Los Angeles PPP Loan Fraud Lawyers
You got a PPP loan during the pandemic. Maybe through your business, maybe through a side company, maybe you helped someone else apply. The money came fast back then - the government was desperate to get relief out the door. Years have passed. You assumed the feds had bigger problems to chase. You figured the statute of limitations would run out. You moved on.
The federal government did not move on.
Los Angeles isn't just another federal district prosecuting PPP fraud. The Central District of California was selected by the Attorney General to jointly head one of only three national COVID-19 Fraud Strike Force Teams - specialized prosecution units with FBI agents embedded with prosecutors from day one, mandate to pursue pandemic fraud aggressively, and data analytics that turn suspicious loans into federal indictments faster than anywhere else in the country. If you're in LA, you're in the crosshairs.
Welcome to Spodek Law Group. We handle federal PPP loan fraud defense in Los Angeles and throughout the Central District of California. If you've received a letter from the SBA Office of Inspector General, if federal agents have contacted you, if someone in your orbit has been indicted - this article explains what you're facing and what options may still exist.
The Government Has 10 Years to Come for You
In August 2022, President Biden signed the PPP and Bank Fraud Enforcement Harmonization Act. Most people have no idea what it actualy did.
It extended the statute of limitations from 5 years to 10 years - retroactively.
That means a PPP loan from April 2020 is prosecutable until April 2030. A loan from 2021 until 2031. Congress gave the government a full decade to investigate, build cases, and prosecute. And there using it. The DOJ's COVID-19 Fraud Enforcement Task Force coordinates FBI, IRS Criminal Investigation, SBA OIG, Secret Service, and Homeland Security Investigations into a single enforcement machine. This isn't random audits - this is systematic prosecution.
Courts have rejected challenges to the retroactive application. You don't have a vested right in the statute running out until it actualy expires. The law changed. The clock reset.
Every PPP loan ever issued is now subject to prosecution for a full decade from the date of the offense.
The SBA Office of Inspector General has recieved more than 250,000 hotline complaints since the pandemic began. From those, there data analytics team identified over 95,000 actionable leads. As of late 2024, they had hundreds of ongoing investigations feeding into the Strike Force pipeline. That pipeline runs through Los Angeles.
Los Angeles Is Strike Force Headquarters
Most people don't understand what it means that CDCA jointly heads a national Strike Force.
The Justice Department created three COVID-19 Fraud Strike Force Teams in 2022. One is headquartered in the Southern District of Florida (Miami). One is in the District of Maryland (Baltimore). The third is a joint operation between the Central District of California (Los Angeles) and the Eastern District of California (Sacramento).
This means specialized prosecutors who do nothing but pandemic fraud. FBI agents embedded with prosecutors from the beginning of investigations - not handed off after evidence gathering. Data analytics systems that identify suspicious patterns and feed them directly to prosecution teams. The entire structure is designed to accelerate the process of turning data into criminal charges.
Heres the reality. Through December 31, 2024, the COVID-19 Fraud Enforcement Task Force has charged over 3,500 defendants with federal crimes related to pandemic fraud. Of defendants whose cases have been resolved, 82% were convicted. Of those convicted and sentenced, 81% received prison time. That's not probation. That's federal prison.
The numbers from Los Angeles are even more stark.
Recent CDCA PPP fraud cases:
- Richard Ayvazyan (Tarzana): 17 years federal prison. His family ran a fraud ring that stole over $20 million through approximately 150 fraudulent PPP applications. They used identities stolen from elderly people, deceased individuals, and foreign exchange students. Richard and his wife fled to Montenegro before sentencing. The FBI found them. They were extradited back. His wife got 6 years. His brother got 5 years.
- Jasmine Mallard-McCarter (Eastvale): 84 months federal prison - seven full years. She marketed PPP fraud services on Instagram. Helping people who wanted to steal from pandemic relief programs. More than $1.7 million in fraudulent claims. Judge Frimpong sentenced her in June 2025.
- Robert Benlevi (Encino): 11+ years. He submitted 27 loan applications to four banks seeking $27 million. Claimed each of his companies had 100 employees and $400,000 monthly payroll. The companies had no employees. No payroll.
- Mustafa Qadiri (Irvine): Indicted on bank fraud, wire fraud, identity theft, and money laundering. Banks transferred aproximately $5 million to accounts he controlled. HSI seized a Ferrari, Bentley, and Lamborghini that he bought with the money.
These aren't hypothetical penalties. These are people from Los Angeles and surrounding areas sitting in federal prison right now.
