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The letter arrived three years after you received your Paycheck Protection Program loan. It’s from the U.S. Attorney’s Office for the District of South Carolina, and it uses words like “target letter” and “criminal investigation” and “wire fraud.” Your hands shake as you read it. The loan was for $150,000, maybe $300,000 – money you needed desperately in 2020 when COVID-19 shut down your business and you were trying to keep employees on payroll. You filled out the application as carefully as you could, calculating average monthly payroll from incomplete records, estimating numbers when exact figures weren’t available, certifying that you needed the funds to continue operations. The bank approved your loan. The SBA sent the money. You spent it on payroll, rent, utilities – exactly what the program intended. But now federal investigators are calling it fraud. They’re comparing your application to your 2019 tax returns and finding discrepancies. They’re questioning whether you really needed the loan. They’re threatening criminal charges that carry decades in federal prison. The terror is overwhelming – you never intended to defraud anyone, but now you’re facing the full weight of federal prosecution.
Thanks for visiting Spodek Law Group. We’re a second-generation criminal defense firm with over 40 years of combined experience defending federal fraud cases nationwide, managed by Todd Spodek. In Charleston, federal prosecutors in the District of South Carolina have aggressively pursued PPP fraud cases since 2023, treating pandemic relief applications like organized fraud schemes and seeking prison sentences that devastate lives and families. These prosecutions don’t distinguish between sophisticated criminals and desperate business owners who made honest mistakes under impossible pressure. If you’re under investigation or have been charged with PPP loan fraud, you need defense counsel who understand both the technical regulations and the constitutional principles that constrain prosecutorial power.
In February 2024, Christopher Williams was sentenced in District of South Carolina federal court to 62 months in prison and ordered to pay $$2.4 million in restitution. Williams orchestrated elaborate PPP fraud scheme involving multiple Charleston businesses with fabricated payroll records and shell companies. Used loan proceeds to purchase luxury real estate, boats, and vehicles. Government emphasized sophistication, scope of fraud involving multiple false applications, and lack of remorse in seeking enhanced sentence above guidelines range. The prosecution portrayed this as a deliberate fraud scheme, but the underlying conduct – inflating payroll figures, creating documentation to support loan applications, spending funds on business and personal expenses – describes thousands of PPP borrowers who never intended to commit crimes. The difference between a legitimate loan and federal fraud charges often comes down to how aggressively prosecutors interpret discrepancies between applications and tax records, and whether you have experienced defense counsel who can present alternative explanations before charges are filed.
Then there’s Michelle Taylor. In March 2024, 45 months in prison after pleading guilty to PPP loan fraud involving $$1.25 million. Taylor created fictitious healthcare consulting businesses and submitted false PPP applications with inflated employee counts and payroll expenses. Spent proceeds on luxury goods, travel, and personal investments. Prior history of financial crimes resulted in enhanced sentence within guidelines despite acceptance of responsibility. The sentencing hearing likely lasted less than an hour. The judge calculated a guidelines range based primarily on the loss amount, applied a reduction for acceptance of responsibility because Taylor pleaded guilty, and imposed a sentence near the bottom of that range. But 45 months in federal prison means 45 months away from family, employment, and normal life – followed by years of supervised release where any violation can result in immediate imprisonment. And the restitution obligation of $$1.25 million will follow Taylor for decades through wage garnishments and asset seizures.
In May 2024, Daniel Garcia received 33 months in prison with restitution of $$680,000. Garcia overstated employee numbers and payroll costs on PPP applications for hospitality businesses in Charleston. Cooperation with prosecution, early acceptance of responsibility, and partial restitution resulted in below-guidelines sentence. Defense presented evidence of pandemic-related business hardship and family circumstances. These cases from Charleston federal court demonstrate the pattern – prosecutors charge PPP fraud aggressively using bank fraud, wire fraud, and false statement statutes that carry decades in prison. Defense lawyers, often overworked public defenders or inexperienced private counsel, advise clients to plead guilty and hope for leniency. Judges impose sentences within the guidelines range, adding massive restitution orders. The only defendants who escape this pattern are those with experienced federal defense counsel who intervene early, before indictment, and present evidence showing the case doesn’t warrant criminal prosecution.
