Austin PPP Loan Fraud Lawyers
You got a PPP loan in 2020. Maybe 2021. The government was handing out money to businesses during the pandemic - you filled out the application, got approved, used the funds. Years passed. Life moved on. You assumed the government moved on too.
It didn't.
The federal government turned PPP loan fraud prosecution into an assembly line. And the Western District of Texas - which covers Austin - is one of the most aggressive districts in the country. A Georgetown couple just got sentenced to 32 combined years for $3 million in PPP fraud. Congress extended the statute of limitations to 10 years. That 2020 loan you thought was forgotten? Prosecutable until 2030. But here's what nobody tells you: the very instinct most people have when they panic - paying it back to make it go away - is exactly what prosecutors use to convict them.
Welcome to Spodek Law Group. We handle federal PPP loan fraud defense in Austin and throughout the Western District of Texas. If you're under investigation, if you've received a letter from the SBA Office of Inspector General, or if federal agents have contacted you - this article explains what you're actually facing and why the obvious move might destroy you.
The 10-Year Clock Is Running
In August 2022, President Biden signed the PPP and Bank Fraud Enforcement Harmonization Act. Most people missed what it actualy did.
It extended the statute of limitations from 5 years to 10 years - retroactively.
That means a PPP loan from 2020 is prosecutable until 2030. A loan from 2021 until 2031. The government gave itself a full decade to come for you. And there using it. The DOJ continues to investigate PPP fraud as a top enforcement priority through the COVID-19 Fraud Enforcement Task Force. They have dedicated strike forces. They have data analytics. They have time.
The Western District of Texas isn't playing around.
In October 2024, Michael Fullerton and Tiffany Fullerton of Georgetown - just north of Austin - were sentenced to a combined 32 years in federal prison for PPP fraud. Michael got 286 months. Tiffany got 108 months. They used the funds to try starting a marijuana dispensary in Oklahoma, bought a motor home, luxury watches, a boat. They also have to pay back $3,027,526.11 in restitution. U.S. Attorney Jaime Esparza said it clearly: "They took advantage of a national emergency to enrich themselves."
Even a former FBI employee in San Antonio got prosecuted. Christopher Phillips used his FBI credentials to verify his identity on a fraudulent PPP application. He claimed two employees and $15,000 monthly payroll for a company that had neither. He got 3 months home confinement plus 5 years probation - light compared to the Fullertons, but still a federal conviction that follows him forever.
The numbers are brutal. According to Pandemic Oversight, as of December 31, 2024: 3,096 defendants have been charged with pandemic relief fraud. Of those, 2,532 were found guilty - thats 82%. Of those convicted, 1,741 received prison time - thats 81%. IRS Criminal Investigation reports a 97.4% conviction rate in cases they actually prosecute. Once your charged in federal court, conviction is basicly certain.
So your instinct - the thing your probably thinking right now - is to pay it back before they come for you.
The Trap Most People Walk Into
Your instinct is to pay it back. Dont.
This is were it gets ugly. The DOJ has explicitly stated that voluntary repayment can be used as evidence of consciousness of guilt. You read that right. The very act you think shows good faith - returning the money - becomes proof that you knew it was fraud.
Theres a 2024 Manhattan case that shows exactly how this works. A healthcare company received $3.2 million in PPP funds after making what they claimed was an honest error calculating eligible payroll. When the DOJ sent a repayment letter, they immediatly returned the funds plus interest. They thought it showed good faith.
At trial, the prosecutor told the jury: "Ladies and gentlemen, innocent people don't repay legitimate loans. The defendant knew this was fraud - that's why he rushed to repay."
Result: 15 years federal prison.
A California tech startup had a $750,000 loan. They faced confusing guidance about affiliate rules. They voluntarily repaid when questioned. Prosecutors used the CEO's email saying "maybe we should repay to avoid problems" as consciousness of guilt evidence. Despite having a legitimate business need, the CEO was convicted. 87 months federal prison.
The January 2025 DOJ report revealed there strategy: target "technical violators" who voluntarily repaid. Why? Because these are "slam dunk" cases. There no need to prove intent when the defendant already "admitted" guilt by repaying. The people trying hardest to make it right are the easiest to prosecute.
Now - to be fair - repayment CAN be part of a resolution strategy. But only when done with counsel, at the right time, as part of a structured approach. The difference between strategic repayment (with a lawyer, during the civil window, as part of negotiation) and panic repayment (DIY, after investigation starts, hoping it makes problems disappear) is the difference between civil resolution and 15 years in federal prison.
So what CAN you do?
The Window That Closes
There's a window - typically six to twelve months - between when the SBA OIG flags your loan and when the case gets referred to the FBI for criminal investigation.
During this window, civil resolution is possible.
You might negotiate repayment plus a civil penalty. Maybe a False Claims Act settlement. Not pleasant - but not a federal felony conviction either. Not prison. Not the end of everything.
Once the FBI takes over, that option disappears.
After FBI referral, your facing criminal charges. The civil path closes. Prosecutors have enormous leverage because of charge stacking - one PPP application can trigger wire fraud (20-30 years), bank fraud (30 years), false statements (30 years), money laundering (20 years), and aggravated identity theft (mandatory +2 years consecutive). Theoretical exposure exceeds 100 years. That leverage makes them very hard to negotiate with.
Most people miss this window entirely. They dont know it exists. They find out about it after the FBI shows up.
If you're under investigation or think you might be:
- Don't destroy any documents. Document destruction becomes a seperate charge.
- Don't discuss the matter with anyone else who might be involved. Those conversations become evidence.
- Don't make voluntary payments without counsel. You now understand why.
- Don't talk to federal agents without a lawyer present. People who decided to talk without counsel have ended up charged with obstruction or making false statements - on top of the PPP fraud.
- Contact a federal defense attorney immediately. The earlier you act, the more options exist.
Todd Spodek has handled PPP fraud cases in the Western District of Texas. He understands the difference between OIG-stage investigations where civil resolution may still be possible, and FBI-stage investigations where criminal defense is the priority.
When Your Ready
If you're in Austin - or anywhere in the Western District of Texas - and you're facing a PPP loan fraud investigation, Spodek Law Group can help you understand where you stand.
The consultation is free. Theirs no obligation.
What you'll get is an honest assessment. Is this still at the OIG stage where civil resolution might be possible? Has it been referred to the FBI? What does the evidence look like? What are realistic outcomes based on how these cases play out in WDTX?
The statute of limitations runs until 2030 or 2031 depending on when you got the loan. The government has time. But once they move, things happen fast. The window between OIG and FBI referral is 6-12 months. Don't waste it trying to figure this out alone.
Call us at 212-300-5196.
Were here when you need us.
