Long Island PPP Loan Fraud Lawyers

You're not researching a 2020 problem. You're researching an active federal investigation that's been building against you for years - you just didn't know it. The government didn't wait for tips or whistleblowers. They built a surveillance system that screened over 5 million PPP loans through federal databases, flagged 3.7 million recipients with fraud indicators, and referred 669,000 loans for investigation. If you took a PPP loan on Long Island and something wasn't exactly right, there's a reasonable chance your file is already sitting in a pile at the Eastern District of New York.

Welcome to Spodek Law Group. Our goal is to tell you exactly what you're facing - not the sanitized version you'll find on other law firm websites that just want you to call. Todd Spodek has handled federal fraud cases for years, and the pattern with PPP investigations is always the same: by the time someone starts searching for a lawyer, the government has had their bank records, their tax returns, and their forgiveness applications for months or years. The question isn't whether there's an investigation. The question is what stage it's in.

Here's what nobody tells you about PPP fraud enforcement in 2025: the government changed the rules after you took the money. They extended the statute of limitations. They built databases specifically to catch you. And your loan forgiveness application - the one you thought closed the book on this - was actually a second federal crime you didn't know you were committing. That's not hyperbole. That's 18 USC 1001. This article explains exactly how the trap works, what's happening on Long Island specifically, and what defense actually looks like at each stage.

The 10-Year Trap Congress Built After You Took the Money

Heres the thing most people dont understand about PPP fraud prosecution. The normal statute of limitations for wire fraud is five years. That means if you took a PPP loan in April 2020, youd think the government had until April 2025 to charge you. Makes sense, right? Except Congress changed the rules in August 2022 - two years AFTER most people had already taken their loans and spent the money.

The PPP and Bank Fraud Enforcement Harmonization Act of 2022 extended the statute of limitations to ten years. Not prospectively for future fraud. Retroactively for fraud that had already occured. So that April 2020 loan? The government now has until April 2030 to charge you. And if you filed a forgiveness application in 2021 or 2022, the clock on THAT starts from the date you filed. Your forgiveness application in late 2021 means theres a potential charge hanging over your head until 2031.

Why did Congress do this? Becuase the government knew it couldnt possibly investigate 5 million loans in five years. The SBA Office of Inspector General estimated that over $200 billion in PPP loans were potentially fraudulent. Thats not a typo. Two hundred billion dollars. The government needed time to work through the backlog, and Congress gave it to them. The extension wasnt about fairness. It was about making sure nobody escaped prosecution just becuase the government was overwhelmed.

Think about what this means for you. Youve been operating for four years thinking the clock was running out. Maybe you relaxed a little. Maybe you stopped worrying. But the government has been using that time to build cases. The easy ones went first - people who bought Lamborghinis and yachts. Now theyre working through the harder ones. The small business owners who inflated payroll by 20%. The people who kept employees on paper who werent actualy working. The ones who used funds for rent on buildings they didnt occupy.

At Spodek Law Group, we see this constantly. Clients come in thinking there case is old news. Then we pull the timeline and realize the statute dosent run for another six years. Thats six more years of the government having access to your bank records, your emails, your forgiveness application. Six more years of witnesses memories getting hazier while the governments documents stay crisp.

5 Million Loans Screened: How the SBA Already Has Your File

OK so you might be thinking: sure, theres a ten year window, but how would they ever find ME? Theres millions of loans. Thats exactly what the government wants you to think.

The SBA Office of Inspector General didnt just sit around waiting for complaints. They built a screening operation that processed every single PPP loan through the Do Not Pay database - a federal system that cross-references government payments against known fraud indicators. Five million loans. $525 billion. Every one of them screened.

Heres how the four-step process works:

• Automated screening compares your application against public and private databases, looking for internal inconsistencies. Did your reported payroll match IRS records? Did your business address exist? Were you on any federal exclusion lists?
• Data analytics using machine learning identify patterns that human reviewers might miss - things like applications with identical language, businesses created right before COVID, payroll numbers that dont make sense for your industry.
• Human reviewers examine the flagged files. This is were things get serious. A actual person is looking at your loan documents, comparing them to public records, deciding wheather to refer you for investigation.
• Referral to OIG. Once youve been referred, your in a criminal investigation pipeline. You might not know it. You might not find out for months or years. But your file is moving.

The numbers are staggering. The SBA referred over 669,000 potentially fraudulent loans to OIG for investigation. Thats not 669,000 confirmed fraudsters - its 669,000 files that looked suspicious enough to warrant criminal scrutiny. The GAO separately flagged 3.7 million recipients with fraud warning indicators. Even if only a fraction of those result in charges, were talking about tens of thousands of prosecutions working there way through the system.

And heres what practitioners know that the public dosent: the government has been strategic about timing. They went after the obvious cases first - the people who bought cryptocurrency and Patek Philippe watches with PPP money. Those made headlines. Those justified the task forces budget. But now theyre into the second and third waves. The cases where fraud is provable but not flashy. The cases that look exactly like yours.

