Birmingham EIDL Loan Fraud Lawyers: Federal Defense for Economic Injury Disaster Loan Investigations

Birmingham EIDL Loan Fraud Lawyers: Federal Defense for Economic Injury Disaster Loan Investigations

You got a letter from the SBA Office of Inspector General about your Economic Injury Disaster Loan. Or FBI agents from the Birmingham Field Office showed up at your business in Birmingham, Hoover, Vestavia Hills, Mountain Brook – asking whether your business really suffered pandemic-related economic injury that qualified you for EIDL funding. Or your accountant called saying federal agents subpoenaed your records – comparing your 2019 revenue to your 2020 revenue to the EIDL application where you claimed you lost hundreds of thousands of dollars. You’re terrified because you don’t know if this is a civil audit or a criminal investigation. You don’t know if you should talk to these agents or invoke your Fifth Amendment rights. And you certainly don’t know that EIDL fraud prosecutions carry up to 30 years in federal prison under 18 USC § 1014 (false statements to SBA) and 20 years under 18 USC § 1343 (wire fraud).

Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve represented clients facing federal EIDL fraud investigations across Alabama’s Northern District for many, many years. We know what comes next in your case. The U.S. Attorney’s Office for the Northern District of Alabama prosecutes EIDL fraud cases throughout Birmingham and the surrounding region. And unlike PPP loans where “payroll” was easy to fabricate, EIDL fraud prosecutions center on “economic injury” – whether your business actually suffered pandemic-caused revenue loss.

What That SBA Letter Actually Means

The SBA sends different types of contact depending on where the investigation stands. An initial compliance letter asks you to clarify information – your 2019 revenue, your 2020 revenue, whether you suffered “economic injury” caused by the pandemic. This feels routine. It’s not. By the time SBA sends that letter, their fraud detection algorithms have flagged your loan. FBI, IRS Criminal Investigation, and SBA Office of Inspector General are comparing your tax returns to your EIDL application.

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

Here’s what makes EIDL fraud different. PPP prosecutions focus on “payroll costs” – did you have the employees you claimed? EIDL prosecutions focus on “economic injury” – did your business lose revenue due to the pandemic? Revenue numbers are objective. Your 2019 tax return shows $500,000. Your 2020 tax return shows $480,000. Your EIDL application claimed you lost $200,000. The math doesn’t work. Prosecutors argue the numbers speak for themselves. The statute of limitations is 10 years. If you applied in 2020, they can prosecute you through 2030.

The Next 60-90 Days – What Happens to You

Week 1-2: Silent investigation. Agents pull your bank records, compare your EIDL application to your tax returns. 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 your business partners, your accountant, your employees. If you’re going to cooperate – provide evidence against a co-conspirator – you do it now. After indictment, your bargaining power drops.

Month 4-6: Indictment or plea negotiation window. Federal prosecutors in the Northern District of Alabama 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?”

In Alabama, cases like Tametria Conner Dantzler’s demonstrate the government’s commitment. She faced charges for a $2 million EIDL fraud scheme in Montgomery and pleaded guilty in August 2024. That’s the reality. The federal government doesn’t let go once they’ve identified fraud.

EIDL vs. PPP – Why EIDL Fraud Is Worse

A $150,000 fraudulent PPP loan and a $150,000 fraudulent EIDL loan produce the same sentencing range. But EIDL fraud sometimes results in harsher sentences because the proof is more objective.

PPP fraud cases turn on payroll. Did you have 10 employees? Prosecutors pull your 941 forms, interview the “employees,” prove they didn’t exist. There’s room to argue confusion – maybe you counted independent contractors, maybe you misunderstood “payroll costs.”

EIDL fraud cases turn on economic injury. Prosecutors pull your tax returns. 2019: $500,000. 2020: $520,000. Your EIDL application: “We lost $300,000 due to COVID.” That’s not confusion. That’s a lie, provable with documents you signed under penalty of perjury.

Use of funds matters too. EIDL loans had to be spent on operating expenses, not personal expenses. Prosecutors find EIDL funds going to personal credit cards, car payments, luxury purchases – that’s misuse of funds, a separate charge.

The Charges You’re Actually Facing

You’re not charged with “EIDL fraud.” You’re charged with wire fraud (18 USC § 1343), false statements to SBA (18 USC § 1014), bank fraud (18 USC § 1344), money laundering (18 USC § 1956), conspiracy (18 USC § 371). False statements to SBA is the 30-year statute.

What makes it federal? Your EIDL application went through electronic systems. The government must prove: (1) false statement, (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? Did you rely on your accountant? 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 and false statement statutes are vague. Where’s the line between fraud and misunderstanding? The statute doesn’t say. And in a political environment where the government wants COVID 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. Each certification: additional counts. Each wire transfer: potential money laundering count.

Your Choices – Talk, Cooperate, Plea, or Fight

Choice one: Talk to agents or invoke Fifth Amendment. Talking feels cooperative. It’s not. It’s providing evidence. Even if you’re innocent, talking without a lawyer is the biggest mistake defendants make. Agents say “We just want to understand.” They mean “Your statement will be memorialized in an FD-302 report and used against you.”

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

Choice three: Plea deal before trial. Federal prosecutors offer sentence reductions if you plead before trial. The discount: 30-40% off the guidelines range. But you’re still pleading to a felony with supervised release and mandatory restitution.

Choice four: Trial. Only 2% of federal defendants go to trial. Conviction rate: over 90%. But sometimes trial is the right call – if the government can’t prove intent, if there are procedural violations, if the case turns on witness credibility.

Birmingham Sentences – Real Numbers

Tametria Conner Dantzler: Montgomery, $2 million EIDL fraud, pleaded guilty August 2024. Sentencing guidelines calculate a base offense level based on loss amount. Under $150,000: lower level. Over $150,000: higher level. Over $1 million: significant enhancements. Judges add enhancements for leadership role, sophisticated means, obstruction – or subtract reductions for acceptance of responsibility, cooperation.

Restitution is mandatory. You pay back every dollar, even if you spent it on operating expenses. Supervised release: three years after prison. Probation check-ins, drug testing, employment requirements, travel restrictions. Violations send you back.

Collateral consequences: Can’t vote while incarcerated, can’t own firearms, can’t get federal contracts. In Birmingham, felony convictions impact employment and housing for years.

Call 212-300-5196

If you received an SBA letter, if FBI agents from the Birmingham Field Office contacted you, if your EIDL loan is under investigation in Alabama – call us. The government has already started building its case. Your defense needs to start now.

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