Austin PPP Loan Fraud Lawyers

You think the worst thing about your PPP fraud is the money. You applied for loans you werent eligible for. You received funds you shouldnt have. If prosecutors come after you, they come after you for that - the dollar amount. The bigger the fraud, the longer the sentence.

That's not how Austin works.

Welcome to Spodek Law Group. Our goal is to tell you what other websites won't: in the Western District of Texas, the BUSINESS you used to commit fraud matters more then the money you stole. Michael Fullerton didnt create fictional companies from scratch. He used dormant ones - businesses that actualy existed but werent operating. He revived them to submit PPP applications. He got 286 months. Thats nearly 24 years in federal prison. For $3 million.

If you used a dormant company, if you revived an expired LLC, if you had access to existing business infrastructure - Austin prosecutors will treat your fraud as more sophisticated, more planned, and more deserving of a sentence that could exceed most violent crimes.

When Your Business Becomes the Evidence

Most people think PPP fraud is about the application. You lied about employees. You fabricated payroll numbers. You submitted false documents. That's the fraud. That's what your facing.

Thats not how federal prosecutors in Austin see it.

In the Western District of Texas, prosecutors treat PPP fraud as an INFRASTRUCTURE crime. They're not just looking at what you said on the application - they're looking at HOW you structured the fraud. The business entities you used. The companies you created or revived. The organizational framework that made the fraud possible.

Heres how this works in practice. You have an old LLC that you formed years ago but never used. Its sitting dormant. When PPP came along, you thought "I have a legitmate business entity - I'll use that." You figured it was safer then creating something from scratch. A real company looks more credible then a fictional one. Wrong. To Austin prosecutors, using that dormant LLC demonstrates SOPHISTICATION. It shows you had access to existing business infrastructure. It shows you planned ahead. It shows the kind of organizational capability that transforms opportunistic fraud into organized crime.

The Western District of Texas has demonstrated that business infrastructure drives sentences. Michael Fullerton used dormant companies and got 286 months. Michael McQuarn created entirely fictitious companies and - while he died before sentencing - had received far less money and faced potentially lighter consequences. The sophistication of your fraud structure matters as much as the dollar amount.

The dormant company you revived to commit fraud is the evidence that will convict you. Austin prosecutors dont just see a false application. They see a fraud operation with existing business infrastructure, demonstrated planning capability, and the kind of organizational sophistication that justifies decades in prison.

The Fullerton Trap: 286 Months for Dormant Companies

Let me show you exactly how business infrastructure becomes 24 years in federal prison.

Michael Fullerton of Georgetown, Texas - just north of Austin - submitted six fraudulent PPP loan applications. He didnt create fake businesses from nothing. He used ONE existing company and THREE dormant or expired business names. Businesses that were real at some point. Businesses with actual formation documents, EIN numbers, and legitimate paper trails. He revived them specificaly to submit PPP applications.

OK so what happened? Five of those six applications were approved. Fullerton and his co-conspirators received aproximately $3 million in PPP funds. They had applied for $3.5 million total. A success rate that prosecutors argued demonstrated the sophistication of using real-but-inactive business entities.

What did they do with the money? They tried to start a marijuana grow operation and dispensary in Oklahoma. They planned a bar and grill. They set up an auto and boat repair shop. They bought a motor home. Luxury watches. A boat. The spending was lavish and completly unrelated to any payroll or business expenses.

Heres the part that should terrify you. Fullerton was convicted on ALL 11 counts. Not some counts. Not most counts. Every single count the government charged. Wire fraud. Bank fraud. Conspiracy. Money laundering. The jury found him guilty of everything.

The sentence? 286 months. Let that sink in for a moment. Two hundred eighty-six months. Thats 23 years and 10 months in federal prison. For $3 million in PPP fraud. Thats aproximately 8 months of prison time for every $100,000 he stole. The math is brutal.