Your Forgiveness Application Was Your Second Federal Crime

Heres were it gets realy bad. Most people think of PPP fraud as lying on the initial application. You inflated your payroll, you listed employees who werent real, you claimed expenses you didnt have. Thats one crime. But if you also filed for loan forgiveness - and almost everyone did - you probly committed a second federal crime without realizing it.

When you submitted your forgiveness application, you made certifications under penalty of perjury. You certified that the funds were used for eligible expenses. You certified that the information was accurate. If your initial application contained false information, and you then submitted a forgiveness application based on that same false information, youve made a second set of false statements to a federal agency.

This matters for two reasons:

• Its a seperate charge. The government dosent have to choose between charging you for the application fraud and the forgiveness fraud. They can charge both. Thats additional counts, additional exposure, additional leverage in plea negotiations.
• It extends the timeline. The ten-year statute of limitations runs from your LAST fraudulent act. If your forgiveness application was submitted in December 2021, your statute runs until December 2031. Thats still six years away.

Making false statements to the SBA under 18 USC 1014 carries penalties of up to $1 million in fines and 30 years imprisonment. Read that again. Thirty years. For paperwork. The government dosent actualy seek 30 years in most cases, but the statutory maximum gives prosecutors enormous leverage. When your facing a theoretical 30-year sentence, a plea deal for three years starts looking pretty reasonable.

Ive seen cases were clients thought there exposure was limited to the original loan. Then we analyze the forgiveness application and realize theyve doubled there legal problems. The certifications on that form are explicit. Theres no ambiguity about what your signing. And the government has the form with your signature on it.

This is why Todd Spodek tells every client the same thing: dont assume you know what your charged with until youve seen the indictment. The forgiveness application creates a whole seperate universe of criminal liability that most people never considered.

Why Paying It Back in 2025 Destroys Your Defense

Heres the part that makes defense attorneys cringe. Clients come in and say: "I'll just pay it back. That shows good faith, right? That should help."

In 2020 and early 2021, maybe. The government was overwhelmed. Voluntary repayment before investigation could sometimes make a case go away. But thats not 2025. What worked four years ago now actualy hurts you.

Prosecutors have learned that voluntary repayers make there jobs easy. Think about it from there perspective. Your trying to prove someone committed fraud. They voluntarily pay back the money. Why would someone pay back a legitimate loan? The only logical explanation is they knew it was fraudulent. Your repayment becomes what prosecutors call "consciousness of guilt" evidence. Its an admission wrapped in a bank transfer.

The DOJ COVID-19 Fraud Enforcement Task Force has specificaly identified "voluntary repayers" as a target category. Not becuase repayment is itself a crime, but becuase it correlates so strongly with actual fraud. The person who took a legitimate PPP loan and used it correctly dosent panic and pay it back four years later. Only people with something to hide do that.

Let that sink in. The intuitive response - fix the problem, return the money, make it right - is exactly the wrong move once your past a certain point. It dosent make the case go away. It gives prosecutors another piece of evidence. Your defense attorney now has to explain why you repaid a "legitimate" loan, and theres no good answer.

Theres a narrow exception. If your truly not under investigation yet, if you have no reason to believe the government is looking at you, a formal voluntary disclosure through an attorney - not just repayment but actual disclosure with legal representation - might help. But this only works for misuse of funds, not application fraud. If you lied on the application itself, voluntary disclosure wont save you. And the window for this approach has basicly closed.

Spodek Law Group has handled cases on both sides of this line. Some clients come to us early enough that strategic options exist. Others come after theyve already made moves that damaged there defense. The difference in outcomes is significant.

98.5% Conviction Rate: What Happens When They Charge

People hear "federal investigation" and think its like state court - maybe you beat the charges, maybe you plea to something minor, maybe the whole thing gets dropped. Federal court dosent work like that. Especialy not for PPP fraud.

During the last four years, IRS Criminal Investigation has obtained a 98.5% conviction rate in prosecuted COVID fraud cases. Thats not a typo. Ninety-eight point five percent. If your charged federaly with PPP fraud, you have less then a 2% chance of acquittal.

Why is the rate so high? Becuase federal prosecutors dont charge cases they might lose. The U.S. Attorneys Office has nearly unlimited resources compared to defendants. They can take years to investigate. They can subpoena every bank record, every email, every text message. By the time they bring charges, theyve already built an overwhelming case. The trial is almost a formality.

And sentencing is getting worse, not better. Defendants sentenced in 2024 and 2025 are receiving sentences 40% longer then those sentenced in 2021-2022 for identical conduct. The same fraud that got someone probation three years ago now gets them federal prison. Judges have lost patience. The "pandemic confusion" excuse dosent work anymore. Everyone knew what they were doing.

In one EDNY prosecution, 16 defendants were convicted of conspiracy to fraudulently obtain PPP loans. The lead planner got 15 years. A co-founder of Blueacorn, a lender service provider, got 10 years and $63 million in restitution. A Nevada man who laundered PPP money through real estate and casinos got over 15 years. These arent outliers. These are the new normal.

The math is brutal. If you go to trial, you have a 98.5% chance of conviction, followed by a sentence thats 40% longer then it would of been three years ago. If you plea, you might get a better deal, but your still going to federal prison for something. The only way to avoid this outcome is to resolve the case before charges are filed - and that requires a lawyer who understands how federal investigations work.

