My Accountant Said It Was Fine: Why the Reliance on Professional Advice Defense Usually Fails in EIDL Fraud Cases

You're probably reading this because you're facing federal charges for EIDL fraud, and you're thinking the same thing thousands of defendants have thought before you: "But my accountant told me I could do this." Or maybe it was your lawyer. Or your business consultant. Whoever it was, somebody with credentials and professional licenses told you the EIDL loan was legitimate, that your application was fine, that there was nothing to worry about.

And now your facing federal prison.

At Spodek Law Group, we understand exactly how frustrating and terrifying this situation is. Our mission has always been to fight for people who feel like the system has failed them. Todd Spodek and our team have represented countless clients who genuinely believed they were following professional guidance - only to discover that the "reliance on professional advice" defense is one of the most misunderstood and commonly failed defenses in federal criminal law.

Heres what nobody tells you about this defense. Its real. It exists. In theory, it can work. But the legal requirements are so strict, so demanding, so absolutly unforgiving that most defendants who try to use it watch their case fall apart at trial.

Lets talk about why that happens - and what you actualy need to make this defense work.

What the Reliance Defense Actualy Requires

OK so first things first. The reliance on professional advice defense isnt just about pointing to your accountant and saying "they said it was OK." There's a specific legal test with multiple elements, and you need to prove ALL of them. Miss even one and the whole defense collapses.

Heres what you need:

Complete and honest disclosure. You have to have given your professional advisor full and complete information about the facts of your situation. Every detail. Nothing left out. Nothing minimized. Nothing "forgotten."

Advice from a competent professional. The person advising you needs to actually be qualified to give that type of advice. A CPA can advise on tax matters. A lawyer can advise on legal matters. But did your accountant have any business telling you that a potentially fraudulent federal loan application was legal? Probly not.

Good faith reliance. You have to have genuinely, sincerely relied on the advice. Not just heard it and ignored it. Not used it as cover for a decision you already made. Actually relied on it as the basis for your actions.

Actual advice, not just consultation. There's a difference between asking someone, "Can I do this?" and receiving a definitive answer that you then follow. Vague conversations don't count.

Each one of these elements becomes a battlefield in federal court. And prosecutors have gotten very good at dismantling each one.

The Disclosure Trap: What You Didn't Tell Them

Lets start with the first element - complete disclosure. This is where most reliance defenses die.

Heres the thing. For your accountant or lawyer to give you meaningful advice about your EIDL application, you would have needed to tell them everything about your situation. Did you tell them that you were inflating your revenue numbers? Did you mention that your business hadn't been operating in the way the application suggested? Did you disclose that you were maybe applying through multiple entities?

If you left ANYTHING out - anything at all - the government will find it. And then theyll ask your advisor the devastating question: "If the defendant had told you about X, would you have given the same advice?"

The answer is almost always no.

Think about this from the advisor's perspective. Theyre not going to jail for you. When federal agents interview them, theyre going to protect themselves. They're going to say "I never knew about that," or "they didn't tell me the full picture," or "if I'd known, I would have advised against it."

And just like that, your defense evaporates.

At Spodek Law Group, Todd Spodek always asks clients the hard questions upfront: What EXACTLY did you tell your accountant? Do you have documentation? Is there any chance they might remember the conversation differently than you do? Because in federal court, their memory is going to matter more than yours.

Call us at 212-300-5196 if you need to discuss your specific situation. These conversations need to happen early.

The Competence Problem: Wrong Expert, Wrong Advice

Here's something that surprises a lot of defendants. Just becuase someone has professional credentials dosent mean theyre qualified to give the specific advice you needed.

CPAs are experts in accounting and tax matters. Theyre not experts in federal loan programs. Theyre definatly not experts in criminal law. When you asked your accountant if your EIDL application was "fine," they might have been evaluating it from a tax perspective - not from a "will this send me to federal prison" perspective.

Prosecutors love this argument. "Your Honor, members of the jury, the defendant claims they relied on their accountant. But is an accountant qualified to give legal advice about federal loan applications? Is a CPA trained to interpret the CARES Act and SBA regulations? Is a tax professional the right person to consult about potential wire fraud or bank fraud charges?"

The answer, obviously, is no.

Even lawyers can fail this test. If you consulted a real estate attorney about your EIDL loan, prosecutors will point out that real estate law and federal criminal fraud are completely different specialties. Unless you consulted an attorney who specifically advises on federal compliance or white-collar criminal matters, your "legal advice" might not count for much.

This is why Spodek Law Group focuses exclusively on federal criminal defense. When your facing potential prison time, you need specialists. You need attorneys who understand exactly how federal prosecutors think and operate. Not someone who dabbles in criminal law between real estate closings.

The Good Faith Problem: Did You Really Believe It?

OK so lets say you made full disclosure to a genuinely qualified professional and they gave you specific advice. Theres still another hurdle: did you actually believe their advice was correct?

This might sound wierd. Why would you follow advice you didnt believe? But juries are deeply skeptical of defendants who claim they thought obvious wrongdoing was legal just becuase somebody with a license said so.

