even when defendants plead guilty. The 80-month sentence reflects the sentencing guidelines for fraud over $10 million. Hammond’s sentence is more than three times longer than the Chan brothers’ sentences because her fraud amount was four times larger.
In June 2024, five of eight individuals who were charged for their role in a COVID-19 loan fraud scheme were sentenced. Between the eight individuals charged, three EIDL advances and 12 PPP loans were funded by the SBA or their approved third-party lenders for a total of $295,841.00 in loans. Anthony Harley, 40, of North Charleston was sentenced to two years after pleading guilty to wire fraud. Benjamin Blue, 42, of Summerville was sentenced to one year and one day after pleading guilty to wire fraud. Sheniqua Mitchell, 37, of North Charleston was sentenced to 33 months after pleading guilty to wire fraud. Roberta Harley, 61, of North Charleston received a time-served sentence after pleading guilty to conspiracy. These varying sentences – from time served to 33 months for the same fraud scheme – demonstrate how cooperation level, criminal history, and role in the conspiracy affect sentencing. Mitchell’s 33-month sentence suggests she had a leadership role or less cooperation. Roberta Harley’s time-served sentence suggests she had minimal role and full cooperation.
PPP fraud detection is algorithmic. Every PPP application was cross-referenced against IRS Form 941 quarterly payroll tax returns. The Chan brothers submitted 22 fraudulent applications across multiple family restaurant businesses – those applications claimed payroll for employees that didn’t exist or were inflated. Computer systems flagged discrepancies between claimed payroll on applications and actual Form 941 filings. The SBA Office of Inspector General reviews flagged applications and refers suspected fraud to federal law enforcement. In Charleston, FBI handles PPP investigations, often working with IRS Criminal Investigation.
Bank Secrecy Act reports trigger investigations. When the Chan brothers used PPP funds to make personal car purchases and pay personal credit card expenses, their banks filed Suspicious Activity Reports. Car dealerships report all cash purchases over $10,000. Credit card payments from business accounts designated for PPP funds trigger automatic reporting. Hammond’s submission of over $11 million in fraudulent applications created paper trails across multiple banks and lenders – each application generates documentation that federal agents can trace. Loan forgiveness applications create second fraud exposure. When you apply for forgiveness, you certify PPP funds went to payroll, rent, utilities. If funds went to personal car purchases or credit card payments – that’s wire fraud when you certified the opposite.
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. William and Siu Chan received 24 months for $2.5 million fraud with guilty plea. Hammond received 80 months for $11 million fraud with guilty plea. The Lowcountry five received sentences from time served to 33 months for $295,841 total fraud – demonstrating how cooperation and role affect sentencing within guidelines.
Restitution is mandatory – you must repay the full PPP amount plus interest and penalties. This federal debt survives bankruptcy. The Chan brothers owe $1,268,386.50 jointly. Hammond owes over $11 million. The Lowcountry five owe $295,841 jointly. Probation terms after prison: 3 years supervised release, cannot start/manage a business without permission, continuous financial monitoring. The Chan brothers face 3 years of supervised release after their prison sentences. During supervised release, they cannot operate their restaurant businesses without federal permission – which essentially prevents them from working in the industry where they committed the fraud.
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, car purchase records, credit card payment records – makes conviction nearly certain. The “trial penalty” means if you’re convicted at trial, you face statutory maximums instead of reduced plea sentences. The Chan brothers pled guilty and received 24 months for $2.5 million fraud. If they had gone to trial and been convicted, they would have faced 7-15 years in prison for the same conduct. Hammond pled guilty and received 80 months for $11 million fraud. If she had gone to trial and been convicted, she would have faced 15-25 years.
Timeline: From initial SBA contact to indictment typically runs 6-18 months. District of South Carolina prosecutors build overwhelming cases before filing charges. By the time you’re indicted, they have everything – bank records, IRS filings, car purchase records, credit card statements, applications for all related businesses. The mistake Charleston business owners make: responding to initial SBA audits without legal counsel. They think explaining will resolve it. Instead, statements like “I may have used some funds for personal expenses” or “I bought a car for business use” 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 South Carolina for many, many, years. If the SBA contacted you about your PPP loan – if federal agents asked to interview you – time matters. District of South Carolina prosecutes aggressively. Call 212-300-5196.
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