How One Application Becomes Five Federal Charges
The PPP itself doesn't have criminal provisions. The CARES Act isn't a penal statute. So how are people going to federal prison?
The DOJ uses pre-existing fraud statutes. One PPP application can trigger multiple charges stacked together:
- Wire Fraud (18 U.S.C. § 1343) - 20 to 30 years maximum
- Bank Fraud (18 U.S.C. § 1344) - 30 years maximum
- False Statements to SBA (18 U.S.C. § 1014) - 30 years maximum
- Money Laundering (18 U.S.C. § 1956) - 20 years maximum
- Aggravated Identity Theft (18 U.S.C. § 1028A) - mandatory +2 years consecutive
One application. Theoretical exposure exceeding 100 years. In practice, sentences don't reach that level - but charge stacking gives prosecutors enormous leverage in plea negotiations. Your facing five counts when you walk into that negotiation. Most defendants plead guilty because trial risk is catastrophic.
And heres what people don't realize about sentencing in 2025.
Defendants sentenced now are recieving sentences 40% longer then defendants who committed identical conduct but were sentenced in 2021-2022. Early pandemic leniency is completley over. Federal judges have seen hundreds of these cases. There not sympathetic anymore. The economic chaos excuse doesn't work. The confusing guidance defense doesn't work. Prison time is included in nearly every PPP sentencing now.
"Do people actualy go to prison for a small PPP loan?"
Yes.
A Cincinnati defendant got 18 months federal prison for $21,000 in PPP fraud. March 2025. The amount dosent protect you. Federal judges in 2025 include prison regardless of amount. This is about deterrence, not proportionality. The government wants headlines. They want other people who committed PPP fraud to see these sentences and worry.
If you took $50,000 or $500,000 or $5 million - you face the same fundamental problem. Federal prosecutors have made PPP fraud a priority. There not showing mercy based on loan size.
The Window Most People Miss
Theres something practitioners know that most people don't understand.
There's a window - typically six to twelve months - between when SBA OIG flags a loan for investigation and when the case gets referred to FBI or IRS-CI for criminal prosecution. During this window, options exist that completley disappear once criminal charges are filed.
During the OIG review stage, a skilled defense attorney may be able to negotiate a civil disposition. Repayment plus a fine. Maybe a False Claims Act settlement. Administrative resolution. Not pleasant - but not a federal felony conviction either.
But heres the trap most people fall into.
Some people, panicking when they learn there under investigation, decide to voluntarily repay the loan. They think it will make the problem go away. The DOJ has explicitly stated that voluntary repayment can be used as evidence of consciousness of guilt. Returning the money doesn't make it go away - it can actualy strengthen the government's case against you.
Others talk to investigators thinking they can explain. They think cooperation will help. Recent cases show people who decided to talk to investigators without counsel ended up being charged with obstruction or making false statements to federal agents - on top of the underlying PPP fraud. The agents seem friendly. There not on your side.
If your under investigation or concerned you might be:
- Don't destroy any documents. Document destruction becomes its own charge.
- Don't discuss the matter with others who may be involved. Those conversations can be used against you.
- Don't make voluntary payments to the SBA without counsel. This can be used as consciousness of guilt.
- Don't talk to federal agents without a lawyer present. Nothing you say will help. Everything can hurt.
- Contact a federal defense attorney immediatly. The earlier you act, the more options may exist.
Todd Spodek has handled PPP fraud cases in the Central District of California. He understands the difference between OIG-stage investigations where civil resolution may be possible, and FBI-stage investigations where criminal defense is the priority. The window matters. The timing matters. What you do in the next few weeks can determine the next decade of your life.
When Your Ready
If you're in Los Angeles - or anywhere in Southern California under CDCA jurisdiction - and you're facing a PPP loan fraud investigation, Spodek Law Group can help you understand where you stand and what realistic options exist.
The consultation is free. Theirs no obligation.
What you'll get is an honest assessment. Is this still at the OIG stage where civil resolution might be possible? Has it been referred for criminal prosecution? What does the evidence look like? What are realistic outcomes - not best-case fantasies, but actual possibilities based on how these cases are playing out in the Central District right now?
Call us at 212-300-5196. The statute of limitations runs until 2030 or 2031 depending on when you got the loan. The government has time. But once they move, things happen fast. The Strike Force model is designed for speed. The earlier you have counsel, the more options may exist.
Don't wait until federal agents show up at your door.
Were here when you need us.
