Connecticut PPP Loan Fraud Lawyers

Your PPP loan was forgiven two years ago. You recieved the official notice from the SBA. Case closed, right? Wrong. At Spodek Law Group, we represent business owners across Connecticut who discover—often years after loan forgiveness—that the FBI has been quietly building a criminal case against them. The forgiveness letter you celebrated doesn't stop federal prosecutors. It doesn't even slow them down. We're a premier federal criminal defense firm, and we need you to understand something critical: loan forgiveness is an administrative decision made by the Small Business Administration. Criminal prosecution is a separate legal determination made by the Department of Justice. These agencies dont coordinate. They dont communicate. The SBA can approve your forgiveness while the FBI is simultaneously subpoenaing your bank records, and neither agency tells the other what their doing.

Thousands of people have been prosecuted for PPP loans that were completely forgiven years before they ever got charged. This isnt theory. Investigative journalists compared SBA forgiveness data to criminal complaints and found defendants whose loans were forgiven while FBI investigations were active—in one analysis, the SBA had approved $1.3 million in forgiveness to six defendants before there arrests. You celebrate. The FBI doesn't stop working. If your a business owner in Hartford, New Haven, Bridgeport, or Stamford who received PPP funds, this article explains the federal prosecution reality your facing and what you need to do right now to protect yourself. Call us at 212-300-5196.

The Forgiveness Trap Nobody Tells You About

Here's what nobody explains when your loan forgiveness gets approved. The SBA processes forgiveness applications based on limited review of the documentation you submit—payroll records, tax forms, invoices. It's an administrative function designed to clear a backlog. They approve or deny based on whether your paperwork appears consistent. That's it. Forgiveness is not a legal determination that your application was accurate. It's not immunity from prosecution. It's a loan processing decision.

Meanwhile, the FBI runs criminal investigations that last eighteen to twenty-four months before agents ever make contact with you. They subpoena your bank records directly from the bank—and banks dont notify customers when federal subpoenas arrive. They pull your tax returns from the IRS. They compare your PPP loan application to your actual payroll records from third-party payroll processors. They interview your employees. They talk to your accountant. They build the entire case while you think forgiveness means your in the clear.

The SBA Office of Inspector General flagged over 669,000 loans as potentially fraudulent using automated data analytics. The Government Accountability Office flagged 3.7 million recipients with warning signs. These arent investigations—these are FLAGS that trigger investigations. Your loan might be one of them. You wouldnt know becuase the agencies investigating you aren't required to tell you untill they're ready to charge you.

In Connecticut specifically, we've seen this pattern repeatedly. A Woodbridge accountant named Yasir Hamed submitted fraudulent PPP applications for multiple New Haven businesses between June 2020 and September 2021. He overstated the number of employees and payroll amounts, submitted false tax filings that had never been filed with the IRS. The SBA processed those applications. The loans went through. Forgiveness was likely approved for some. But federal investigators were working. In 2024, Hamed was sentenced to 32 months in federal prison and ordered to pay $2.3 million in restitution. The forgiveness didnt save him.

Heres the part that destroys business owners. By the time forgiveness is approved, your convinced the matter is resolved. You stop worrying. You delete old emails to clear space. You dont keep meticulous records anymore becuase "the SBA already reviewed everything." Then, two years later, FBI agents show up with a subpoena—or worse, an arrest warrant—and you realize the investigation was running the entire time on a parallel track you couldnt see.

What "Forgiveness" Actually Means (And What It Doesn't)

Let's be precise about what forgiveness actually is. When the SBA approves loan forgiveness, they are making an administrative determination that the documentation you provided appears sufficient to satisfy the loan forgiveness requirements under the CARES Act. They review the payroll reports you submitted, the tax forms, the invoices. They check if the numbers add up. If your paperwork looks consistent, they approve forgiveness and the loan is converted to a grant—you dont have to repay it.

That's an administrative process. It's handled by SBA loan officers who are processing thousands of applications. There not conducting criminal investigations. They dont have subpoena power. They dont cross-reference your application against third-party bank records or interview your employees under oath. They review the documents you gave them and make a decision.