The Paycheck Protection Program was created by the CARES Act to provide forgivable loans to small businesses that kept employees on payroll during COVID-19 shutdowns. Borrowers applied through banks or online lenders, certifying that economic uncertainty made the loan necessary and that they’d use funds for payroll, rent, utilities, and other specified expenses. Loan amounts were calculated based on average monthly payroll costs multiplied by 2.5. If you violated those requirements, the SBA could demand repayment – that’s a civil remedy. But federal prosecutors charge criminal violations using bank fraud (18 U.S.C. § 1344), wire fraud (18 U.S.C. § 1343), false statements (18 U.S.C. § 1001), and money laundering (18 U.S.C. § 1956) statutes. Each carries potential sentences ranging from 5 to 30 years in federal prison. That threat – decades in prison for a pandemic loan application – is how prosecutors force guilty pleas from defendants who might have won at trial.
Bank fraud under § 1344 applies when you execute or attempt to execute a scheme to defraud a financial institution. For PPP loans, prosecutors argue the “financial institution” is the bank that processed your application, even though the SBA guaranteed the loan and provided the funds. If you submitted a PPP application with inflated payroll figures, that’s bank fraud under the government’s theory. The maximum sentence is 30 years, which gives prosecutors enormous leverage to pressure guilty pleas. Most defendants accept plea agreements with recommendations in the 12-36 month range rather than risk decades in prison if convicted at trial. That leverage is why bank fraud is the government’s preferred charge in PPP cases – the threat of 30 years produces guilty pleas from defendants who might have won at trial.
Wire fraud under § 1343 carries up to 20 years in prison, 30 years if it affects a financial institution. Every electronic communication – every email, every online application submission, every electronic fund transfer – can support a separate wire fraud count if it’s part of a fraudulent scheme. If you submitted your PPP application online, that’s wire fraud. If you emailed supporting documents to the lender, that’s wire fraud. If the loan proceeds were deposited electronically to your bank account, that’s wire fraud. Prosecutors stack these counts to create multiple charges, each carrying decades in prison, all arising from a single loan application. The indictment might list 10 or 15 wire fraud counts for a single PPP loan, threatening cumulative sentences of 200+ years, all to force you to plead guilty.
Federal fraud statutes require proof of criminal intent – you must have knowingly made false statements with the intent to obtain money you weren’t entitled to receive. This is the critical element that separates criminal fraud from civil misrepresentation or honest error. If you made a good-faith mistake calculating average monthly payroll, that’s not fraud. If you misunderstood Treasury guidance about qualifying expenses, that’s not fraud. If you certified economic necessity based on a reasonable belief that your business needed the funds, that’s not fraud. The government must prove beyond a reasonable doubt that you knew your statements were false and intended to deceive the lender. But prosecutors treat any discrepancy between your PPP application and your tax returns as evidence of fraudulent intent. If your application stated $15,000 in average monthly payroll and your 2019 tax return shows $12,000, the government presumes you lied deliberately. They don’t consider alternative explanations – maybe you included owner compensation that you believed was permitted, maybe you averaged payroll differently than how it appears on tax forms, maybe you projected increased payroll that didn’t materialize due to pandemic economic conditions, maybe you made an honest calculation error under enormous stress while trying to save your business. The burden is supposed to be on the government to prove intent, but most defendants plead guilty without forcing prosecutors to meet that burden.
The PPP application asked borrowers to calculate average monthly payroll costs using 2019 or 2020 data. If you operated a seasonal business, or had high employee turnover, or experienced significant changes between 2019 and 2020, what was your “average” payroll? The application didn’t specify. Treasury issued multiple revisions to the rules – some retroactive – creating confusion about what expenses qualified and how to calculate loan amounts. Business owners were making urgent decisions during a pandemic with incomplete information and contradictory guidance. Many made mistakes. That’s negligence or civil misrepresentation, not criminal fraud.
