How to Prove You Didn't Intend to Commit PPP Fraud

At Spodek Law Group, we understand what brings you here at this hour. Something happened. A letter arrived. A phone call came. Maybe an agent showed up asking questions about a loan application you filed years ago. And now you find yourself searching for answers to questions you never thought you would need to ask.

Our firm has spent decades defending individuals facing federal charges. Todd Spodek and our team have seen every variation of this situation. We know the fear you feel right now is overwhelming. We also know that fear can lead to decisions that make everything worse.

This article exists to give you something most legal content will not provide. Not vague reassurances. Not generic explanations of the law. The truth about what you are actually facing and what it takes to mount a real defense.

Why Most People Misunderstand Intent in PPP Cases

Heres the thing about intent that trips up almost everyone who gets caught in a PPP investigation. You probly think intent means you had to know you were breaking the law. That you had to wake up one morning and decide to commit fraud. That theres some mental state of evil that prosecutors have to prove you possessed.

Thats not how federal fraud works.

Federal law dosent require prosecutors to prove you knew your actions were ilegal. It dosent require them to show you had criminal purpose in your heart. What they need to prove is much simpler. They need to show you knew the statements you made were false when you made them.

Read that again.

The law dosent care if you thought everyone was doing it. The law dosent care if your accountant told you it was fine. The law dosent care if you genuinly believed what you were doing was perfecty normal during a pandemic when everyone was scrambling. What the law cares about is wheather you knew the specific facts you certified were true or false.

And this is were most people realize there in trouble. Because heres the uncomfortable question nobody wants to ask out loud. If everything on your application was completly accurate, why are you googling this at 11pm?

How Federal Prosecutors Actually Prove Intent

They start with your bank records.

Every single transaction you made after recieving PPP funds has been documented. The government has had years to subpeona these records, analyz them, and build a timeline of exactly how you spent the money. They dont need you to admit anything. The numbers tell the story.

And this is the part that keeps defense attorneys up at night. Federal prosecutors dont rush these cases. There not working on your timeline. There working on theres. The DOJ PPP Fraud Strike Force has been building cases since 2021. If your just now getting a letter, your already three years behind in a fight that started without you.

Heres what the evidence collection looks like from there side:

Your application gets pulled. Every number on it gets compared against every document they can find. Your tax returns. Your payroll records. Your bank statements from before the pandemic. Did you claim employees you didnt have? Did you claim revenue that dosent match your tax filings? Did you claim your buisness was operational when records show it wasnt?

Then they look at the money trail. Where did the funds go after you recieved them? Payroll? Rent? Utilites? Or did they go somewhere else? Personal accounts. Luxury purchases. Investments. Every dollar gets traced.

They interview people. Your employees. Your accountant. Your banker. Everyone who might know something. And heres the thing about federal investigations. People talk. There scared of becoming targets themselves. They say things they probly shouldnt. And all of that becomes evidence.

The conviction rate in federal fraud cases exceeds 90 percent. Thats not because defendants are all guilty. Its because by the time your charged, prosecutors have already won.

The Evidence Trail You Already Left

Every click. Every login. Every keystroke.

OK so lets talk about what you probly didnt think about when you submitted that application. The digital footprint you left behind. Because unlike cash, unlike paper, unlike conversations that happened years ago - digital evidence dosent fade. It dosent forget. Its sitting on servers right now, waiting to be subpeonaed.

Your IP address was recorded when you submited the application. Your device ID was logged. The exact time you clicked submit. If you used a computer at home, they know it was your home. If you used your phone, they know it was your phone.

That email you deleted? Its on a server somwhere. The text messages you sent to your accountant? Your phone company has records. The QuickBooks file you modified? Theres a version history.

And heres were it gets worse. The banks that processed these loans had no incentive to verify anything. Why would they? The SBA guarenteed every dollar. Banks made billions in processing fees. They approved loans in 48 hours because speed meant more fees. Nobody was checking. Nobody was verifying.

But that dosent mean nobody was watching.

The system was designed this way. Fast approval. Zero verification. Perfect documentary evidence for later prosecution. Its not broken. Its working exactly as intended. And your the one caught in it.

What the Certification Language Actually Says

Lets read it together.

"The undersigned certifies that the information provided in this application and the information provided in all supporting documents and forms is true and accurate in all material respects. The undersigned understands that knowingly making a false statement to obtain a guaranteed loan from SBA is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000."

And heres where most people stop breathing for a second.

The certification you signed states - in plain English - that you understood providing false information could result in criminal prosecution. That signature is not evidence of intent. That signature IS intent. The government dosent need anything else.

