Florida PPP Loan Fraud Lawyers

Florida PPP Loan Fraud Lawyers

The PPP loan was approved in May 2020: $180,000 for a Florida tourism business. Those funds covered payroll, rent, and utilities during the pandemic shutdown. Ten months later came the forgiveness application. Not the original loan application – the forgiveness paperwork. That certification now creates federal criminal exposure. FBI Miami and SBA Office of Inspector General investigate the covered period expense documentation. The decisions you made about what expenses to include – those choices now face scrutiny from federal prosecutors. Thanks for visiting Spodek Law Group – the firm has defended clients in many, many PPP forgiveness fraud investigations throughout Southern District of Florida. Former federal prosecutors on Todd Spodek’s team understand how technical regulatory violations become federal criminal charges. With over 2,000 federal cases handled, Spodek Law Group knows how SBA audit findings escalate to federal prosecution.

Most business owners believed forgiveness was administrative. SBA review, upload documentation, funds become grant. Federal prosecutors view it differently.

Covered Period Compliance Trap

The covered period ran from May 15 through November 12, 2020 – a 24-week window where all expenses must be “incurred and paid” during this specific timeframe. SBA rules required precise timing. The rent: $4,800 monthly for the Coral Gables storefront location. The November payment went out on November 18, 2020. Six days outside the covered period. The forgiveness application included it anyway. The reasoning seemed defensible – the payment was for November rent, and the covered period included November. SBA interpretation: the payment date controls, not the period the rent covers. This timing difference creates criminal exposure under 18 USC Section 1343 wire fraud and 18 USC Section 1014 false statements to SBA. The forgiveness application transmitted electronically satisfies the wire fraud predicate. The certification stated: “I have used all loan proceeds for eligible expenses incurred and paid during the covered period.” If that certification was false when made, federal criminal liability attaches. Prosecutors must prove criminal intent – that you knew expenses fell outside the covered period when you certified the forgiveness application. The constitutional burden requires proof beyond reasonable doubt. But the November 18 rent payment becomes evidence prosecutors use against you. Similar timing issues appear throughout the forgiveness documentation. A December utility payment dated December 3, 2020 – outside the period. Payroll processing delay that pushed one payment to November 14 – potentially outside the period if the 8-week option had been used instead of 24-week. These timing discrepancies total $12,200 of the $47,000 in ineligible expenses SBA audit identified. Loss amount under Federal Sentencing Guidelines affects your sentencing bracket. Southern District of Florida federal court follows Guidelines calculations that determine whether you face probation or prison. The $47,000 loss creates federal prison exposure even though the original loan was only $180,000.

What did you understand when you submitted the forgiveness application? Did you know payment date controlled eligibility, not the period the expense covered? If you relied on your CPA’s advice about covered period timing, that matters for your defense. This regulatory complexity creates constitutional defense opportunities. Todd Spodek secured numerous acquittals at trial in federal fraud cases by challenging whether prosecutors can prove defendants knowingly violated regulations versus reasonably misunderstood complex rules. The government’s burden remains: proof beyond reasonable doubt that you intended to defraud SBA.

Independent Contractor Inclusion Error

The Florida tourism business employed 8 W-2 workers during the covered period. Tour guides, front desk staff, maintenance workers. The operation also worked with 12 independent contractors on 1099s. Seasonal hospitality workers, marketing consultants, event coordinators. Florida’s tourism industry extensively uses 1099 workers – gig economy demand, seasonal fluctuations, project-based needs. The forgiveness application included $31,000 paid to these 1099 contractors as “payroll costs” eligible for forgiveness.

SBA Interim Final Rule states independent contractor compensation doesn’t qualify as borrower payroll costs for forgiveness purposes. Creates massive confusion because IRS regulations did allow independent contractor compensation when self-employed individuals applied for their own PPP loans. Many CPAs believed 1099 payments qualified for borrower forgiveness calculations – accountants across Florida interpreted the rules this way during 2020. SBA disagrees. The agency treats inclusion of $31,000 in 1099 payments as a false statement on the forgiveness application.

That $31,000 represents the largest portion of the $47,000 in ineligible expenses. Even though no payroll records were fabricated and no employees were invented, prosecutors claim you made false statements about expense eligibility. As a second-generation criminal defense attorney, Todd Spodek understands how conflicting regulatory guidance creates defense opportunities. When even certified public accountants disagree on SBA rule interpretations, prosecutors face challenges proving you willfully defrauded SBA versus reasonably misunderstood evolving pandemic regulations that changed multiple times during 2020.

The 2019 compensation as business owner: $95,000. The forgiveness application claimed $35,000 in owner compensation for the covered period. Seemed reasonable – roughly 2.5 months of annual salary. The calculation showed this amount as eligible for forgiveness.

SBA formula caps owner compensation: 2019 compensation divided by 12 months times 2.5 months. The correct calculation: $95,000 divided by 12 times 2.5 equals $19,792 maximum eligible. The claim was for $35,000 in the forgiveness application. Excess: $15,208. That excess becomes part of the $47,000 ineligible amount SBA identified. An absolute cap exists too: $20,833 maximum based on $100,000 annual compensation limit, so even owners earning $200,000 annually couldn’t exceed $20,833 for forgiveness purposes.

SBA application materials didn’t clearly explain this cap. First-draw PPP had different rules than second-draw. The forgiveness application form itself didn’t calculate the cap automatically. Many businesses throughout Southern District of Florida exceeded the owner compensation cap without understanding they were creating false statement exposure. Federal prosecutors treat excess owner compensation claims as intentional false statements. Ignorance of the cap doesn’t prevent criminal charges under 18 USC 1014.

SBA loan review processes: automatic review for loans $2 million and above, random sampling for smaller loans, targeted reviews based on fraud indicators flagged by data analytics. The $180,000 loan: selected for SBA review in 2023. SBA requests documentation – payroll records, quarterly tax forms, bank statements, lease agreements, utility bills, 1099 forms for contractors. The documents get provided. Seems like straightforward administrative review.

SBA analysis identifies $47,000 in ineligible expenses across the forgiveness application. November 18 rent payment outside covered period: $4,800. Ineligible 1099 contractor payments: $31,000. Owner compensation exceeding cap: $15,208. Other timing and documentation discrepancies: $7,400. SBA OIG makes referral to Department of Justice for criminal investigation. FBI Miami gets the case assignment – their pandemic fraud task force handles PPP and EIDL prosecutions throughout Florida. Grand jury subpoenas get issued for business bank records, personal financial records, communications with CPAs about the forgiveness application.

What seemed like an administrative audit becomes a federal criminal investigation. The same findings SBA called “ineligible expenses” – federal prosecutors call those “false statements” and “wire fraud.” Your certification on the forgiveness application becomes evidence prosecutors use to prove criminal intent. When SBA audits escalate to FBI investigations, experienced federal defense counsel can intervene before criminal charges get filed. Todd Spodek represented Anna Delvey in the high-profile federal fraud case that became a Netflix series – demonstrating experience with complex fraud prosecutions at the highest stakes. Early intervention with prosecutors can mean the difference between criminal charges and civil resolution through repayment. Department of Justice data shows 81% of pandemic fraud defendants received prison time. Your loss amount under Sentencing Guidelines determines whether you face probation or federal prison. Southern District of Florida federal court will determine your outcome. The forgiveness application you submitted – those decisions about covered period expenses, contractor payments, owner compensation – create your criminal liability now.

Todd Spodek: 212-300-5196.