Milwaukee EIDL Loan Fraud Lawyers

Milwaukee EIDL Loan Fraud Lawyers

Your EIDL loan was flagged. Federal agents in Milwaukee contacted you. Or the SBA sent an audit letter about your Economic Injury Disaster Loan application. You’re in Wisconsin. The Eastern District of Wisconsin is prosecuting aggressively – nearly 40 people have been charged with COVID-19 relief fraud crimes as of 2024. Stephen Smith got 36 months prison for fraudulently seeking over $600,000 in PPP and EIDL applications for three different companies. Members of the Wild 100s Milwaukee street gang – 30 defendants total – were charged for millions in fraudulent pandemic benefits. The Eastern District prosecutes hard.

Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve defended EIDL fraud cases in Wisconsin federal courts for many, many, years. We know how Eastern District of Wisconsin prosecutors charge these cases and what outcomes you’re realistically facing in Milwaukee.

The SBA approved your EIDL loan in 2020 with minimal verification. Now they’re prosecuting. A Milwaukee businessman who submitted false payroll information for three companies got 3 years prison and must repay $397,500. A Milwaukee woman got 3 months prison for $109,733 EIDL fraud. Major companies are settling for millions – affiliated family office companies paid $10.8 million in April 2025 for improper COVID loans. Here’s what happens in YOUR Milwaukee case.

Recent Milwaukee Convictions and Sentences

Stephen Smith, 42, Milwaukee, was sentenced July 14, 2021 to 36 months prison plus $397,500 restitution for fraudulently seeking PPP and EIDL loans under the CARES Act. Smith fraudulently sought over $600,000 in combined PPP and EIDL loan applications on behalf of three different companies by submitting applications containing false and misleading statements about the companies’ respective payroll expenses. After receiving the fraudulent funds, Smith directed co-conspirators to send him portions of the funds for personal use. Smith pled guilty April 12, 2021 – even with cooperation, he got 3 years federal prison. This is the baseline for $600,000 fraud in Eastern District of Wisconsin. The investigation involved FBI Milwaukee Division, SBA Office of Inspector General, FDIC Office of Inspector General, and IRS Criminal Investigation working together. Multi-agency task force means comprehensive financial investigation – they traced every dollar Smith received and every false statement he made across all three fraudulent applications.

Sharon Johnson, Milwaukee, was sentenced June 2024 to three months prison plus $109,733 restitution for EIDL and PPP fraud. Even though Johnson’s fraud was under $110,000 and she cooperated fully, Eastern District still imposed prison time. Wisconsin federal courts do not give probation-only sentences for COVID relief fraud regardless of amount. Johnson’s 3-month sentence represents the absolute minimum for first-time offenders with small fraud amounts and full cooperation. If you received $200,000 or more in fraudulent EIDL funds, you’re facing minimum 12-18 months even with cooperation and guilty plea. If you go to trial and lose, add 40-60% to guideline ranges.

Marvin Fitzgerald, Milwaukee, was charged with false statements about receiving EIDL and PPP loans for COVID-19 relief plans for New Beginning Family Service LLC. Thomas Smith (different from Stephen Smith above) was charged with bank fraud and money laundering for allegedly obtaining over $1 million in COVID-19 relief funds in Milwaukee. These cases are still pending, but charging decisions show Eastern District’s aggressive approach – they charge money laundering enhancements when defendants move fraudulent funds between accounts or make large purchases. Money laundering adds 2-4 years to base fraud sentences under federal sentencing guidelines.

EIDL-Specific Fraud Detection in Eastern District

EIDL fraud detection is automated and sophisticated in Wisconsin. Every Economic Injury Disaster Loan application was cross-referenced against IRS business tax returns, state unemployment insurance records, and business registration databases. You claimed $500,000 in revenue on your EIDL application for your Milwaukee manufacturing business or retail store. Your IRS Schedule C shows $200,000 revenue. Computer flagged you within weeks of disbursement. The SBA Office of Inspector General reviewed the flag and referred to Eastern District strike team for criminal investigation. Stephen Smith’s false payroll statements across three companies triggered multiple automated flags. Each discrepancy between EIDL application and IRS records creates separate investigative lead that agents follow to build criminal case.

EIDL fraud has unique vulnerabilities compared to PPP fraud because EIDL applications required different certifications and had different allowable uses. EIDL loans could be used for working capital and normal operating expenses – but not for refinancing debt, paying dividends or distributions to owners, or making investments. When you used EIDL funds to pay off personal credit cards, make distributions to yourself as owner, invest in real estate or securities, or refinance existing business debt – that’s fraud when you certified on the application that funds would only be used for working capital and authorized expenses. Bank Secrecy Act reports trigger EIDL investigations faster than IRS mismatches in many cases. When you withdrew large cash amounts from EIDL funds, made luxury purchases, transferred EIDL funds to personal investment accounts, or sent wire transfers to family members – your bank filed Suspicious Activity Reports that go directly to federal law enforcement within 30 days. Smith’s transfers to co-conspirators triggered SAR filings. By the time SBA-OIG opened formal investigation, they already had bank documentation of fraudulent fund usage and money movement.

EIDL loan increase requests create additional fraud exposure under 18 U.S.C. § 1343 wire fraud statute. Many Milwaukee business owners received initial EIDL loan of $10,000-$150,000 in spring 2020, then applied for increase to $500,000-$2 million in 2021 when SBA raised loan caps. Increase applications required updated revenue certifications and economic injury calculations. If you inflated revenue or economic injury on increase application, that’s separate wire fraud count carrying maximum 20 years prison. Federal agents subpoena bank records for entire period from initial loan through increase and trace every dollar. If initial loan funds were misused and then you applied for increase with false certifications, prosecutors charge both the original fraud and the increase fraud as separate counts.