Criminal prosecution is diffrent. Federal prosecutors in the U.S. Attorney's Office for the District of Connecticut—covering Hartford, New Haven, Bridgeport, and Stamford—conduct multi-agency investigations involving the FBI, the IRS Criminal Investigation division, and the SBA Office of Inspector General. These investigations involve subpoenas to banks, payroll companies, tax preparers, and business partners. They involve comparing what you stated on your application to objective third-party records. They involve determining wheather you knowingly made false statements to obtain federal funds.

And heres the critical point: these two processes run on completly separate tracks. The SBA does not notify the FBI when they approve forgiveness. The FBI does not notify the SBA when they open a criminal investigation. Your forgiveness approval doesnt pause or stop the criminal investigation. It doesnt reduce the FBI's interest in your case. In fact, prosecutors can argue that forgiveness makes the case worse—you didnt just fraudulently obtain funds, you fraudulently obtained funds and then got them forgiven, meaning taxpayers will never be repaid.

The statute of limitations for PPP fraud is ten years. Congress extended it from five years to ten years in 2022 specifically to give prosecutors more time to pursue pandemic relief fraud. If your PPP loan was disbursed in 2020 or 2021, federal prosecutors have until 2030 or 2031 to charge you with crimes. That's a decade. The SBA's forgiveness decision—made in 2021 or 2022—doesnt shorten that timeline.

We've represented business owners who recieved forgiveness approval in 2022 and were indicted in 2024. Two years after forgiveness. The indictment alleged wire fraud, bank fraud, and making false statements to the SBA under 18 U.S.C. § 1014. The forgiveness letter was irrelevant. The prosecutors argued: "The defendant obtained funds through false pretenses and then manipulated the forgiveness process to avoid repayment. This is layered fraud." Forgiveness became evidence of additional fraud, not proof of innocence.

The Investigation Timeline You Can't See

By the time an FBI agent leaves a business card at your door or calls requesting a "voluntary interview," the investigation is essentially finished. Let me explain the timeline based on cases we've handled and patterns we've observed in Connecticut federal court.

Months 0-6: The investigation starts with a referral. Maybe the SBA Office of Inspector General flagged your loan becuase the employee count didnt match IRS records. Maybe a whistleblower—an ex-employee, a business partner, a competitor—filed a complaint. Maybe the DOJ's COVID-19 Fraud Enforcement Task Force ran data analytics and your loan application showed statistical anomalies. You dont know the investigation has started becuase nobody tells you.

Months 6-12: Federal agents start gathering evidence. They subpoena your bank records directly from the bank. Banks are legally prohibited from notifying customers about federal subpoenas, so you never find out. The FBI pulls your business account statements, personal account statements, credit card transactions. They subpoena your payroll processor—ADP, Paychex, Gusto—and get the actual payroll records showing how many employees you had and what you actualy paid them. They pull your tax returns from the IRS—your business returns, your personal returns. They compare what you stated on the PPP application to what these third-party records show.

Months 12-18: Agents interview witnesses. They talk to your employees—sometimes current employees, sometimes former employees who are willing to cooperate. They ask: "How many people worked here in 2020? What were you paid? Did the business shut down during COVID or stay open?" They interview your accountant or CPA. They ask: "Who prepared the PPP application? Did the owner provide the employee numbers or did you calculate them? Were the tax forms attached to the application actualy filed with the IRS?" Your accountant might think there helping you by cooperating. There not. Their providing evidence.

Months 18-24: The case is presented to an Assistant U.S. Attorney in the District of Connecticut. The prosecutor reviews the evidence—bank records, payroll records, tax returns, witness statements—and decides wheather to pursue charges. If they decide to proceed, they typically present the case to a federal grand jury, which issues an indictment. Or, they might attempt a "voluntary interview" first to see if youll make statements that contradict the evidence they already have.

Month 24+: This is when you find out. An FBI agent leaves a business card. Or you get a phone call. Or agents show up at your home or business with a grand jury subpoena or an arrest warrant.

Heres what you need to understand: by the time they contact you, theyve already made the decision to prosecute. The investigation is finished. They have your bank records. They have your tax returns. They have payroll records from your payroll company. Theyve interviewed witnesses. Theyve built the case. The "voluntary interview" is not an investigation—its evidence collection for a case that already exists.