Long Island Cases: The Doctor, The Detective, The Businessman

This isnt happening somewhere else. Its happening here. The Eastern District of New York - which covers Brooklyn, Queens, Long Island, and Staten Island - has been aggressivly prosecuting PPP fraud. Let me tell you about some of the people who thought they wouldnt get caught.

Dr. Konstantino Zarkadas was a Glen Cove medical doctor. Between March and July 2020, he fraudulently obtained 11 PPP and EIDL loans totaling $3.7 million. What did he do with the money? He used $194,915 as a down payment on a $1.75 million yacht. He faces up to 30 years in prison and forfeiture of nearly $3.8 million. A doctor. Presumably smart. Presumably understood risk. Now facing decades in federal prison becuase he thought a yacht was a good idea.

Donald Finley was a Locust Valley businessman who owned the Jekyll & Hyde theme restaurant in Manhattan and Bayville Adventure Park on Long Island. He obtained 29 fraudulent PPP and EIDL loans totaling $3.2 million. He funneled the money through more then 30 bank accounts to prevent tracing and used substantial portions to buy property in Nantucket. He got 24 months in federal prison, had to pay $3.2 million in restitution, a $15,000 fine, and 500 hours of community service. His businesses are gone. His reputation is destroyed. All for money that wasnt his.

Damaris Beltre was a tax preparer in Freeport. She faces a 42-count indictment for preparing fraudulent PPP applications and tax returns causing $12 million in losses. She allegedly used PPP proceeds to buy a house in the Dominican Republic, a Honda CRV, and jewelry, while withdrawing over $226,000 in cash. If convicted, shes looking at decades in prison.

And then theres the NYPD case. John Bolden, a detective, allegedly helped submit fraudulent PPP applications for himself and over 65 other individuals. Police officers. People who took an oath to uphold the law. Now facing 30 years in federal prison for fraud.

These arent career criminals. There professionals. Doctors, business owners, law enforcement. People who had things to lose. People who thought they were smart enough to not get caught. The Eastern District didnt care about there backgrounds. The government prosecuted them anyway.

At Spodek Law Group, weve seen the fear in clients eyes when they realize there in the same category as these defendants. The difference isnt wheather you committed fraud. The difference is wheather you get ahead of the investigation or wait for the indictment.

What Defense Actually Looks Like at Each Stage

So what do you actualy do? That depends entirely on where you are in the investigation timeline. Theres no single answer becuase theres no single stage.

Stage 1: No known investigation

This is the best possible position, but its also the most uncertain. You dont know what the government knows. A experienced federal defense attorney can make informal inquiries, assess your exposure, and help you understand wheather your likely in the 669,000 referred files or the millions who will never be charged. This is were strategic decisions get made - document preservation, witness preparation, in some narrow cases voluntary disclosure.

Stage 2: Civil demand or inquiry

The SBA or DOJ has reached out, usually demanding documents or seeking repayment. This is not yet criminal, but its a clear warning sign. How you respond to this inquiry often determines wheather you end up charged criminally. Never respond to a federal agency without counsel. Never produce documents without understanding what your handing over. Never agree to repayment without understanding the implications.

Stage 3: Grand jury subpoena

Now your definitly under criminal investigation. A grand jury subpoena for documents or testimony means prosecutors are building a case. At this stage, the goal shifts from prevention to damage control. Your attorney should be in communication with the AUSA (Assistant U.S. Attorney) handling the case, understanding what there looking at, positioning for the best possible outcome if charges come.

Stage 4: Target letter

When you recieve a target letter, the government is telling you your likely to be indicted. This is your last window to negotiate before charges. Some cases can still be resolved at this stage through proffer sessions, cooperation agreements, or pre-indictment pleas. The leverage is limited, but its not zero.

Stage 5: Indictment

Once your indicted, the options narrow dramaticly. With a 98.5% conviction rate, trial is rarely the right choice. Most cases resolve through plea negotiations. The question becomes: how much prison time, how much restitution, what can be preserved for your family.

Todd Spodek has handled cases at every stage of this timeline. The earlier you engage counsel, the more options exist. By Stage 5, your mostly managing damage. By Stage 1, your shaping the outcome.

If your reading this article becuase you took a PPP loan on Long Island and somethings not right, dont wait for Stage 4 or Stage 5. Call Spodek Law Group at 212-300-5196. The consultation is confidential. The statute of limitations gives the government ten years. It dosent give you that long to prepare a defense.

The people in those Long Island cases - the doctor, the detective, the businessman - they all had a window were intervention could of changed there outcome. Most of them waited to long. The government built its case. The indictment came. By then, the best defense attorney in the world can only do so much.

Our office is in the Woolworth Building in Manhattan, but we handle federal cases across Long Island, Brooklyn, Queens, and nationwide. This isnt marketing. This is what we wish someone had told our clients before they made the mistakes that put them in federal prison. The trap was built after you took the money. The surveillance has been running for years. The only question is wheather you get ahead of it or let it catch up to you.

Call 212-300-5196. The mistake of waiting isnt free.