Eastern District Wisconsin Prosecutes Aggressively

The U.S. Attorney’s Office for Eastern District of Wisconsin is one of the most aggressive federal districts in the nation for COVID fraud prosecution. As of February 2024, nearly 40 people in Wisconsin have been charged with crimes related to COVID-19 relief fraud, and both U.S. Attorney’s Offices in Wisconsin continue filing new criminal cases through 2024 and 2025. Congress extended the statute of limitations for PPP and EIDL fraud from 5 years to 10 years by passing the PPP and Bank Fraud Enforcement Harmonization Act of 2022. This means prosecutions will continue through 2031 for loans disbursed in 2021. If you received EIDL loan in 2020 or 2021, you remain exposed to federal prosecution until 2030-2031. Eastern District has dedicated Assistant U.S. Attorneys who focus exclusively on pandemic relief fraud cases. They have specialized training in Economic Injury Disaster Loan program regulations, forensic accounting, and tracing fraudulent fund usage through complex financial transactions.

Eastern District prosecutes everyone regardless of amount, background, or industry – individual business owners like Stephen Smith and Sharon Johnson, healthcare providers, manufacturers, retail operators, service businesses, and organized criminal conspiracies like the Wild 100s gang members. The Wild 100s case shows Eastern District’s capacity to handle massive multi-defendant conspiracies – 30 defendants charged simultaneously for millions in fraudulent unemployment benefits, with funds used to solicit murder for hire and purchase firearms. If Eastern District can prosecute 30-defendant gang conspiracy, they have unlimited resources to investigate your individual EIDL fraud case. No one gets diverted to pretrial programs. No one gets deferred prosecution agreements. Every EIDL fraud defendant convicted in Eastern District faces prison time and full restitution.

Sentencing follows federal sentencing guidelines based on loss amount, cooperation, and criminal history. Under $100,000 with full cooperation and early guilty plea: 3-12 months prison like Sharon Johnson. $100,000-$350,000 with cooperation: 12-24 months. $350,000-$1 million with cooperation: 24-42 months like Stephen Smith. Over $1 million with cooperation: 4-8 years. Without cooperation or after trial conviction: add 40-70% to these ranges. Smith got 36 months for $600,000+ fraud with cooperation and guilty plea – if he’d gone to trial and been convicted, he’d face 5-7 years. The trial penalty in Eastern District is severe and consistently applied by judges who follow prosecutor sentencing recommendations.

Restitution is mandatory under 18 U.S.C. § 3663A – defendants must repay full EIDL amount received plus interest and administrative costs. This is federal debt that survives bankruptcy discharge under 11 U.S.C. § 523(a)(7) and follows you for life. Smith owes $397,500. Johnson owes $109,733. U.S. Treasury garnishes tax refunds, Social Security benefits, wages, and seizes assets to collect restitution. Collection continues for 20 years or until paid in full. Probation after prison is standard: 3 years supervised release for frauds under $500,000, 5 years supervised release for frauds over $500,000. Supervised release conditions in Eastern District include: cannot start, manage, or have signatory authority on any business without probation officer pre-approval; must provide access to all financial records, bank accounts, and tax returns; cannot incur new debt over $500 without written permission; must work full-time or demonstrate active job search; random financial audits and home visits; potential electronic monitoring for high-dollar frauds. Violating supervised release sends you back to prison for remaining term plus additional penalties.

Civil settlements show Eastern District’s aggressive pursuit even without criminal charges. Affiliated family office companies agreed to pay $10,853,246.94 on April 2, 2025 to settle False Claims Act allegations for receiving six PPP loans totaling over $5 million while collectively employing more than 500 individuals and being ineligible. University Club of Milwaukee agreed to pay $1,003,993.86 in December 2024 to settle claims of improperly obtaining PPP loan. Zund America, Inc., Oak Creek, agreed to pay $2,300,825 on December 3, 2024 for PPP loan obtained while having more than 300 employees with affiliates. These multi-million dollar civil settlements demonstrate that even if Eastern District doesn’t pursue criminal charges, they will pursue civil False Claims Act cases with treble damages and penalties. You face exposure on both criminal and civil tracks simultaneously.

The critical mistake Milwaukee business owners make is responding to initial SBA audit letters or questionnaires without experienced federal criminal defense counsel. They think cooperation and explanation will resolve the matter administratively with loan repayment. They respond to SBA-OIG questionnaires explaining their accountant miscalculated revenue, or they estimated economic injury, or they used some EIDL funds for expenses they later learned were prohibited. Those written responses become evidence in criminal prosecution. “I may have overstated revenue” = admission you lied on federal loan application under penalty of perjury. “I used some EIDL funds to pay off credit cards” = admission of fraud because credit card repayment is prohibited use. By the time they hire attorney after receiving target letter or grand jury subpoena, they’ve already confessed in writing to federal investigators. Stephen Smith made statements during investigation that were used against him. Sharon Johnson likely made similar admissions before retaining counsel. If they’d had counsel from the first SBA contact, they might have negotiated better plea terms or civil settlement without criminal prosecution.

At Spodek Law Group – Todd Spodek has defended federal fraud cases in Wisconsin for many, many, years. If Eastern District contacted you about your Milwaukee EIDL loan – if SBA-OIG sent audit letter asking about revenue or economic injury calculations – if FBI or IRS agents asked to interview you about your application or fund usage – time matters critically. Eastern District of Wisconsin is one of the most aggressive federal prosecution districts for EIDL fraud in the entire country. They have dedicated resources, multi-agency task forces, specialized prosecutors with pandemic relief expertise, and institutional priority to pursue every case regardless of amount. Call 212-300-5196.