The Connecticut Numbers That Should Terrify You

Connecticut-specific data tells a story that should alarm any business owner who recieved PPP funds. In Connecticut PPP fraud cases prosecuted between 2023 and 2025, ninety percent of defendants who spoke to FBI agents without an attorney were indicted. Ninety percent. Not sixty. Not seventy. Ninety. Cooperation without legal representation is nearly guarenteed prosecution in this state.

Sentencing has gotten significantly harsher. Defendants sentenced in 2024 and 2025 recieve sentences that are forty percent longer than defendants sentenced in 2021 and 2022 for identical conduct. Early pandemic sympathy is gone. Federal judges in Connecticut now view PPP fraud as theft from taxpayers during a national crisis. The leniency that existed in the immediate aftermath of the pandemic has evaporated.

Heres the sentencing breakdown based on cases prosecuted in the District of Connecticut:

Loan Amount	Typical Sentence
Small loans ($10,000 - $50,000)	Probation to 12 months in federal prison
Medium loans ($50,000 - $250,000)	18 to 36 months in federal prison
Large loans (over $250,000)	36 to 120 months in federal prison

Restitution is mandatory in every case. You will be ordered to repay every dollar you recieved, regardless of wheather the loan was forgiven. Forgiveness eliminates the civil debt to the SBA. It doesnt eliminate the restitution obligation in a criminal case.

Lets look at specific Connecticut cases from the past two years:

• Yasir Hamed (Woodbridge): 60-year-old accountant who submitted fraudulent PPP applications for multiple New Haven businesses. He overstated employee counts and payroll amounts, submitted tax filings that were never actualy filed with the IRS. Fraud amount: $2.3 million. Sentence: 32 months in federal prison. Restitution: $2,284,772. He used PPP funds to pay for college tuition and to purchase his house in Woodbridge—prosecutors used those expenditures to prove intent to defraud.
• Omar Rajeh (Hamden): Defrauded pandemic relief programs of over $750,000. Sentence: 15 months in federal prison (sentenced July 2025).
• John Matava (Coventry): Fraudulently obtained COVID-19 relief funds. Sentence: 24 months (March 2024).
• Hartford defendant: Obtained $480,000 through false applications. Sentence: 33 months.
• New Haven defendant: Lied about payroll to obtain $260,000. Sentence: 24 months.

These are recent sentences. These are the sentences being imposed in 2024 and 2025 in Connecticut federal court. The trend is clear: prosecutors are pursuing these cases aggressively, and judges are imposing significant prison time.

In 2025 alone, government fraudsters in Connecticut were ordered to pay restitution amounting to $42.9 million. COVID-era PPP fraud accounted for $6.6 million of that total. These numbers represent just one year in one state. The enforcement effort is massive and sustained.

Nationwide, the conviction rate for defendants charged with PPP fraud-related offenses is 81.8 percent. Once your charged, the likelihood of conviction is overwhelming. This isnt a typical fraud case were the government's burden is difficult. PPP fraud cases involve documentary evidence—your application, your bank records, your tax returns, your payroll records. The documents either support your application or they contradict it. Juries see the contradiction and convict.

81 percent of defendants sentenced for PPP fraud nationwide recieved prison time. Not probation. Not home confinement. Federal prison. The statistic demolishes the assumption that "first-time offenders get probation" or "white-collar criminals dont do time." In PPP fraud cases, prison is the norm.

Why Talking to the FBI Destroys Your Case

Lets talk about the moment that ruins most PPP fraud cases: the voluntary interview. Heres how it happens. An FBI agent calls you. Or they leave a business card at your home or office. The card says "Special Agent [Name], Federal Bureau of Investigation" with a phone number and a handwritten note: "Please call me regarding your PPP loan. I'd like to discuss some questions."

Or the agent shows up in person. There polite. They say there "trying to clear up some inconsistencies" or "just want to hear your side of the story." They emphasize that the interview is voluntary. They say cooperation shows good faith. They might even suggest that talking to them now could help resolve the matter without charges.

Heres what they dont tell you: theyve already built the case. The investigation has been running for 18 to 24 months. They have your bank records showing every deposit and withdrawal. They have your actual payroll records from your payroll processor showing exactly how many employees you had and what you paid them. They have your tax returns. Theyve interviewed your employees and your accountant. They know the discrepancies between your PPP application and the objective records. The interview is not about gathering information—theyve already gathered it. The interview is about getting you on record saying something that contradicts there evidence.

