Boise PPP Loan Fraud Lawyers

Boise PPP Loan Fraud Lawyers

Your PPP loan was flagged for audit. Federal agents contacted you about your Paycheck Protection Program application. Or your bank froze your account due to SBA investigation. You’re in Idaho. Three defendants were just sentenced in February 2024 in Boise for fraudulently obtaining $3.5 million in PPP loans for fake businesses. The ringleader – an Atlanta woman – received 3 years and 10 months in federal prison. Two other conspirators received 2-year sentences. The District of Idaho established a dedicated COVID-19 Fraud Task Force – they’ve identified $7 million in pandemic fraud and prosecute aggressively.

Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve defended PPP fraud cases in Idaho for over 40 years. We know how District of Idaho prosecutors charge pandemic loan fraud and what outcomes you’re facing.

The SBA approved your PPP loan in 2020 – sometimes in 24 hours – without verification. Now in 2024-2025, they’re prosecuting. Three Nampa-area residents pled guilty to bank fraud charges in April 2025 for defrauding the PPP program. An Idaho business owner and two companies consented to an $850,000 judgment in October 2024 for PPP and EIDL fraud. Here’s what happens in YOUR situation.

$3.5 Million Fraud Ring Sentenced in February 2024

Three defendants were sentenced in February 2024 in Boise for fraudulently obtaining and misusing Paycheck Protection Program loans issued by a Boise financial institution. They were part of a larger COVID-19 fraud ring. Khadijah X. Chapman, 59, from Atlanta, was sentenced to three years and 10 months in federal prison. Daniel C. Labrum, 42, from South Jordan, Utah, was sentenced to two years. Eric J. O’Neil, 58, from Bethel, Connecticut, was sentenced to two years and three months. Chapman, Labrum and O’Neil fraudulently obtained PPP loans for fake businesses in 2020 and 2021. They created shell companies with no actual employees, no actual payroll, no actual business operations. They submitted fraudulent PPP applications with false employee counts, false payroll tax filings, false revenue numbers. They were convicted of bank fraud under 18 U.S.C. § 1344, which carries a statutory maximum of 30 years in prison.

The sentencing disparity shows the hierarchy of the fraud ring. Chapman at 3 years 10 months was the ringleader who organized the scheme. Labrum at 2 years and O’Neil at 2 years 3 months were participants who followed Chapman’s direction. All three pled guilty – if they had gone to trial and been convicted, they would have faced 7-15 years in prison for a $3.5 million fraud. Three Nampa-area residents – Miguel Vittorio, Yessenia Casillas, and Luis Vasquez – pled guilty to bank fraud charges in separate federal cases in April 2025 for defrauding the Paycheck Protection Program. Their sentencing dates have not been announced yet, but they face similar prison terms based on their fraud amounts.

How PPP Fraud Gets Detected

PPP fraud detection is algorithmic. Every PPP application was cross-referenced against IRS Form 941 quarterly payroll tax returns. You claimed 20 employees on your PPP application. Your 941s show zero employees – or the business doesn’t exist at all. Computer flagged you immediately. The SBA Office of Inspector General reviews flagged applications and refers suspected fraud to federal law enforcement. In Idaho, the COVID-19 Fraud Task Force includes FBI agents, IRS Criminal Investigation agents, and SBA-OIG investigators working full-time on pandemic fraud.

Bank Secrecy Act reports trigger investigations. When you withdrew large cash amounts, made luxury purchases, or transferred PPP funds to personal accounts – your bank filed Suspicious Activity Reports. Those go directly to federal law enforcement. Chapman, Labrum, and O’Neil’s fake businesses – with no actual operations – meant all PPP funds went to personal use. Those transactions flagged the fraud. Loan forgiveness applications create second fraud exposure. When you applied for forgiveness, you certified PPP funds went to payroll, rent, utilities. Federal agents subpoena bank records and trace every dollar. If funds went to personal expenses instead of permitted uses – that’s wire fraud when you certified the opposite on forgiveness applications.

Idaho’s COVID-19 Fraud Task Force

The District of Idaho COVID-19 Fraud Task Force was established by U.S. Attorney Josh Hurwit to investigate and prosecute pandemic relief fraud. By September 2023, the task force had identified $7 million in fraud related to pandemic relief programs. U.S. Attorney Hurwit indicated the task force would likely be “indicting and resolving a similar number of cases” in 2024 and “probably for several years thereafter.” This means investigations continue aggressively into 2025 and beyond. Cases progress from initial SBA contact to indictment in 6-12 months instead of 12-24 months in districts without task forces. Federal agents have more resources, more expertise, and institutional support for aggressive prosecution.

District of Idaho Sentencing

PPP fraud sentencing follows the federal guidelines based on loss amount. Under $100,000 with cooperation: 6-18 months. $100,000-$500,000: 2-4 years. $500,000-$1 million: 4-7 years. Over $1 million: 5-10 years with plea, 10-20+ years if convicted at trial. Chapman received 46 months (3 years 10 months) as the ringleader of a $3.5 million fraud. Labrum and O’Neil received 24 and 27 months respectively as participants. All three pled guilty – trial convictions would have resulted in 7-15 year sentences for the same conduct.

Restitution is mandatory – you must repay the full PPP amount plus interest. This federal debt survives bankruptcy. Chapman, Labrum, and O’Neil owe restitution on the $3.5 million fraudulently obtained. Probation terms after prison: 3-5 years supervised release, cannot start/manage a business without permission, continuous financial monitoring. The critical decision: plea deal versus trial. Federal PPP fraud cases have 97%+ conviction rates at trial. Documentary evidence – your application, your IRS records, your bank statements – makes conviction nearly certain. The “trial penalty” means if you’re convicted at trial, you face statutory maximums instead of reduced plea sentences. All three defendants in the Boise case pled guilty and avoided trial – their sentences would have been 2-3 times longer if convicted at trial.

Timeline: From initial SBA contact to indictment typically runs 6-12 months in Idaho due to the dedicated task force. By the time you’re indicted, they have everything – bank records, IRS filings, witness statements. The mistake Idaho business owners make: responding to initial SBA audits without legal counsel. They think explaining will resolve it. Instead, statements like “I may have inflated employee counts” become admissions of fraud. By the time they hire an attorney, they’ve confessed.

At Spodek Law Group – Todd Spodek has defended federal fraud cases for many, many, years. If the SBA contacted you about your PPP loan – if federal agents asked to interview you – time matters. District of Idaho has a dedicated fraud task force. Call 212-300-5196.