CPA or Loan Preparer Made Errors: Am I Still Liable?

At Spodek Law Group, we understand the fear that comes with discovering your CPA or loan preparer made errors on your application. Our founding attorney, Todd Spodek, has handled countless cases where business owners find themselves in exactly this position. You trusted a professional to get the numbers right. You signed what they put in front of you. Now, federal investigators are asking questions, and your whole world feels like it is falling apart. We are here to help you understand what you are actually facing and what can be done about it.

You are searching for answers at what might be the worst moment of your life. Maybe you got a letter. Maybe an agent showed up. Maybe your accountant just called with panic in their voice saying something went wrong with the paperwork. Whatever brought you here, we want you to know that having questions does not make you guilty of anything. But the answers you need are more complicated than what most people expect to hear.

The question you are really asking is whether someone else's mistake can become your criminal liability. The short answer is that it depends on factors you might not have considered yet. And some of those factors could actually make things worse if you handle them wrong in the next few days.

What most people dont realize is that the system was set up this way on purpose. The government knew professionals would make mistakes. They knew some would cut corners. They built the certification requirements specifically so that business owners would be the final verification layer. Understanding this changes everything about how you should approach your situation.

My CPA Made the Mistake So I Should Be Fine, Right

This is the first thing everyone thinks. You hired a professional. You trusted their expertise. They prepared the documents and ran the numbers. If something was wrong with the application, that's on them. You were just relying on the expert you paid good money to help you.

Heres the thing though. Banks didnt require your CPA to sign those loan documents. They required you. Think about that for a second. Every major lender, every SBA program, every PPP application - they all wanted the buisness owner's signature. Not the accountants. Not the tax preparers. Yours.

That wasnt an accident. The entire certification system was designed specifically to make business owners the final checkpoint. The government knew accountants would make mistakes. They new some would cut corners. Some would even commit outright fraud. So they built a system where somebody with direct knowledge of the business would have to certify the numbers were correct.

That somebody was you. You trusted a professional, of course you did. Thats what your supposed to do. But the legal system dosent care about what you expected your CPA to handle. It cares about what you certified when you put your signature on that line.

The language right above your signature wasnt boilerplate. It was designed. Under penalty of perjury. Those words ment something specific to the drafters of these programs. They ment that if the numbers were wrong, the person who signed would be on the hook. Not the person who calculated. The person who certified.

This is the fundamental reality that catches most people off guard. You came here looking for reassurence that your CPA's mistake protects you. The uncomfortable truth is that the certification system was engineered to make sure it dosent. Lenders wanted somebody with skin in the game and direct knowledge of the buisness to be personaly responsible. That person was always going to be you.

What Reliance on Professional Actually Requires

Heres where it gets complicated. Theres a legal defense called "reliance on professional advice" and it absolutly exists. Courts have recognized for decades that people shouldnt be punished for following advice from qualified experts they reasonably trusted. In theory, this should protect you.

In practice, the requirements are much stricter then most people realize. Its not enough to say you had a CPA. You have to prove a whole list of things that many people cant actualy demonstrate.

First, you needed to provide complete and accurate information to the professional. If you gave them inflated numbers, or left out information that would have changed there analysis, the defense falls apart. You can't claim reliance on advice when you controlled what facts they were working with.

Second, you had to actualy rely on there advice. This sounds obvious but prosecutors will look for any evidance that you made the decision yourself, or that you told the CPA what result you wanted. If theres an email where you said "we need to qualify for at least this amount," suddenly your not relying on advice - your directing the outcome.

Third, and this is the part that shocks most people - you have to waive the attorney-client privilege with the professional you're blaming. Everything you ever discussed with that CPA becomes fair game for prosecutors. Every email. Every phone call they documented. Every meeting note. If your going to say "I trusted them and they steered me wrong," you have to let prosecutors see exactly what happened between you.

Think about what that means. Your opening up your entire relationship with that CPA to prosecutorial scrutiny. And if theres anything in those records that dosent look good for you, prosecutors will find it.

Even Sam Bankman-Fried, with virtualy unlimited legal resources and some of the best lawyers money could buy, couldnt make the reliance on counsel defense work effectively. The judge in his case ruled that the mere presence of attorneys doesn't automatically negate fraudulent intent. The same logic applies to CPAs and loan preparers.

Theres also another problem people dont consider. Your CPA might not actualy be on your side anymore. Once a federal investigation starts, every professional who touched that application is looking out for themselves. The CPA who seemed like your trusted advisor last year might be the person telling investigators that you directed them to prepare numbers a certain way. Profesional relationships change dramaticaly when federal prison becomes a possibility.