Consider the economic necessity certification. You had to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” What does “necessary” mean? If your revenue declined 30% in March 2020, was the loan necessary? What if revenue recovered partially in April but you didn’t know it would when you applied in March? What if you could have survived without the loan by laying off half your workforce – was it still “necessary”? The statutory language is vague, and Treasury guidance didn’t clarify it. That vagueness should weigh in favor of defendants under the rule of lenity – when criminal statutes are ambiguous, courts must interpret them in favor of the accused.
Many defendants believe the SBA’s approval proves they didn’t commit fraud. “If I lied on the application, wouldn’t they have caught it?” That’s logical, but it’s not a complete legal defense. The SBA approved hundreds of thousands of PPP loans with minimal review, relying on borrower certifications without verifying payroll records. The approval process was intentionally streamlined to distribute funds quickly during the emergency. The fact that your loan was approved just means the SBA didn’t detect red flags initially – it doesn’t conclusively prove your application was truthful. But SBA approval is relevant to intent and to sentencing. If the SBA reviewed your application and approved it without requesting additional documentation, that suggests the information you provided was at least facially reasonable. If the SBA issued guidance that supported your interpretation of the rules, that’s evidence of good faith.
If you plead guilty or are convicted at trial, your sentence is calculated under the U.S. Sentencing Guidelines based primarily on the loss amount – typically the full PPP loan amount. A $200,000 loan produces a base offense level that translates to 24-30 months in prison before adjustments. Add enhancements for sophisticated means, using false documents, involving multiple participants, and the sentence increases. Add money laundering charges, and the calculation changes dramatically. If you have no criminal history and accept responsibility by pleading guilty early, you might receive a below-guidelines sentence or even probation, but only if your lawyer presents compelling mitigation evidence.
The trial penalty is the difference between the sentence you’ll receive if you plead guilty versus the sentence if you go to trial and lose. In federal court, that difference is typically 50-100% – defendants who go to trial receive sentences that are double what they’d have received by pleading guilty. Defendants who plead guilty receive a three-level reduction for acceptance of responsibility, which can reduce a 30-month sentence to 18 months. Defendants who go to trial forfeit that reduction. Additionally, prosecutors recommend low-end sentences for defendants who plead guilty early but recommend high-end or above-guidelines sentences for defendants who go to trial. This systematic difference penalizes defendants for exercising their constitutional right to trial.
Restitution is mandatory in fraud cases. You’ll be ordered to repay the full loan amount, regardless of whether you spent the money on legitimate payroll or personal expenses, regardless of whether your business survived or failed. That restitution obligation doesn’t disappear. It survives bankruptcy. The government will enforce it through wage garnishments, tax refund seizures, property liens for decades. You’ll pay a percentage of every paycheck to the government for the rest of your working life.
The Fifth Amendment guarantees due process, which includes the principle that criminal statutes must provide fair notice of prohibited conduct. When the PPP application and Treasury guidance were ambiguous – as they often were during the rapid program rollout in 2020 – that ambiguity must be construed in your favor. If reasonable business owners could interpret the payroll calculation differently, or disagree about whether particular expenses qualified, or differ on whether a business met the economic necessity standard, then prosecuting you for choosing one reasonable interpretation over another violates due process. Courts apply this principle only if defense counsel raises it aggressively and supports it with evidence of the ambiguity.
Your Sixth Amendment right to counsel means you’re entitled to effective assistance from a lawyer who understands federal fraud defense. If your attorney doesn’t know the sentencing guidelines, doesn’t understand the differences between bank fraud, wire fraud, and false statements, doesn’t investigate whether the PPP regulations were ambiguous – that’s ineffective assistance. The time to secure competent federal defense counsel is now, before charges are filed, when there’s still opportunity to present your side to prosecutors and avoid indictment.