His wife Tiffany Fullerton was also convicted. She got 108 months - 9 years. Together, this married couple will serve a combined 32 years in federal prison. They were also ordered to pay $3,027,526.11 in restitution - basicly every dollar they stole, plus interest and fees.

Heres something practitioners understand that the public dosent. The sentence wasnt driven primarly by the dollar amount. $3 million is serious, but it dosent automaticaly produce a 24-year sentence. What drove the sentence was the STRUCTURE of the fraud. Multiple business entities. Dormant company revival. Multi-state activity with the Oklahoma operations. The infrastructure became the aggravating factor that pushed Fullerton's sentence into territory usually reserved for violent offenders.

The investigation involved multiple federal agencies working together. IRS Criminal Investigation traced the money flows. The FBI analyzed the business structures. The Small Business Administration Office of Inspector General examined the applications. The Special Inspector General for Pandemic Recovery coordinated the overall investigation. When prosecutors can show a coordinated multi-entity fraud scheme, they have ammunition for dramatic sentencing enhancements.

The Fullerton investigation took years to build. Prosecutors didnt rush to charge. They methodicaly documented every business entity, every application, every flow of funds. They traced the money from PPP disbursement to marijuana grow operation. They showed how dormant Texas entities funded Oklahoma cannabis ventures. The complexity of the scheme - spanning multiple states, multiple business entities, multiple co-conspirators - justified the complexity of the sentence. The jury saw everything and convicted on everything.

Fictitious vs Dormant: Why Real Companies Are More Dangerous

You might think creating a completely fake company is worse then using a real one. Inventing a business from nothing seems more fraudulent then reviving something that actualy existed.

Austin prosecutors see it exactly backwards.

Michael George McQuarn of Austin created entirely fictitious companies. Vantastic Voyages LLC. Happy Days Movers LLC. Cool Kids Entertainment Group LLC. These businesses never operated. They existed only on paper, created specificaly to submit PPP applications.

McQuarn submitted 10 PPP applications under 4 different business names. He requested over $23 million. He actualy received aproximately $956,310. He used the money to buy a 26-foot Pavati Wake Boat for $333,000. A Rolls Royce Dawn for $241,392. A $10,000 yacht club membership. He paid off his Triumph Bonneville motorcycle.

The federal government caught McQuarn within months. By June 2020 - just weeks after he received the money - investigators had seized everything. The wake boat. The Rolls Royce. The motorcycle. All the cash. Federal agents showed up with seizure warrants and took the luxury items McQuarn had bought with PPP funds. The yacht club membership he paid for? Gone. The lifestyle he thought PPP would fund? Confiscated before he could enjoy it. McQuarn pleaded guilty in February 2022 to conspiracy to commit wire and bank fraud. He died in October 2022 before formal sentencing.

Compare McQuarn's situation to Fullerton's. McQuarn requested far more money ($23 million vs $3.5 million) but received far less ($956,310 vs $3 million). His fictional companies were easier to detect and faster to unravel. Fullerton's dormant company revival created a more sophisticated fraud structure that prosecutors treated as more culpable.

Heres why this matters for your situation. If you used a dormant company - one that actualy existed at some point, one with real formation documents, one that could potentialy have had legitimate operations - prosecutors will argue you demonstrated planning and sophistication. You had access to business infrastructure. You chose to exploit that access. The very thing that made your fraud seem "safer" is what makes it more serious under federal sentencing guidelines.

Every business entity you used becomes a separate basis for enhancement. One dormant LLC triggers concerns about infrastructure. Multiple dormant LLCs suggest an organized scheme. And organized schemes receive sentences that can exceed 20 years.

What Austin Sentences Actually Look Like

Let me show you whats actualy happening in the Western District of Texas right now. Not guidelines. Not hypotheticals. Real sentences from real cases.