The Certification Trap You Already Fell Into

Remember what you signed. Pull out that application if you still have it. Look at the language directly above your signature line.

Under penalty of perjury. Your signature. Your certification that the information was true and accurate to the best of your knowledge.

You didnt read every word of course. Nobody does. You had a business to run and a crisis to navigate, and you trusted the professionals you hired to handle the details. But the certification you signed wasnt about the details. It was about the big picture numbers that you, as the buisness owner, should have known.

How many employees did you have? You knew that number. What was your montly payroll? You signed checks, you knew the aproximate figure. What was your revenue last year? You saw those statements.

These arent technical accounting questions that require CPA expertise. These are basic facts about your business that the government expects every owner to know. And when you certified those numbers were accurate, you weren't certifying your CPA did good work. You were certifying the underlying facts about your company.

Critical warning: Prosecutors dont randomly investigate CPA errors. They investigate when something in the application triggered their algorithms. If investigators are at your door, its because the numbers you certified didnt match something else in the system. Tax records. Bank deposits. Employee filings. Something flagged your application as worth looking at.

The algorithms caught something. That's why they're at your door. And now they're going to ask you to explain the discrepancy between what you certified and what their other records show.

The certification you signed wasn't just a formality. It was a legal document with real consequences. Every word was chosen carefully by lawyers who understood exactly what they were creating. A mechanism to hold business owners personally accountable for the accuracy of their applications. Not the preparers. Not the accountants. The signers.

When Blaming Your CPA Makes Things Worse

Harold Dotson got 3 years in federal prison. Let that sink in for a moment.

Dotson was a Maryland accountant who ran H&M Tax Service. He helped clients submit over 24 million dollars in fraudulant PPP and EIDL applications. He created false tax forms. He fabricated employee counts. He inflated payroll numbers. He took kickbacks ranging from 2 to 27 percent of every fraudulant loan.

The DOJ caught him. He plead guilty. He got sentenced to 3 years plus 3 more years of supervised release. He has to pay back 24.8 million in restitution. His career is over. His reputation was destroyed.

His clients? Many of them got sentences just as long or longer.

Read that again. The accountant who actually fabricated the documents, who knew exactly what fraud was being committed, who took kickbacks for his crimes - he got 3 years. The buisness owners who signed the applications, some of them got more.

Why? Becuase the government dosent care who prepared the paperwork. They care who signed it. They care who recieved the money. They care who certified under penalty of perjury that the information was true.

Heres another thing most people dont think about. Your CPA has an incentive to flip on you. If federal investigators come to them first, which happens alot, they have a choice. They can take the fall for their mistakes. Or they can cooperate and say the client directed them to prepare the application a certain way.

Which do you think most people choose when facing federal prison?

Do not call your CPA. Not yet. That call could become evidence of consciousness of guilt. It could look like your coordinating stories. It could be used against both of you.

CPAs and clients have an uncomfortable alliance built on not documenting too much. Both sides benifit from keeping things informal. Until there's a federal investigation. Then everyone scrambles to blame the other. And the person with more to trade - usualy the professional with more clients to give up - often comes out ahead.

This dynamic plays out over and over in federal fraud cases. The accountant or preparer who worked with dozens of clients has leverage. They can offer prosecutors information about multiple cases in exchange for leniency. The individual business owner has nothing to trade except their own cooperation, which often means admitting to things that hurt their case.

Think about it from the prosecutor's perspective. They can charge the CPA and get one conviction. Or they can work with the CPA to charge twenty clients and get twenty convictions. The math is obvious. And that's why CPAs who cooperate often get lighter sentences than the clients they helped prepare applications for.

The Documentation You Need But Probably Dont Have

What do you have in writing? This is the question every defense attorney will ask you in your first meeting. And most people dont have good answers.

For a reliance on professional defense to work, you need to show what information you provided to the CPA and how they used it. That means:

• Engagement letters or contracts showing the scope of work
• Emails or written communications where you provided raw data
• Documents showing what numbers you gave them versus what appeared on the application
• Any evidance you questioned there calculations before signing
• Proof you didnt direct specific outcomes

Most people dont save these things. They hand over some QuickBooks files or bank statements, have a few phone calls, sign what comes back, and move on. Normal business practice. Terrible for building a defense.

The DOJ COVID-19 Fraud Enforcement Task Force has charged over 3,500 defendants since 2021. They have dedicated staff. They have budget. Congress gave them a 10-year statute of limitations running until 2031. They arnt slowing down.

Everything you ever discussed with your CPA becomes discoverable if you try to blame them. Prosecutors will subpoena every record. They will interview every employee at that accounting firm. They will find every email, every text, every meeting note.

If there's nothing there that shows you actually relied on professional advice in good faith, the defense won't work. And if theres something there that makes you look bad, prosecutors will definitly find it.