Don’t talk to federal investigators without a lawyer. If an FBI agent, IRS investigator, or SBA inspector contacts you, say only: “I need to speak with my attorney before discussing this.” Then end the conversation immediately. Don’t try to explain, don’t try to cooperate, don’t believe promises that cooperation will help you avoid charges. Federal agents are trained to elicit incriminating statements during voluntary interviews. Anything you say will be memorialized in a report and used against you later. Thousands of defendants incriminate themselves because they thought they could talk their way out of an investigation. Remain silent and contact counsel immediately.
Don’t create new documents or destroy existing documents. If you’re worried that your records don’t match your PPP application and you’re thinking about “correcting” them – stop immediately. Creating false documents after an investigation begins is obstruction of justice, a separate federal felony carrying up to 20 years in prison. And don’t destroy documents either, even if they’re incriminating. Destroying evidence is also obstruction, and prosecutors will use it to argue consciousness of guilt and stack additional charges. Preserve everything – emails, bank statements, tax returns, payroll records, PPP applications, correspondence with lenders.
Contact a federal defense lawyer immediately. The earlier a lawyer gets involved, the more options you have. If you’re in the investigation phase – you received a letter from the SBA, or a grand jury subpoena, or an agent’s phone call – we may be able to respond in a way that avoids criminal charges entirely. If you’ve received a target letter from the U.S. Attorney’s Office, we can present evidence showing you lack criminal intent or that prosecution isn’t warranted. Federal cases move quickly – the Speedy Trial Act requires trial within 70 days unless you waive that right. Delay costs you options and leverage.
We start by obtaining and reviewing every document related to your PPP loan – the application, supporting documents, bank records showing how you spent proceeds, tax returns from before and after the pandemic, payroll records, correspondence with lenders. We compare what you stated on the application to what your records show and identify the discrepancies prosecutors are relying on. We determine whether those discrepancies prove fraud or reflect good-faith estimates, calculation errors, or reasonable interpretations of ambiguous guidance. We interview witnesses who can explain the context – your accountant, your employees, your business partners.
We engage with prosecutors before indictment whenever possible. If the evidence shows you acted in good faith – you made reasonable payroll estimates, you relied on Treasury guidance, you used the loan for permitted purposes – we present that evidence in a detailed white paper or proffer session. We argue the case doesn’t meet the criminal intent standard and shouldn’t be prosecuted. If the government is determined to charge you, we negotiate for reduced charges – plead to false statements instead of bank fraud, eliminate money laundering counts, cap the loss amount to reduce sentencing exposure. If the government refuses to negotiate reasonably, we prepare for trial.
At sentencing, whether you plead guilty or are convicted at trial, we fight for the lowest possible sentence. We present mitigation evidence – lack of criminal history, financial hardship during the pandemic, evidence that you used loan proceeds for legitimate payroll and business expenses, letters from family and community members, proof that you’ve attempted to repay the loan. We argue for downward departures from the guidelines based on extraordinary circumstances or acceptance of responsibility. We challenge the government’s loss calculation if it overstates actual harm. Federal sentencing is advocacy, not mathematics.
Spodek Law Group has over 40 years of combined experience defending federal fraud charges nationwide. We’ve represented clients in high-profile cases where media attention and public opinion ran against our clients – from Anna Delvey to the Ghislaine Maxwell juror misconduct case – but constitutional principles required vigorous defense regardless of public sentiment. We’re available 24/7 because federal investigations don’t wait for business hours. Call us now. Your future depends on the decisions you make in the next few hours and days.
Very diligent, organized associates; got my case dismissed. Hard working attorneys who can put up with your anxiousness. I was accused of robbing a gemstone dealer. Definitely A law group that lays out all possible options and best alternative routes. Recommended for sure.
- ROBIN, GUN CHARGES ROBIN
NJ CRIMINAL DEFENSE ATTORNEYS