Long Island PPP Loan Fraud Lawyers
You read something online about PPP fraud prosecutions. Maybe you saw a news story. Maybe a friend mentioned it. Now you can't sleep.
Your mind keeps running the same calculation: what if they come for me?
Let me tell you what's actually happening. Not the headline version that's designed to terrify you. The real version, with context. Yes, the federal government is prosecuting PPP fraud. Yes, some people in Long Island have gone to federal prison. But the situation is more nuanced than the fear-inducing articles suggest. Most people who are worried will never face criminal charges. Understanding why - and understanding where you actually stand - is more useful than another sleepless night. The gap between "flagged for review" and "facing federal indictment" is enormous, and most people who lose sleep over PPP never cross into the danger zone that federal prosecutors actually care about.
Welcome to Spodek Law Group. We're going to explain what's happening with PPP fraud enforcement in the Eastern District of New York, and help you understand whether you actualy need to be concerned. This isn't about scaring you into calling. Its about giving you information so you can make a rational assessment.
How PPP Fraud Enforcement Actually Works
The government didnt investigate PPP applications the way you might imagine.
They didnt have agents reviewing files one by one, sitting in cubicles with stacks of paperwork. They built automated systems - sophisticated database matching algorithms that could process millions of applications simultaneously and flag discrepencies without any human involvement whatsoever. Every PPP application went into a database that connected to IRS records, and the system compared what you claimed as payroll against what you're 941 filings showed. It compared against W-2 totals. Against Schedule C revenue. Against payroll records from previous years. Against unemployment insurance filings from the state. When the numbers didnt align, the system flagged the application automaticaly, creating a digital trail that would sit there waiting for someone to eventually look at it.
This happened in 2020 and 2021. It happened without any human reviewing you're specific file.
Here's what the automated system flagged:
- Applications where claimed payroll exceeded reported 941 filings by more than 20%
- Businesses with no employees filing for payroll protection
- Multiple applications from the same EIN or SSN
- Schedule C filers whose claimed payroll exceeded their gross revenue
- Applications from businesses that showed no economic activity before 2020
The SBA Office of Inspector General refered over 669,000 potentialy fraudulent loans for investigation. Thats out of roughly 13.4 million total PPP recipients - about 28% were flagged for some kind of discrepency.
Congress extended the statute of limitations from five years to ten years in August 2022. This means every 2020 PPP loan is technicaly prosecutable until 2030. Every 2021 loan until 2031.
Thats the system. Thats how it works.
Putting the Numbers in Perspective
Heres what the scary articles dont tell you: being flagged is not the same as being prosecuted.
Of those 669,000 flagged loans, how many have resulted in criminal charges? A fraction. Federal prosecutors have limited resources - there are only so many AUSAs in the Eastern District, only so many FBI agents assigned to pandemic fraud, only so many courtroom hours available. They prioritize cases based on dollar amounts, the egregiousness of the fraud, and wether assets are recoverable. A $50,000 loan to a legitimate business that overstated payroll by $8,000 is not the same priority as a $2 million scheme involving fake businesses and identity theft.
The cases that make the news are not typical cases:
- Niall Alli - $1.7 million fraud, bought Patek Philippe watches and luxury cars, multiple fake businesses
- Leon Miles - $2 million scheme, Bentley Continental, Instagram posts showing off proceeds
- Damaris Beltre - $12 million scheme across 27 fraudulent applications, organized criminal enterprise
- Donna Ingram - 27 separate applications using stolen identities, sophisticated multi-state operation
These are the cases prosecutors choose becuase their significant, becuase the evidence is overwhelming, becuase they make good deterent examples.
If you submitted one application with some questionable numbers, your in a diffrent category than someone who submitted 27 applications. The 98.5% conviction rate that gets cited? Thats for cases the government chooses to prosecute. It dosent mean 98.5% of flagged loans result in conviction. It means that once federal prosecutors decide to bring charges, they almost always win - becuase they only bring cases their confident theyll win.
Most flagged applications will result in civil action at most.
Repayment demands. Loan forgivness denials. Administrative penaltys. Unpleasent, but not prison. Not everyone flagged becomes a defendant.
What Actually Affects You're Situation
Several factors determine wether a flagged loan becomes a criminal prosecution.
Loan size matters. A $20,000 loan with inflated payroll numbers is treated differntly than a $2 million scheme - prosecutors have to justify the resources spent on each case, and smaller loans typicaly dont justify the full weight of federal prosecution with FBI agents, forensic accountants, and months of grand jury proceedings.
The nature of the discrepency matters. Misunderstanding what counted as payroll is diffrent from fabricating employees who dont exist. Honest confusion about the rules is diffrent from creating fake businesses to apply multiple times. The government distinguishes between:
- Errors in calculation (lowest concern)
- Misunderstanding of eligibility rules (low concern)
- Intentional inflation of legitimate numbers (moderate concern)
- Fabrication of employees or businesses (high concern)
- Identity theft or multiple fraudulent applications (highest concern)
Documentation matters. If you can show you had a resonable basis for you're numbers - even if they turned out to be wrong - thats diffrent from having no basis at all. Did you use an accountant? Did you rely on payroll records? Can you show the calculation you performed?
You're response to scrutiny matters. If agents contact you and you cooperate through counsel, thats diffrent from lying to federal agents (which is its own crime under 18 U.S.C. § 1001).
Prior criminal history matters. First-time offenders in white-collar cases are treated differntly than people with records.
Todd Spodek has seen both sides of these cases. Some clients come in terrified and discover their not in the category prosecutors care about. Others come in assuming it will blow over and discover they need imediate intervention.
These factors matter. You're situation is specific.
This is alot to process.
Understanding You're Actual Options
If your genuinely concerned about you're PPP loan, you have several paths forward - and the right choice depends entirely on you're specific circumstances, the size of the discrepency, and you're tolerance for risk.
Option one: Wait and see. If you're loan was relativly small and you're discrepency was marginal, this might be rational. The government has limited resources and a large backlog. Not every flagged loan will recieve attention. The risk: if they do come, youve lost the oportunity for proactive engagement.
Option two: Consult with counsel now. A federal defense attorney can review you're situation objectivly - what did you actualy claim, what do you're records show, how significant is the gap? This gives you information without comitting to any particular course of action. It lets you make decisions based on reality rather then fear. The consultation itself creates no record, no filing, no government notification.
Option three: Proactive engagement. In some cases, approaching the government before they approach you can result in civil resolution rather then criminal prosecution. This requires carefull strategic judgement about timing and approach. Its not right for everyone, but for some people it converts a potential criminal matter into a managable civil penalty.
Option four: Prepare for contact. If you beleive agents may contact you, having counsel identified in advance means you dont make panic decisions when they show up.
You know exactly what to say: "I'd like to speak with my attorney before answering questions."
Each option has trade-offs. The right choice depends on you're specific facts.
When Your Ready
If you want to understand were you actualy stand, Spodek Law Group can help you assess you're situation. Weve handled federal fraud cases in the Eastern District of New York for over a decade - we understand how these investigations work, what prosecutors prioritize, and what factors affect outcomes. We know the AUSAs who handle PPP cases. We know what they look for and what they ignore.
The consultation is free. Theirs no obligation. No pressure.
Some people who call us discover they have nothing to worry about. Others discover they need to take action. Either way, youll have information instead of anxiety.
When your ready, call us at 212-300-5196. Or dont. But dont spend another night catastrophizing about worst-case scenarios that may not apply to you're situation. Get information. Make rational decisions.
Were here when you need us.
