Connecticut EIDL Loan Fraud Lawyers

Connecticut EIDL Loan Fraud Lawyers

FBI New Haven contacted you about your EIDL loan’s $10,000 advance – the amount SBA explicitly called a “grant.” You’re prosecuted in District of Connecticut federal court covering Hartford, New Haven, Bridgeport, Stamford, the entire state. FBI New Haven or SBA Office of Inspector General investigators appeared three years after you received funds, questioning revenue discrepancies between your application and tax returns, employee counts exceeding payroll records, whether your business actually operated. Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve represented clients in federal fraud prosecutions for over 40 years, many, many, EIDL prosecutions in District of Connecticut.

The Grant Trap

Connecticut businesses applied for EIDL through SBA’s online portal during 2020 or 2021. Restaurants, retail stores, service businesses throughout Hartford, New Haven, Stamford regions – pandemic restrictions devastated revenue. The application required gross revenue figures, employee counts, basic business information. SBA’s automated system processed applications rapidly. Within days, $10,000 appeared in business accounts – the EIDL advance. SBA documentation called it a “grant” repeatedly. Official communications stated explicitly: you don’t repay this advance even if your full loan gets denied, even if you decline the loan.

What Is EIDL Loan Fraud?

EIDL loan fraud occurs when your application contained false statements at the time you submitted it. False revenue figures – you claimed $270,000 annual revenue but tax returns show $185,000 actual gross receipts. Inflated employee counts – you listed 14 employees when you actually had 8 W-2 workers on payroll. Fake businesses that never operated – you created a business entity solely to apply for EIDL funds without conducting legitimate operations or generating real revenue. These false statements constitute fraud regardless of whether you received the full loan or just the $10,000 advance SBA called a grant.

Do You Have to Repay the EIDL Advance?

That language SBA used created confusion federal prosecutors in District of Connecticut now exploit. Connecticut business owners reasonably interpreted SBA’s “grant” characterization to mean the $10,000 carried no repayment obligation, therefore no fraud exposure. But SBA’s language doesn’t provide criminal law protection. District of Connecticut prosecutors charge wire fraud under 18 USC Section 1343. The “grant” characterization doesn’t matter for criminal liability. What matters: you obtained $10,000 from the federal government through false statements transmitted electronically. That $10,000 counts toward fraud loss under federal sentencing Guidelines judges must follow. Prosecutors view the EIDL advance identically to full loan amounts for sentencing purposes.

EIDL Fraud

Your Connecticut business had fluctuating income during 2019. Service sector revenue varies. The EIDL application required gross revenue, but your accounting tracked net income differently. You estimated based on what seemed reasonable. Employee counts posed similar challenges – workers came and went, contractors performed functions you considered employee-like, precise numbers proved elusive during pandemic chaos.

Connecticut business owners face this constitutional question: when do estimates cross into criminal territory? Federal prosecutors must prove intent – that you knew the application contained false information when submitted.

What Are the Penalties for EIDL Fraud in Connecticut?

Wire fraud carries 20-year statutory maximum. False statements to SBA under 18 USC Section 1014 carry 30-year maximum. These statutory limits don’t control actual sentencing. Guidelines based on fraud loss amount determine prison time. The constitutional burden requiring proof of criminal intent remains, but once prosecutors file charges, that burden becomes difficult to meet.

District of Connecticut prosecutors examine application accuracy at submission time. They don’t distinguish between errors from negligence versus deliberate fraud. You claimed revenue based on bank deposits without accounting for refunds. You included seasonal workers who weren’t technically employees during the period SBA specified. You rounded calculations upward. Each decision creates criminal exposure if prosecutors demonstrate you understood EIDL rules and deliberately violated them.

FBI New Haven Investigations

FBI New Haven agent calls your Connecticut business. “We need to verify EIDL application information.” Sounds administrative. It’s criminal investigation designed to obtain admissions demonstrating intent. Connecticut business owners respond without counsel, unaware investigators already possess complete financial records through grand jury subpoenas. They pulled tax returns via IRS summons. They obtained your application from SBA’s database, examined business records filed with Connecticut Secretary of State.

They know the discrepancies.

Agents compare application revenue against tax returns. They examine payroll records verifying employee counts. They review business formation documents confirming the entity existed. Any inconsistency becomes evidence. Interview goals include obtaining admissions – statements where you acknowledge understanding EIDL rules, knowing calculations were incorrect, submitting anyway.

Can You Go to Prison for EIDL Fraud?

Yes. According to Department of Justice data from December 2024, 81% of pandemic fraud defendants received prison time, not probation. Federal sentencing in District of Connecticut operates through mandatory Guidelines based on fraud loss. Loss equals total EIDL obtained through false statements – including that $10,000 advance SBA called a grant.

Small EIDL fraud ($10,000-$50,000) typically produces probation to 18 months for first-time offenders. The $10,000 advance alone, if fraudulently obtained, places you in this bracket. Medium EIDL fraud ($50,000-$250,000) results in 18-36 month sentences. If you received $150,000 EIDL plus the $10,000 advance, and your application overstated revenue by $50,000, your total fraud loss is $160,000 – placing you in the medium bracket. Three factors determine placement: fraud loss weighs heaviest, criminal history second, acceptance of responsibility third. Todd Spodek has defended federal fraud prosecutions for over 40 years. Call 212-300-5196.