The documentation problem is especially acute for PPP loans because everything happened so fast. The pandemic created urgency. Businesses were desperate for cash. Applications were processed in days instead of weeks. Nobody stopped to create careful paper trails. Everybody just wanted to get the money and survive. That speed, which seemed necessary at the time, now creates evidance gaps that are very hard to fill after the fact.

The Two Elements That Make Reliance Defenses Work

Prosecutors love pointing at your signature. They love saying "you signed it, you knew your payroll, you knew your employee count, you knew these numbers were wrong."

But heres the distiction that matters. Theres a difference between knowing the basic numbers about your buisness and understanding how a CPA might manipulate calculations or misapply categories in ways you couldnt detect.

Courts have recognized this. If you provided acurate raw data - truthful payroll records, honest employee counts, real revenue figures - and your CPA then miscalculated the eligible loan amount or miscategorized expenses in ways that inflated the application, thats diferent from you providing false information.

The defense works when you can prove you did YOUR job - giving accurate information - and the professional failed at THEIRS - correctly calculating what it meant.

Two elements make this work. First, you must have provided complete and accurate underlying information. No inflated numbers. No hidden employees. No ficticious revenue. The raw data you gave them has to be true.

Second, the error has to be something that requires professional expertise to catch. If your CPA miscalculated how payroll costs translate to maximum loan amounts using SBA formulas, thats technicle. If they said you had 50 employees when you told them you had 20, thats not a calculation error - thats fraud you should have seen.

The question prosecutors ask is simple: should you have known? Not could you have figured it out if you spent hours analyzing formulas. But looking at the final application with your buisness knowledge, should the numbers have obviously seemed wrong?

If you told your CPA you had 15 employees and 80,000 in monthly payroll, and the application came back saying you qualified for 2 million dollars, that should have raised questions. If the numbers were in a reasonable range based on what you knew, and the error was in technicle calculations, you have an argument.

The key here is honesty with yourself first. Before you can build a defense, you need to understand what actualy happened. Did you provide acurate information? Did the CPA make genuine errors? Or were there moments where you knew something was off but signed anyway because you needed the money? A good defense attorney will ask you these hard questions in confidence. Its better to face them honestly now then to be surprised by them on a witness stand.

Courts have shown wilingness to reconize the difference between buisness owners who were genuinly deceived by profesionals and those who went along with questionable practices. The distinction matters enormously for your outcome. But you have to know which category you actualy fall into before you can build the right defense strategy.

Your 72-Hour Window to Build the Defense

The next 72 hours matter more then you realize. What you do right now could determin wheather you have a viable defense or wheather your handing prosecutors exactly what they need.

Heres what you should NOT do:

Your first instinct is probly to call your CPA and ask what happened. Dont. That call creates evidance. It looks like coordination. It gives prosecutors a narrative about consciousness of guilt. Even if your conversation is completely innocent, the fact that you reached out to the person you might need to blame looks bad.

Dont destroy any documents. Don't delete any emails. Dont modify any files. Document destruction during a federal investigation is a seperate crime that carries its own serious penalties. Whatever those records show, keeping them is better then destroying them.

Dont talk to investigators without counsel. Anything you say can and will be used against you. Even if you think your being helpful and clearing things up, your creating statements that prosecutors can use.

What you SHOULD do immediately: Contact a federal criminal defense attorney who handles loan fraud cases. Before you talk to anyone else. Before you call your CPA. Before you respond to any letters or subpoenas.

At Spodek Law Group we handle exactly these cases. Todd Spodek and our team have represented clients facing federal fraud investigations where reliance on professionals was a central issue. We know how to identify what documentation exists, how to evaluate whether the defense is viable, and how to position your case before you make mistakes that can't be undone.

Call 212-300-5196. The consultation will help you understand exactly where you stand and what options you actualy have.

Time matters here. The sooner you have counsel, the sooner you can stop doing things that hurt your case and start doing things that help. The 10-year statute of limitations means prosecutors have time to build their case slowly and carefully. You need someone in your corner who can do the same.

The question you searched - am I liable if my CPA made errors - has a complicated answer. Maybe. It depends on what happened, what you knew, what you can prove, and how the next few weeks are handled. Get help from someone who knows these cases before you make decisions that can't be taken back.

Federal fraud investigations move at their own pace. Sometimes fast, sometimes agonizingly slow. But what you do in the beginning matters more than almost anything that comes later. The right moves now can create options. The wrong moves can eliminate them permanently.

Your CPA made errors. That's what brought you here. But whether those errors become your liability or your defense depends entirely on what happens next. Take the right steps. Get the right help. Start now.