NEW JERSEY CRIMINAL LAWYERS

Detroit PPP and EIDL Loan Fraud Lawyers

Navigating a DOJ Investigation for PPP Loan Fraud: Protect Your Business with These Effective Strategies

The Paycheck Protection Program (PPP) was initially designed to provide a financial lifeline to small businesses reeling from the pandemic’s impact. However, it became a honey trap for fraudsters who siphoned hundreds of millions of dollars worth of forgivable, federally-backed PPP loans through many fraudulent means. Consequently, the Department of Justice (DOJ) swung into action by launching investigations to uncover all evidence of PPP loan fraud and pursue charges against violators.

If you or your company is being investigated for PPP loan fraud, it’s crucial to understand the severity of the charges and potential consequences that could follow. This overview sheds light on what you need to know and practical strategies for defending against potential charges.

The DOJ is Intensely Investigating PPP Loan Fraud Cases

To combat the wide range of PPP loan fraud practices, the DOJ is adopting an aggressive approach in targeting individuals and companies suspected of submitting false loan applications as well as misusing PPP loan funds. They’re also actively pursuing those suspected of submitting fraudulent certifications for PPP loan forgiveness. In a recent press release from the DOJ, they stated that “Our office will be aggressive in targeting anyone who defrauds this critical program.”

PPP Loan Fraud Charges

Primarily, criminal culpability at the federal level requires intent to defraud. However, if your company received a PPP loan unintentionally despite being ineligible or misused PPP funds unknowingly, it could present a defense against these charges. Nonetheless, unintentional fraud can still result in prosecution under civil offenses like False Claims Act and other statutes which typically comprise overwhelming fines, treble damages, loss of federal program eligibility as well as other penalties.

The DOJ is Pursuing Charges in Numerous PPP Loan Fraud Cases

The DOJ has recently filed court papers alleging various types of financial improprieties geared towards falsely obtaining economc benefits provided by the Federal government, including wrongful acquisition of PPP loans. Entities including shell companies, misleading payroll information and, using PPP loan funds to pay for luxurious personal expenses have been found in violation of PPP guidelines. Also, the DOJ is keenly focusing on companies that attempted to obtain multiple PPP loans and other forms of PPP loan fraud.

Collaboration with Other Federal Law Enforcement Agencies for Unraveling All Forms of PPP Loan Fraud

To flush out fraudulent activities under the Paycheck Protection Program, the DOJ is collaborating with numerous federal law enforcement agencies committed to identifying and prosecuting those who unlawfully took advantage of the federally-backed PPP loan program. These noteworthy agencies include SBA-OIG, FDIC-OIG, FBI and IRS-CI.

Defending Against Potential Charges in Federal PPP LOan Fraud Investigations

Employing a combination of strategies can help mitigate your potential risk of facing severe penalties if you find yourself enmeshed in allegations surrounding PPP loan fraud. Expert attorneys rely on these defenses specific to the Paycheck Protection Program and apply suitable ones based on specific charges leveled against their clients:

Paycheck Protection Program Compliance
For most individuals and businesses involved in a federal investigation about their use of PPP loans or loan forgiveness applications, demonstrating compliance with the terms provided by the agency for accessing funds can be used as a line of defense. Providing proof of compliance can reduce the impact when a business has obtained an allowable PPP loan from submitting a genuine application documenting its use correctly.

Lack Of Intent To Defraud
It’s worthy to note that criminal culpability at the federal level typically requires applicants’ intent to defraud. Thus, if you had no intentionality behind obtaining a PPP Loan or submitted a false document in error, it may provide you with leverage as regards any charges leveraged against you.

Federal PPP Loan Fraud Investigations: Charges You Could Face

Although CARES Act doesn’t contain penal provisions for PPE loan fraud specifically, fraud under the Paycheck Protection Program can trigger criminal and civil charges under various pre-existing federal statutes. Here are potential legal infractions you could face if convicted of PPP loan fraud following a DOJ investigation:

Making False Statements to the Small Business Administration (SBA)
Making False Statements to an FDIC-Insured Bank
Bank Fraud
Wire Fraud
Aggravated Identity Theft
Tax Evasion
Making False Claims to Federal Agents
Conspiracy
Attempted Fraud
False Claims Act Violations

Conclusion

The DOJ is currently investigating PPP loan fraud with laser focus. It’s critical to note that engaging in fraudulent activities will lead to devastating consequences that can wreak havoc on finance, reputation, and the long-term survival of a business. Hence, individuals and companies involved in such investigations must engage the services of a knowledgeable attorney who can provide them with advice, guidance as well as building trust during these investigative procedures.