Michael Fullerton - Georgetown. Used 1 existing and 3 dormant business names. 6 applications totaling $3.5 million. Received $3 million. Marijuana grow operation in Oklahoma. Luxury purchases. Sentence: 286 months (nearly 24 years). Convicted on ALL 11 counts. Restitution: $3,027,526.11.

Tiffany Fullerton - Co-defendant, wife. Same scheme, same applications. Sentence: 108 months (9 years). Combined with husband: 32 years federal prison.

Michael George McQuarn - Austin. Created fictitious companies: Vantastic Voyages, Happy Days Movers, Cool Kids Entertainment Group. 10 applications requesting $23 million. Received $956,310. Wake boat, Rolls Royce, yacht club membership. Pleaded guilty February 2022. Died October 2022 before sentencing. All assets seized.

Christopher James Phillips - Former FBI employee. Schertz, TX. Used FBI credentials to verify identity on application. Formed Phillips Global Realty LLC. Claimed 2 employees, $15,000 monthly payroll - false. Sentence: 3 months home confinement, 5 years probation. Restitution: $39,771.

Heres the pattern you should notice. Fullerton's dormant company scheme got 286 months. Phillips - who actualy used his FBI credentials to commit fraud - got home confinement. Why the massive difference? Phillips stole less money ($39,771 vs $3 million). But more importantly, Phillips used a single company he had legitimatly formed, not a multi-entity dormant company network.

The sentence differential is shocking. Fullerton got prison time measured in decades. Phillips got probation. The dollar amounts dont explain this gap. The business infrastructure does. Fullerton's multi-entity dormant company scheme demonstrated sophistication that Phillips' single-company fraud didnt show.

And the restitution is permanant. The Fullertons owe over $3 million that they cant discharge in bankruptcy. Theyll be paying it back for the rest of there lives. Wages garnished. Tax refunds intercepted. Assets subject to seizure. The sentence dosent end when prison ends.

U.S. Attorney Jaime Esparza made the Western District's approach clear when Phillips was sentenced. His statement - "The United States government will aggressivly prosecute criminals, even if those individuals work within our own ranks" - signals that Austin prosecutors treat all PPP fraud seriously. Even former FBI employees arent safe from prosecution. Even people with law enforcement credentials face charges. But the sentences show they treat SOPHISTICATED fraud - fraud with business infrastructure - as especialy deserving of harsh punishment. Phillips got home confinement. Fullerton got nearly 24 years. Infrastructure made the difference.

The Sophistication Enhancement

Heres were most business owners make the mistake that costs them decades.

Under the federal sentencing guidelines, fraud involving "sophisticated means" triggers a 2-level enhancement to your offense level. What constitutes sophisticated means? Using shell companies. Exploiting dormant business entities. Creating multiple applications through different organizational structures. Exactly what Fullerton did.

But the enhancements dont stop there. If prosecutors show you were an organizer or leader of the scheme, thats another 2-4 levels. If you recruited others, thats additional enhancement. If the scheme involved more then $1 million, thats another increase. If it involved more then $3 million, even higher.

Each level increase translates to significanly more prison time. In the range were seeing in Austin cases, each additional level can mean 12-24 more months in prison. The enhancements compound rapidily.

Heres how this played out for Fullerton. The base offense level for fraud is already substantial. Then prosecutors added enhancements for sophisticated means - the dormant company revival. They added enhancements for loss amount - $3 million. They added enhancements for multiple victims - the lenders, the SBA, the taxpayers. They added enhancements for leadership role - organizing a scheme with co-conspirators including his wife. By the time all enhancements were calculated, his guideline range was measured in decades.

The McQuarn case shows the contrast. Fictitious companies are obviousely fraudulent. Theres no sophistication in inventing "Vantastic Voyages" from nothing. The fraud is transparant. But dormant company revival - using real entities with real formation documents to create the appearance of legitmate business activity - thats the sophistication that triggers enhancements.