And it works. You sit down with the agents. You want to be cooperative. You want to explain. You say: "I had 15 employees when I applied for the loan." But the payroll records show you had 8. You say: "My accountant prepared the application—I just signed it." But your accountants notes say you provided the employee numbers. You say: "All the PPP money went to payroll." But the bank records show a $50,000 transfer to your personal account three days after the loan was deposited.

Each of these statements is now evidence. Worse, each statement that contradicts the documentary evidence they already have can become a separate federal charge under 18 U.S.C. § 1001—making false statements to a federal agent. Thats a felony carrying up to five years in prison. You walked into the interview facing potential wire fraud charges (20 years) and bank fraud charges (30 years). You walked out facing those charges plus a false statements charge. You tried to help yourself. You made it worse.

In Connecticut specifically, the numbers are devastating. Ninety percent of PPP fraud defendants who agreed to FBI interviews without an attorney were subsequently indicted. This isnt a national average—this is Connecticut data from 2023 to 2025. Nine out of ten people who talked got charged. The cooperation didnt help. It guarenteed prosecution.

What should you do if an FBI agent contacts you? Say exactly this: "I need to consult with an attorney before I can discuss this. Please provide your contact information and my attorney will reach out to you." Then actualy hire an attorney immediatly—preferably one experienced in federal criminal defense and PPP fraud cases. Call Spodek Law Group at 212-300-5196.

Dont elaborate. Dont explain. Dont try to "set the record straight." Dont say "I have nothing to hide." Just say you need to consult an attorney and end the conversation. Agents are used to dealing with lawyers. They interview people with attorneys all the time. Its part of the process. Completly innocent people hire lawyers. Hiring a lawyer does not make you look guilty. Talking without a lawyer makes you vulnerable.

The Charge Stacking Reality

Federal PPP fraud cases are rarely prosecuted as single-count indictments. Prosecutors use a strategy called charge stacking, were multiple federal statutes are applied to the same conduct, resulting in numerous felony counts with cumulative maximum sentences that reach into decades.

Heres how it works. You submit a PPP loan application that contains false information about your number of employees and your payroll expenses. That single act can be charged under multiple federal statutes:

Wire Fraud (18 U.S.C. § 1343): If you submitted the application electronically—and almost all PPP applications were submitted online—you used interstate wire communications (the internet) to execute a fraud scheme. Wire fraud carries a maximum sentence of 20 years in federal prison. But heres the key: each use of interstate wires can be a separate count. You submitted the initial application (Count 1). You submitted additional documentation via email (Count 2). You submitted the forgiveness application (Count 3). Three wire fraud counts. Maximum exposure: 60 years.

Bank Fraud (18 U.S.C. § 1344): PPP loans were processed through banks. By submitting a fraudulent application to obtain funds from a federally-insured financial institution, you committed bank fraud. Bank fraud carries a maximum sentence of 30 years in federal prison and fines up to $1 million. If you submitted applications for multiple businesses or multiple loans, each application can be a separate count.

False Statements to the SBA (18 U.S.C. § 1014): This statute specifically criminalizes making false statements to influence the SBA's decision to approve a loan. It carries a maximum sentence of 30 years in federal prison and fines up to $1 million. Every false statement on the application can be a separate count. You overstated employee count (Count 1). You overstated payroll expenses (Count 2). You falsely certified that the business was operational (Count 3). Three counts. Maximum exposure: 90 years.

Money Laundering (18 U.S.C. § 1956 or 1957): If you used the fraudulently-obtained PPP funds—which are considered proceeds of fraud—to conduct financial transactions, you can be charged with money laundering. This includes transferring funds from your business account to your personal account, using PPP funds to pay personal expenses, or using the funds to purchase property. Money laundering carries a maximum sentence of 20 years per count.

In the Yasir Hamed case in Connecticut, the defendant was charged with bank fraud and engaging in illegal monetary transactions (money laundering). Even though the fraud involved a single scheme—overstating employees and payroll for multiple businesses—the conduct was charged under multiple statutes, and the monetary transactions using the fraudulent proceeds became additional counts. The cumulative exposure was substantial, which gave prosecutors leverage to negotiate a plea agreement.

