NEW JERSEY CRIMINAL LAWYERS

Nashville PPP and EIDL Loan Fraud Lawyers

DOJ Investigations for PPP Loan Fraud: What You Must Know

The COVID-19 pandemic has inflicted significant financial troubles on businesses across the US. The Paycheck Protection Program (PPP) was put in place to assist distressed companies by providing a federally-backed, forgivable loan. Unfortunately, the program has also become a breeding ground for fraudulent activities that have caught the attention of the U.S. Department of Justice (DOJ), resulting in inquiries into PPP loan fraud. Such investigations have led to criminal complaints and charges being pursued for a range of federal offenses.

Potential Penalties and Charges for PPP Loan Fraud

The CARES Act that generated the PPP does not spell out specific penalties for those found guilty of PPP loan fraud, but the DOJ can take advantage of numerous pre-existing federal statutes to prosecute such fraud. Federal investigations into PPP loan fraud may involve accusations of crimes such as:

False Statements: Individuals and companies that give false statements to Small Business Administration (SBA) and FDIC-insured financial institutions or other banks stand accused of violating the law, and they risk going to jail for up to 30 years, coupled with fines up to $1 million.

Bank Fraud: Companies or individuals found guilty of bank fraud are known to execute schemes with an intent defraud financial institutions or obtain funds through fraudulent means. The penalty for bank fraud could be as high as 30 years imprisonment plus fines reaching $1 million.

Wire Fraud: The federal prosecutors may charge firms and individuals involved in executing fraudulent plans aimed at defrauding PPP loans using internet facilities under wire fraud statues. The consequences include fines reaching $250,000 and imprisonment up to 20 years.

Aggravated Identity Theft: Companies or individuals involved in transferring or using another person’s identification without lawful approval concerning bank or wire fraud are most likely charged with aggravated identity theft with an additional fine/penalty plus series of punishments.

Tax Evasion: Those accused of PPP loan fraud may also be accused of tax evasion, primarily depending on their alleged involvement in evading payroll taxes claiming payroll expenses covered by PPP loans, thereby evading income tax by failing to report exceeding the threshold. Factors leading to such charges attract up to five years imprisonment and fines reaching $250,000.

Making False Statements: In addition to charges related to false statements on PPP loan applications, companies and individuals can face probes regarding making faulty assertions during investigations associated with PPP loan frauds. Failure to disclose relevant information touching on such probes attracts imprisonment for a period; not less than five years or even more plus fines that may reach $250,000.

Conspiracy and Attempt: Companies or individuals conspired in fraudulent attempts aimed at obtaining PPP funds risk facing conspiracy under 18 U.S.C. § 371and 18 U.S.C. §1349 either attempted PPP Loan fraud under 18 U.S.C §1349.

False Claims Act Violations: The False Claims Act is designed as an act that allows for criminal and civil interference if there is any fraudulence targeting federal government programs such as intentional/unintentional PPP loan fraud application or forgiveness certification, leading to severe penalties.

Active DOJ Pursuation of Charges for PPP Loan Fraud

The DOJ takes allegations concerning PPP loan fraud seriously, pursuing them vigorously against firms and individuals suspected of committing fraudulent activities. Already, it has filed charges in many cases relating to shell companies with falsified payroll data used for personal expenses while applying for multiple payday protection program loans thinking the system would not capture them. Besides all this anti-fraudulent activity from DOJ has been taken forward with collaboration from other federal agencies like SBA Office of Inspector General, FDIC Office of Inspector General, FBI among other partners who work hand in hand with DOJ investigators on identifying culprits in PPP loan fraud.

Potential defenses amid DOJ Investigations into Loan Fraud

Despite the enormous penalties attached to those found guilty of PPP loan fraud, there are multiple defense strategies that accused individuals and companies can assert during DOJ investigations into PPP loan fraudulent activities. Demonstrating compliance with the terms of the PPP is a critical defense, including legally obtaining the loan, opening an account segregating the fund, and providing evidence indicating that those funds were appropriately used. Furthermore, lack of intent to defraud based on circumstantial evidence can be relied upon during such trials.

Conclusion

There is a need to grasp the potential consequences and risks associated with allegations concerning PPP loan fraud as law enforcement agencies investigate this matter keenly. Inquiries into PPP fraud are no longer avoidable; instead, they are actively pursued by DOJ officials who leave no stone unturned in hunting down entities responsible for such fraudulent acts cropping up amid Feds handling of COVID-19-related business funding. Fortunately, potential defenses exist alongside the penalties mentioned above in response to DOJ allegations against you or your company regarding PPP Loan Fraud. Seek experienced legal counsel to help build likely credible defenses; keep in mind your rights deserve protection even when facing charges deemed highly punishable under applicable U.S regulations.