This language was not an accident. Defense attorneys know something prosecutors will never admit publicly. This certification was drafted by lawyers who knew exacty what they were doing. They knew which words would foreclose which defenses. They knew that "in all material respects" would eliminate claims of minor inaccuracys. They knew that "knowingly" would be satisfied by the act of signing.

Read it one more time. Slowly.

Every word is a trap. "True and accurate" means any falsehood counts. "In all material respects" means anything important. "Knowingly" gets satisfied when you read and sign. "Understands" is proven by your signature.

The law only asks one question. Did you know what you signed was false? Not did you know it was ilegal. Not did you mean to commit a crime. Just - did you know it wasnt true?

And if you did, your signature proves it.

The Three Defenses That Actually Work

There are exacty three.

And look - im not going to sugarcoat what each one requires. These defenses exist. They have worked. But they require specific facts that most defendants dont have. If you dont have these facts, you need to know that now, not later.

Defense One: Reliance on Professional Advice

This is the defense everyone thinks they have. "My accountant filled out the form. My accountant told me it was fine. I relied on profesional advice."

Heres the problem. For this defense to work, you need to prove three things. First, you provided complete and accurate information to the profesional. Not some information. All of it. Second, the profesional made the false statements, not you. And third, you had no reason to know the statements were false.

Do you have this documentation? Right now? Do you have emails showing exactly what information you provided? Do you have records of your accountant independantly creating the numbers that turned out to be wrong?

Because if you gave your accountant inflated numbers and they just put those numbers on the form, this defense dosent apply. The profesional didnt make the false statement. You did. Through them.

Defense Two: Good Faith Mistake

This defense argues you made an honest error. You genuinly believed the information was true when you signed. This is extremly difficult in PPP cases because of how specific the certifications were.

For good faith to work, the mistake has to be reasonable. Claiming you didnt know your buisness wasnt operational when it was clearly closed? Thats not reasonable. Claiming you miscounted employees by one or two? Maybe. But prosecutors will argue you had access to your own records.

Defense Three: Lack of Materiality

This defense argues the false statement wasnt important enough to matter. Even if you made a false statement, it wasnt "material" to the loan decision.

The problem is PPP. Every certification was material. The whole point of the program was to keep buisnesses operational and employees on payroll. If you certified you had employees you didnt have, thats material. If you certified revenue that wasnt real, thats material.

Notice what all three have in common? They require evidence. Documentation. Proof of what you knew and when you knew it. This evidence needs to be gathered now, before prosecutors lock in there narrative. Once your indicted, your options narrow dramaticaly.

Why Waiting Makes Everything Worse

Every day you wait, they get stronger.

Heres the thing nobody tells you about federal investigations. There not static. There not just sitting in a file waiting for someone to make a decision. There active. There ongoing. And every day you wait to respond is another day prosecutors use to build there case.

While your reading this, there building. There interviewing witnesses who's memorys are still fresh. There pulling bank records you didnt know they could access. There coordinateing with the IRS, the FBI, and the SBA Inspector General. These agencys share information. They share resources. They share strategys.

The proactive cooperation window exists. Right now. But it closes.

What does that mean? It means there is a brief period - usally before an indictment - when voluntaraly cooperating with the government can significantely reduce your exposure. Coming forward before your charged. Returning funds. Providing information that helps there investigation. These actions matter.

But only if there done at the right time. In the right way. With the right legal guidance.

Once your indicted, the calculation changes completly. Now your negotiateing from weakness. Now prosecutors have no incentive to give you anything. Now there case is built and your just trying to limit the damage.

The window closes. It dosent open again.

How Spodek Law Group Approaches Intent Defense

We start by understanding exactly what happened.

Not what you think happened. Not what you hope happened. What actualy happened. Every fact. Every document. Every conversation. We need to know what prosecutors will find before they find it.

Our approach to PPP fraud defense is built on a fundamental understanding. The government has resources you dont have. They have time. They have money. They have investigators. What we bring is something they lack. We understand the specific weaknesses in intent-based prosecutions. We know which defenses work and which dont. We know how to present your story in a way that creates reasonable doubt.

Todd Spodek has been defending clients in federal court for years. This isnt our first PPP case. This isnt our first fraud case. We know what the other side is doing because weve been doing this for decades.

And honestly - thats why people come to us. Not because we make promises we cant keep. Because we tell the truth about whats possible and then we fight like hell to achieve it.

Heres what happens when you call.

We schedule a confidential consultation. Everything you tell us is protected by attorney-client privilege. We review your situation. We identify your exposure. We explain your options. And if we can help, we tell you exactly how.

This is what we do. Spodek Law Group has built its reputation on defending people in exactly your situation. People who are scared. People who made mistakes. People who need someone to fight for them.

212-300-5196. Thats the number. The call is confidential. The consultation is confidential. And the first step toward protecting your future starts the moment you dial.