Think about it from a jurors perspective. You're a small business owner. You apply for an EIDL loan. Maybe you know your numbers are a little inflated. Maybe you know your business wasn't quite as impacted by COVID as your application suggests. And your accountant says "dont worry about it, everybodys doing this"?

Even if that conversation actually happened, does it sound like good-faith reliance on professional advice? Or does it sound like two people agreeing to look the other way?

The government will argue that you didnt rely on professional advice - you sought out someone who would tell you what you wanted to hear. Thats not reliance. Thats willful blindness dressed up in professional clothing.

Juries understand this instinctively. They know that professionals sometimes tell clients what they want to hear becuase thats how they keep getting paid. The reliance defense requires you to convince twelve skeptical strangers that you genuinely, sincerely believed your actions were lawful based on competent guidance.

Thats a hard sell when the underlying conduct looks fraudulent.

The Paper Trail Problem

Here's a practical issue that destroys many reliance defenses: documentation.

The government has a paper trail. They have your loan application. They have your bank records. They have your tax returns. They have emails. They have IP address logs. Everything is documented.

And what do you have to prove your professional advice? A memory of a conversation?

When Todd Spodek and Spodek Law Group evaluate a potential reliance defense, one of the first things we ask for is documentation. Is there an email where you asked your accountant about the loan? Is there a memo from your lawyer analyzing the EIDL program? Is there an engagement letter that defines what advice was being provided?

Most of the time, there isn't. Most of the time, defendants "talked to their accountant" or "ran it by their lawyer" but never got anything in writing. Which means the entire defense comes down to competing memories - yours saying the professional approved the application, and possibly the professionals saying they dont remember it that way.

Who do you think the jury believes?

The Privilege Waiver Trap

Here's something that catches a lot of defendants completely off guard. If you claim you relied on legal advice, you typically waive attorney-client privilege regarding that advice.

Let that sink in.

Your claiming that your lawyers advice made your conduct legal. The government has the right to examine that advice. They can subpoena your attorney. They can demand communications. They can ask exactly what was discussed and what was said.

Suddenly your defense has opened the door to additional evidence against you. Maybe those attorney communications show you asking questions that suggest you knew something was wrong. Maybe they show the lawyer warning you about risks you then ignored. Maybe they show incomplete disclosure on your part.

The reliance defense can become a trap that lets prosecutors dig even deeper into your case.

This is why at Spodek Law Group we carefully evaluate whether a reliance defense is actualy in your best interest. Sometimes the risks outweigh the benefits. Sometimes you're better served by different defensive strategies. Every case is different and requires careful analysis.

Call us at 212-300-5196 to discuss your situation confidentially.

When Does This Defense Actualy Work?

After all that, you're probably wondering - does this defense ever succeed?

Yes. But the circumstances have to be pretty specific.

The reliance defense tends to work best when:

You have written documentation. An actual engagement letter. Emails asking specific questions and receiving specific answers. A memo analyzing the relevant law. Something tangible that proves the advice was given.

The professional has no reason to disavow the advice. Maybe theyre not facing liability. Maybe theyve already admitted to advising other clients the same way. Maybe the advice was genuinely reasonable given the confusion around COVID relief programs.

Your disclosure was genuinely complete. You told them everything. There's nothing for prosecutors to point to and say "but you didn't mention THIS."

The advice was objectively reasonable. Given the complexity and newness of EIDL programs, some genuinely uncertain areas existed. If your professional made a reasonable interpretation that turned out to be wrong, thats different from telling you that obvious fraud was acceptable.

You actually followed the advice. Not just heard it. Actually structured your conduct based on what you were told.

Even with all these factors, the defense remains difficult. But it moves from "almost impossible" to "potentially viable."

What You Should Do Right Now

If your facing EIDL fraud charges and thinking about a reliance defense, heres what Todd Spodek and Spodek Law Group reccommend:

Gather every piece of documentation. Emails, letters, memos, notes - anything that might support your claim of professional reliance. Do this now, before memories fade and documents get lost.

Dont contact your former advisor without consulting counsel first. That conversation could backfire catastrophically. You need legal guidance before reaching out.

Be honest with your defense attorney about what was actually said. Dont exaggerate. Dont fill in gaps with what you wish had been said. Your attorney needs to know the real facts to evaluate whether this defense can work.

Understand this might not be your best defense. Sometimes other strategies are more promising. An experienced federal defense attorney can help you evaluate all your options.

Act quickly. Federal fraud cases move fast. The earlier we can get involved, the more options you have.

Why Spodek Law Group

At Spodek Law Group, we specialize in federal criminal defense. We understand exactly how prosecutors build their cases and how to challenge every element. We know the reliance defense inside and out - including its weaknesses and how to strengthen it when possible.

Todd Spodek has defended clients facing every type of federal charge. We bring that experience to every case, evaluating the full range of defensive strategies and identifying what gives you the best chance of success.

If your under investigation for EIDL fraud - or if youve already been charged - dont wait. The government is building its case right now. You need someone in your corner who knows how to fight back.

Call Spodek Law Group at 212-300-5196. Your consultation is confidential. Lets talk about your situation and figure out the best path forward.

Your accountant might have let you down. We wont.