Alabama PPP Loan Fraud Lawyers: Federal Defense for SBA Investigations, Wire Fraud Charges & Criminal Prosecution

Alabama PPP Loan Fraud Lawyers: Federal Defense for SBA Investigations, Wire Fraud Charges & Criminal Prosecution

You got a letter from the SBA. Or the FBI showed up at your business in Birmingham, Mobile, Montgomery, Huntsville, Tuscaloosa – asking about your PPP loan. Or your accountant called saying federal agents are pulling your payroll records, comparing them to the application you signed in 2020. You’re terrified because you don’t know what happens next. You don’t know if you’re going to federal prison. You don’t know if you should talk to these agents or invoke your Fifth Amendment right to remain silent. And you certainly don’t know that what you’re facing isn’t “PPP fraud” – it’s wire fraud under 18 USC 1343, which carries up to 20 years in federal prison per count.

Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve represented clients facing federal PPP fraud investigations across Alabama’s three federal districts for many, many years. Our attorneys understand how the Northern District (Birmingham, Huntsville), Middle District (Montgomery, Dothan), and Southern District (Mobile) handle these prosecutions. We’ve seen the SBA letters, the grand jury subpoenas, the target letters. We know what comes next in your case, and we know the window for intervention is closing faster than you think.

What It Means When You Get That Letter

The SBA sends different types of contact depending on where the investigation stands. An initial compliance letter asks you to clarify information – employee counts, payroll amounts, use of funds. This feels routine. It’s not. By the time SBA sends that letter, their fraud detection algorithms have already flagged your loan. FBI, IRS Criminal Investigation, and SBA Office of Inspector General are reviewing your case.

Then there’s the escalation. A grand jury subpoena demanding documents means prosecutors are building a criminal case, not conducting a civil audit. Or agents show up at 6am, interview your employees, freeze your accounts. That’s the psychological warfare – they want you panicked, talking without a lawyer, making admissions before you understand the charges.

The mistake everyone makes: talking to agents without counsel. You think explaining the confusion will clear things up. But anything you say gets memorialized in an FD-302 report and used against you at trial. The statute of limitations for PPP fraud prosecution is 10 years. If you applied in 2020, they can prosecute you through 2030.

The Next 60-90 Days – What Actually Happens to You

Week 1-2: Silent investigation. Agents pull your bank records, compare your PPP application to your 2019 tax returns, your 2020 payroll records, your quarterly 941 forms. You don’t know this is happening. Week 3-8: First contact. SBA letter, FBI visit, or subpoena.

Month 2-4: Target phase. Prosecutors have decided to indict. They’re building the case, interviewing witnesses, calculating loss amounts for sentencing guidelines. If you’re going to cooperate – flip on co-conspirators, provide evidence against your accountant – you do it now. After indictment, your bargaining power drops.

Month 4-6: Indictment or plea negotiation window. Federal prosecutors in Alabama’s districts operate with an 85-90% conviction rate. They don’t file charges unless they believe they’ll win. The question isn’t “Will I be convicted?” – the question is “What sentence can I negotiate before trial?”

Post-indictment: Arraignment in federal court. Bond hearing – depending on fraud size, criminal history, flight risk, you might be detained pending trial. Discovery phase where the government shows you the evidence. Then the cooperation calculus: plead guilty and cooperate for a reduced sentence, or fight?

In the Northern District, two Tuscaloosa men pleaded guilty to PPP fraud after prosecutors proved they fabricated employee payroll. Kenzarian Lemark Harris got 36 months in federal prison. In the Southern District, a Mobile man got 85 months for wire fraud connected to a false PPP application. That’s the range you’re facing.

Wire Fraud – The Charge You’re Actually Facing

You’re not charged with “PPP fraud.” There’s no statute called that. You’re charged with wire fraud (18 USC 1343), false statements to a financial institution (18 USC 1014), theft of government property (18 USC 641), conspiracy (18 USC 371). Wire fraud is the big one – the 20-year-per-count statute.

What makes it wire fraud? Your PPP application went through electronic systems. That’s the “wire” element. The government has to prove four things: (1) false statement on the application, (2) electronic transmission, (3) intent to defraud the SBA, (4) government loss. Elements one, two, and four are easy to prove. Element three – intent – is where your defense lives.