Charge stacking serves a strategic purpose for prosecutors. It creates enormous sentencing exposure, which pressures defendants to plead guilty rather then go to trial. If your facing a single wire fraud count with a 20-year maximum, you might consider going to trial. But if your facing 10 counts across four federal statutes with a cumulative maximum of 150+ years, the risk of trial becomes unbearable. Even if the actual sentence would never approach the statutory maximum, the theoretical exposure is terrifying.

If your facing a PPP fraud investigation or charges in Connecticut, you need an attorney who understands the charge stacking strategy and knows how to negotiate with federal prosecutors. At Spodek Law Group, we've handled these cases. We know the statutes, the sentencing guidelines, and the prosecution tactics. Call us at 212-300-5196.

What You Need to Do Right Now

If you recieved a PPP loan and your concerned about potential fraud allegations, or if youve already been contacted by federal agents, heres what you need to do immediatly.

Step 1: Do not talk to federal agents without an attorney

Ive said this already, but its worth repeating becuase its the single most important thing. If an FBI agent, an IRS Criminal Investigation agent, or an SBA Office of Inspector General investigator contacts you—by phone, in person, or by letter—do not agree to an interview. Say: "I need to consult with an attorney before I can discuss this. Please provide your contact information and my attorney will reach out to you." Then end the conversation. Do not elaborate. Do not explain. Do not try to defend yourself. Politely decline and contact an attorney immediatly.

Step 2: Do not destroy any documents

Do not delete emails. Do not shred papers. Do not alter records. Do not wipe your computer or phone. Destroying evidence after you know or suspect a federal investigation is underway is obstruction of justice under 18 U.S.C. § 1519, a separate federal felony that carries up to 20 years in prison. Weve seen cases were the obstruction charge resulted in a longer sentence then the underlying fraud charge. Even if your PPP application was fraudulent, destroying evidence makes everything worse. Dont do it.

Step 3: Hire an attorney experienced in federal criminal defense

PPP fraud cases are federal cases prosecuted in U.S. District Court. They involve federal agencies—FBI, IRS-CI, SBA-OIG—and federal prosecutors in the U.S. Attorney's Office. You need an attorney who has experience handling federal criminal matters, understands the federal sentencing guidelines, and has relationships with federal prosecutors. At Spodek Law Group, we handle federal criminal defense across the country, including Connecticut. Weve represented clients in PPP fraud investigations and prosecutions. We understand the statutes, the defenses, and the negotiation strategies. Call us at 212-300-5196.

Step 4: Gather your PPP loan documents

Collect everything related to your PPP loan—the application, supporting documentation, loan approval notice, forgiveness application, forgiveness approval notice, bank statements showing deposits and expenditures, payroll records, tax returns. Your attorney will need to review these documents to assess the strength of the goverments potential case and identify possible defenses. Dont alter the documents. Dont create new documents. Just gather what exists.

Step 5: Understand the timeline

The statute of limitations for PPP fraud is 10 years from the date of the offense. If you recieved a PPP loan in 2020, prosecutors have until 2030 to charge you. If you recieved forgiveness in 2021, that doesnt shorten the statute of limitations—it runs from the date of the fraudulent application, not the date of forgiveness. Even if several years have passed since your loan, your not necessarily safe. Federal investigations take time, and prosecutors are working through a massive pipeline of flagged loans.

Step 6: Don't assume forgiveness means safety

If your loan was forgiven, dont assume the matter is closed. As Ive explained throughout this article, forgiveness is an administrative decision that doesnt prevent criminal prosecution. Thousands of people have been prosecuted after forgiveness. If your loan application contained false information—even if the loan was forgiven—you can still be charged.

At Spodek Law Group, we represent clients at every stage of PPP fraud cases—from the initial investigation through trial if neccessary. Weve handled cases involving small loans and large loans, single applicants and multi-defendant conspiracies. We understand the federal system, the prosecution strategies, and the defenses that work. If your facing a PPP fraud investigation or charges in Connecticut, call us at 212-300-5196. We can help.

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About Spodek Law Group: We are a premier federal criminal defense firm representing clients nationwide in complex federal cases. Todd Spodek and our team of experienced attorneys handle cases involving fraud, white-collar crime, and federal investigations. Our mission is to provide aggressive, strategic defense for clients facing the full weight of federal prosecution. We understand that federal charges are terrifying, and we're here to fight for you. Call us at 212-300-5196 for a consultation.