NEW JERSEY CRIMINAL LAWYERS

Dallas PPP and EIDL Loan Fraud Lawyers

DOJ Investigation for PPP Loan Fraud: Protect Yourself and Your Business

The Paycheck Protection Program (PPP) was designed to provide much-needed funding to struggling businesses during the COVID-19 pandemic. Sadly, fraudsters saw this program as an opportunity to exploit and took advantage of hundreds of millions of dollars in federally-backed loans issued under the program. As a result, the United States Department of Justice (DOJ) is actively investigating alleged fraudulent activities related to PPP loans.

As a business owner who is or may be subject to a DOJ investigation for PPP loan fraud, it is essential to understand what you are up against and how to protect yourself from severe legal consequences. In this article, we highlight critical information that can help you navigate through a DOJ investigation for PPP loan fraud successfully.

The DOJ is Aggressively Pursuing Individuals and Companies Suspected of PPP Loan Fraud

The DOJ is currently targeting individuals and businesses suspected of submitting fraudulent applications or misusing funds obtained through the PPP. Specifically, the DOJ has prioritized individuals who submitted false certifications for loan forgiveness.

In recent press releases, the DOJ has emphasized its commitment to employing strict measures in prosecuting anyone found guilty of defrauding this crucial program created to help Americans battle financial hardship during the pandemic. Therefore, it is vital to comply with all applicable requirements while applying for and utilizing funds issued under the PPP.

The DOJ has Already Filed Charges in Multiple Cases

PPP loan fraud is not merely hypothetical; it has already occurred! The DOJ filed charges in various cases where individuals created shell companies and falsified payroll information that enabled them to obtain PPP loans fraudulently. Others have used these funds to pay lavish personal expenses or attempt multiple applications – all illegal acts. To minimize potential exposure, ensure that you keep precise and accurate records on how you use any funding received under the PPP accurately.

The DOJ Collaborates with Other Federal Agencies

To combat fraudulent activities in connection with the PPP, the DOJ collaborates with numerous other federal agencies, including the US Small Business Administration Office of Inspector General (SBA-OIG), Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), Federal Bureau of Investigation (FBI), and the Internal Revenue Service Criminal Investigations (IRS-CI). As such, the risk of being caught and facing severe consequences is high.

Effective Defenses Against DOJ Investigations for PPP Loan Fraud

The consequences of a DOJ investigation for PPP loan fraud are severe; however, there are potential defenses against these allegations. Lawyers who represent clients accused of PPP loan fraud during a DOJ investigation often use multiple defense strategies that specifically apply to the PPP and tailored to the charges listed above.

One such defense is proving compliance with all aspects of the PPP fully. If your company lawfully obtained a PPP loan and meticulously documented how they used these funds, you have a relatively high chance of success in any ensuing legal action. However, you must exercise caution when voluntarily offering information to any investigating authority to avoid providing incriminating statements unwittingly.

Another possible defense is demonstrating that there was no fraudulent intent behind your actions. To establish culpability under federal law requires fraudulent intent or knowledge thereof. If you or your business inadvertently obtained or used funding inappropriately despite being ineligible or made an error on a forgiveness certification form, proving lack of fraudulent intent could help reduce potential penalties.

Potential Charges in Federal PPP Loan Fraud Investigations

PPP loan fraud has grave implications; anyone found guilty faces potential charges under various federal statues including:

Making False Statements – this includes submitting false statements or reports knowingly either to influence an institution’s decision or by being reckless about its accuracy

Bank Fraud – Falsely obtaining funds owned by or in custody/control of a financial institution through false pretenses constitutes bank fraud.

Wire Fraud – The use of electronic communications instead represents wire fraud and can carry significant penalties if convicted.

Aggravated Identity Theft – Using another’s identity in connection with certain offenses carries aggravated identity theft charges.

Tax Evasion – Misrepresenting taxes in connection with PPP loan funds frequently leads to tax evasion charges.

Making False Statements to Federal Agents – Dishonest statements made during the course of an inquiry, audit or examination incur penalties under 18 U.S.C. § 1001.

Conspiracy – Working together with others to commit fraudulent activities targeting PPP loans is grounds for a conspiracy charge.

False Claims Act Violations – Activities that defraud federal government programs are prosecutable under the False Claims Act, resulting in civil and criminal sanctions.

Conclusion

PPP loans are a valuable source of potential relief for businesses affected by the COVID-19 pandemic. However, it is equally critical to ensure compliance with all regulations and carefully document transparent financial records relating to these funds. Failure to do so could result in unfortunate consequences, including legal action from investigating authorities such as the DOJ. By being proactive in protecting your business interests, you can avoid PPP loan fraud allegations altogether!