Alabama EIDL Loan Fraud Lawyers

Alabama EIDL Loan Fraud Lawyers

You got contacted about your EIDL loan – the Economic Injury Disaster Loan, not the PPP everyone talks about. You’re in Alabama, and federal investigators are asking questions. You thought EIDL was less serious than PPP fraud because you rarely see news coverage about it. That assumption just became dangerous. Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve defended federal fraud cases for over 40 years, including dozens of EIDL investigations that carry identical consequences to PPP cases despite getting a fraction of the media attention.

Here’s what actually happens when Alabama federal prosecutors investigate your EIDL loan, why the lack of public information works against you, and what you need to know about facing the same agencies, the same statutes, and the same prison sentences as PPP fraud.

You Think EIDL is Less Serious

Search Google for “PPP loan fraud” and you’ll find dozens of “People Also Ask” questions. Search “EIDL loan fraud” and those questions disappear. That absence reveals something critical: EIDL borrowers don’t have collective awareness that prosecution is aggressive. Federal prosecutors in Alabama exploit this information gap. When the SBA Office of Inspector General contacts you about your EIDL loan, they’re using the exact same legal framework that applies to PPP. Both programs fall under 18 USC Section 1014 – making false statements to obtain SBA loans. Maximum penalty: 30 years federal imprisonment and $1 million fine. Wire fraud charges under 18 USC Section 1343 carry 20-30 years. These aren’t EIDL-specific statutes – they’re the same federal crimes that apply to any fraudulent interaction with the SBA, whether PPP or EIDL.

The same federal agencies investigate both. DOJ prosecutors, FBI agents, SBA Office of Inspector General investigators, IRS Criminal Investigation – they don’t distinguish. For larger EIDL loans, Homeland Security Investigations (HSI) gets involved because EIDL could reach $2 million, and amounts that size trigger HSI’s jurisdiction. Alabama’s HSI office works closely with federal prosecutors in the Northern District (Birmingham), Middle District (Montgomery), and Southern District (Mobile) on EIDL cases exceeding $500,000. Federal sentencing works identically for both programs. The United States Sentencing Guidelines calculate prison time based on loss amount. The guidelines don’t have a “this was EIDL so reduce the sentence” provision. A $150,000 fraudulent PPP loan and a $150,000 fraudulent EIDL loan produce the same sentencing range. If anything, EIDL fraud sometimes results in HIGHER sentences because EIDL loans tended to be larger. August 2025 cases demonstrate this. A former SBA loan officer pled guilty to facilitating more than $550,000 in fraudulent COVID-19 pandemic loans. Emanuel Tucker pled guilty to his role in a $15.9 million EIDL fraud scheme. These cases received minimal media coverage compared to PPP prosecutions, but the defendants face identical prison time. The lack of news stories doesn’t reflect prosecutorial priorities – it reflects media focus. You’re facing the same level of federal enforcement with far less public preparation.

How EIDL Investigations Target Different Evidence

PPP investigations focus on payroll. EIDL investigations examine different questions, though they lead to the same federal charges.

EIDL fraud prosecutions center on “economic injury” – whether your business actually suffered pandemic-caused damage that qualified you for the loan. Federal prosecutors subpoena your tax returns from 2018 and 2019 to establish your business’s pre-pandemic financial health. If those returns show losses or minimal profit, prosecutors argue you had no “economic injury” from the pandemic because your business was already struggling. A Birmingham restaurant owner we defended faced this scenario. His EIDL application claimed severe pandemic-caused economic injury. IRS records showed the business lost money in 2018 and 2019. Prosecutors argued: if the business couldn’t generate profit pre-pandemic, pandemic-era losses weren’t “economic injury” under EIDL standards – they were pre-existing business failure. Prosecutors also examine whether your business existed before February 15, 2020. If your LLC was formed in December 2019 or January 2020, investigators scrutinize whether that was legitimate timing or strategic positioning to fraudulently access EIDL funds. A Montgomery business owner received $500,000 in EIDL after forming his company two months before pandemic declarations. HSI is investigating whether the business had genuine operations or existed solely to obtain loan money.

Then there’s spending. EIDL loans were designated for “working capital” – business operational expenses. Bank records showing personal expenditures destroy EIDL defenses rapidly. Prosecutors track EIDL deposits, then follow withdrawals to car dealerships, vacation rentals, personal credit cards, home renovations. A Mobile contractor received $75,000 in EIDL. Bank records showed $50,000 spent on business expenses – legitimate. The other $25,000 funded a Caribbean vacation and home improvements. He thought “working capital” meant discretionary spending. Federal prosecutors view personal use as evidence he knew the loan exceeded legitimate business needs. Here’s where EIDL cases get harder to defend: the applications were simpler. PPP required detailed payroll documentation. EIDL applications asked fewer questions. Prosecutors turn that simplicity against defendants. Their argument: “You only had to answer five questions. If three answers were lies, that’s not confusion – that’s deliberate fraud.” The streamlined application that made EIDL “easier” also makes it harder to claim you misunderstood.

Information Asymmetry Works Against You

When the federal government creates two parallel disaster loan programs, then selectively publicizes enforcement of one while quietly prosecuting the other with equal aggression, that’s prosecution through information asymmetry. PPP borrowers have access to hundreds of news stories about what triggers investigations. EIDL borrowers don’t.

When Investigators Contact You

Most EIDL borrowers cooperate immediately without counsel. That cooperation kills their defense. Federal investigators frame initial contact as clarification. “We’re reviewing your EIDL application and noticed discrepancies.” That sounds administrative. It’s criminal investigation. When you explain that you estimated economic injury based on projected losses, prosecutors use that statement to prove you knowingly submitted false information. The lawyered path functions differently. Your attorney can distinguish between legitimate confusion about “economic injury” standards (which varied depending on SBA guidance) and deliberate inflation of losses. That distinction matters because it’s the difference between civil liability and criminal prosecution. Alabama federal prosecutors are not offering lenient treatment. Defendants sentenced in 2024-2025 receive prison terms approximately 40% longer than those sentenced in 2021-2022.

EIDL cases also carry civil exposure. The False Claims Act allows the government to pursue triple damages plus penalties. In 2025, that penalty is $27,894 per false claim. For a $150,000 EIDL loan with three false statements, you’re facing $450,000 in civil damages plus $83,682 in penalties. Total: $533,682. Then add criminal restitution and prison time.

What You Actually Face

Small EIDL loans ($10,000-$50,000) typically result in probation to 12 months. Medium loans ($50,000-$250,000) produce 18-36 month sentences. Large loans ($250,000-$1 million) result in 36-60 months. Recent cases show 51 months for $900,000+ fraud. Post-conviction, you’re facing full restitution, 2-3 years supervised release, and potentially civil False Claims Act damages on top of criminal penalties.

Todd Spodek is a second-generation criminal defense attorney who has handled hundreds of federal fraud prosecutions, including pandemic loan cases involving both PPP and EIDL. When we represent EIDL fraud defendants in Alabama, you get attorneys who have negotiated with Assistant US Attorneys in all three Alabama federal districts. We’re available 24/7 at 212-300-5196.