Did you deliberately lie? Or did you make a good-faith mistake interpreting ambiguous SBA guidance in March 2020 when the program rolled out in chaos? Did you rely on your accountant’s calculations? Did you misunderstand what “payroll costs” meant under the CARES Act? Intent is a question of fact, and it’s the prosecutor’s burden to prove beyond a reasonable doubt.

Here’s the constitutional problem. Wire fraud is a vague statute. Prosecutors apply it to business decisions, to judgment calls made under contradictory guidance. Where’s the line between fraud and misunderstanding? The statute doesn’t say. And in a political environment where the government wants PPP fraud convictions, that vagueness gets weaponized against defendants who may have made errors but didn’t commit crimes.

Multiple counts stack fast. Loan application: one count. Forgiveness application: another count. Each follow-up certification: additional counts. A single PPP loan can generate five or six wire fraud counts. At 20 years per count, even with sentencing guidelines bringing it down, you’re looking at serious prison time.

Your Choices – Talk, Cooperate, Plea, or Fight

Choice one: Talk to FBI/IRS agents or invoke your Fifth Amendment right to silence. Talking feels cooperative. It’s not. It’s providing evidence. Even if you’re innocent, talking without a lawyer present is the single biggest mistake defendants make. Agents will tell you “We just want to understand what happened.” What they mean is “We’re building a case, and your statement will be Exhibit A.”

Choice two: Cooperation. If you had a co-conspirator – a business partner who knew the application was false, an accountant who fabricated the numbers – you can cooperate against them for a reduced sentence. But cooperation means pleading guilty. The calculus: cooperate early (before indictment) and you might get a 5K1.1 motion for substantial assistance, knocking years off your sentence. Cooperate late and it’s worth less.

Choice three: Plea deal before trial. Federal prosecutors offer sentence reductions if you plead guilty before they spend resources on a trial. The discount can be significant – 30-40% off the guidelines range. But you’re still pleading guilty to a felony. You’ll have a federal conviction, supervised release for three years after prison, restitution for every dollar the government lost.

Choice four: Trial. Only 2% of federal defendants go to trial. The conviction rate at trial is over 90%. Those numbers terrify most defendants into pleading. But sometimes trial is the right call – if the government can’t prove intent, if there are procedural violations (illegal search, Miranda issues), if the case turns on witness credibility. It’s a risk. But it’s a constitutional right.

Alabama Sentences – Real Numbers from Real Cases

Northern District: 36 months for Kenzarian Lemark Harris in the Tuscaloosa PPP case. That’s three years in federal prison. Why 36 months? Loan amount, acceptance of responsibility (pleading guilty), no prior federal convictions, cooperation level. Sentencing guidelines calculate a base offense level based on loss amount, then add enhancements (leadership role, sophisticated means, obstruction) or subtract reductions (acceptance of responsibility, cooperation). Judges in Birmingham and Huntsville follow the guidelines closely.

Southern District: 85 months for the Mobile defendant. That’s seven years. Why the difference? Aggravating factors. In that case, the defendant also conspired to distribute fentanyl – separate federal crime, sentences stacked. But even without drug charges, larger PPP frauds (over $150,000) trigger higher base offense levels.

Restitution is mandatory. You pay back every dollar the SBA lost, even if you spent it on payroll, rent, business expenses. Even if the loan was forgiven. Forgiveness doesn’t erase fraud.

Supervised release: Three years after prison. Conditions include probation check-ins, drug testing, employment requirements, travel restrictions. Violations send you back.

Collateral consequences: Federal conviction means you can’t vote while incarcerated, can’t own firearms, can’t get federal contracts. In Alabama, felony convictions impact employment and housing for years.

Call 212-300-5196

If you received an SBA letter, if FBI agents contacted you, if your PPP loan is under investigation in Alabama – call us. The government has already started building its case. Your defense needs to start now. Constitutional principles – burden of proof, presumption of innocence, right to counsel – don’t enforce themselves. You enforce them by hiring experienced federal defense attorneys who know Alabama prosecutors, who know the judges, who know when to negotiate and when to fight.

The statute of limitations is 10 years. The cooperation window is measured in weeks. Don’t wait.