Think about your own situation. Did you use an existing business entity? Did you revive something dormant? Did you have multiple LLCs or corporations that you used for applications? Each entity becomes evidence of infrastructure. Each piece of infrastructure becomes evidence of sophistication. Each piece of sophistication adds time to your potential sentence.

The 10-year statute of limitations created by the PPP and Bank Fraud Enforcement Harmonization Act of 2022 means prosecutors have time to map your entire business infrastructure. Traditional fraud has a 5-year clock. PPP fraud has 10 years. If you applied in 2020, your exposed until 2030. Prosecutors arent rushing. There building comprehensive cases that capture every business entity, every dormant revival, every piece of infrastructure you used.

Why Business Owners Face Extra Scrutiny

If your someone with existing business entities - LLCs you formed years ago, corporations that went inactive, partnerships that never got off the ground - you need to understand your exposure.

Austin prosecutors view business owners as inherantly more sophisticated fraudsters. You had access to infrastructure. You knew how business entities work. You understood the difference between active and dormant companies. That knowledge becomes evidence of intent.

Consider the math prosecutors do. A random person creates a fake business to submit one PPP application. Obviousely fraudulent, but also obviousely opportunistic. A business owner revives a dormant LLC to submit applications through multiple entities. Sophisticatd, planned, and demonstrating the organizational capability that suggests a larger scheme.

The Fullerton case is the extreme example, but the principle applies to everyone with business infrastructure. If you had dormant entities you could have revived, prosecutors may argue you chose that path deliberatly. If you had multiple LLCs, prosecutors may argue you were building a fraud operation. Your business experience becomes the aggravating factor.

And prosecutors know exactly how to find your infrastructure. They subpoena state records showing every business entity you ever formed. They check the status - active, inactive, revoked, expired. They trace which entities you used for PPP applications. They build timelines showing when you revived dormant companies. The pattern of business activity becomes evidence of fraud planning.

The Texas Secretary of State maintains records of every business formation, every annual filing, every status change. Federal prosecutors can pull your entire business history in hours. They can see which LLCs you formed in 2015 and forgot about. They can see which corporations you let lapse in 2018. They can see which entities suddenly showed activity in April 2020 - right when PPP became available. The timing alone tells a story. And that story supports sophistication enhancements.

Heres the part that should concern you most. Your co-conspirators might already be cooperating. If you worked with partners, employees, accountants, or attorneys on PPP applications, any of them could be providing information about your business infrastructure. The person who helped you revive that dormant LLC. The accountant who prepared the fictitious payroll documents. The business partner who co-signed applications. Each one is a potential cooperating witness.

Every day you wait, investigators map more of your business infrastructure. Every entity they identify adds to the sophistication evidence. Every connection they trace adds to the conspiracy case. The comprehensive picture of your business activity builds while you do nothing.

At Spodek Law Group, Todd Spodek has handled hundreds of federal fraud cases. The business owners who call before prosecutors finish mapping there infrastructure have options. Strategic disclosure. Cooperation positioning. Arguments about which entities were actualy dormant versus merely inactive. The business owners who call after the infrastructure map is complete are fighting sophistication enhancements with overwhelming evidence.

Call 212-300-5196 before prosecutors finish mapping your business infrastructure. Not becuase we're trying to scare you into hiring a lawyer. Becuase in Austin, with infrastructure-based prosecution and sophistication enhancements and a 10-year statute of limitations, the dormant company you thought made your fraud look legitimate could be the evidence that turns 5 years into 24 years.

Spodek Law Group. The Woolworth Building, 233 Broadway Suite 710, New York. We put this information on our website becuase most business owners have no idea that there business infrastructure is the primary evidence against them. Our goal isnt to frighten you. Its to make sure you understand that Austin prosecutors dont just charge the fraud - they charge the sophistication. And sophistication can mean the difference between probation and decades.

In Austin, the business you used becomes the evidence. And that evidence determines whether you serve months or years. Choose wisely.