New York City PPP Loan Fraud Lawyers

You think you're hiding in a crowd. Eight million people in New York City - surely the federal government can't find everyone who stretched the truth on a PPP application. The chaos of COVID, the rush to distribute billions, the overwhelmed banks and understaffed agencies. You figured you'd disappear into the noise.

You figured wrong.

Welcome to Spodek Law Group. Our goal is to tell you what nobody else will: New York City isn't one federal jurisdiction. It's two. The Southern District of New York covers Manhattan and the Bronx. The Eastern District of New York covers Brooklyn, Queens, Staten Island, and Long Island. Both districts are actively prosecuting PPP fraud right now. And together, they form the most aggressive white-collar prosecution machine in America. SDNY alone sentenced over 1,000 people last year. They convicted Sam Bankman-Fried. They took down Bernie Madoff's associates. They prosecuted the first PPP lender in American history. For prosecutors who handle billion-dollar Wall Street fraud, your $200,000 PPP loan is a Tuesday afternoon.

Two Federal Districts, Zero Places to Hide

Heres the thing about New York that nobody explains when you're worried about PPP fraud. NYC seems like chaos - 8 million people, thousands of businesses, endless transactions flowing through the financial capital of the world. You'd think the federal government would be overwhelmed. Actually it's the opposite. New York is covered by TWO separate federal districts, not one. SDNY handles Manhattan, the Bronx, Westchester, and surrounding counties. EDNY handles Brooklyn, Queens, Staten Island, Long Island, and parts of upstate. That's not confusion. That's double the prosecutors hunting you.

You might think having two districts would create jurisdictional confusion - cases falling through the cracks, agencies not coordinating. That dosent happen. These districts don't share cases. They compete. Each US Attorney wants conviction numbers for their own office. Each district wants headlines. SDNY sentenced 1,048 individuals in fiscal year 2024 alone - that's just one of the two districts. Average sentence: 59 months. Your case isnt special to them. It's one of thousands they're processing through an assembly line.

And heres the part that feels random but determines your fate. Where you did business determines which district handles your case. Manhattan address? You're in SDNY. Brooklyn address? EDNY. You didnt choose your prosecutor. Your ZIP code did. Random geography became the single most important factor in how your case gets handled - and you had no control over it.

The implication is brutal if you think about it. Two federal districts means two separate offices with two separate leadership teams, two sets of prosecutors looking to make their careers, two budgets that need to be justified with conviction numbers. When the PPP and Bank Fraud Enforcement Harmonization Act extended the statute of limitations to 10 years in 2022, both districts started building long-term prosecution strategies. You're not dealing with one US Attorney's office that might be overwhelmed. You're dealing with two that are actively competing to see who can prosecute more cases.

The 10-year statute means if you got your loan in April 2020, you're exposed until April 2030. If you applied for forgiveness in late 2021 or 2022, the clock starts from forgiveness - meaning exposure until 2031 or 2032. That's not a distant threat. That's investigators building cases right now that won't produce indictments for another three or four years. The investigation that starts today becomes the sentence of 2028. Both SDNY and EDNY have the resources and the timeline to be systematic about this.

The Prosecutors Who Took Down Wall Street Want Your PPP Case

Federal prosecutors exist in every district across the country. SDNY is different. It's not just another US Attorney's office. SDNY has jurisdiction over Wall Street - the financial center of the world. Defense lawyers call it the "Sovereign District" becuase it basicly operates independently from Main Justice in Washington. These prosecutors convicted Sam Bankman-Fried in under a year after FTX collapsed. They prosecuted Bernie Madoff's associates. They've handled the biggest securities fraud cases in American history. These are the elite of white-collar prosecution.

OK so you might think that actualy helps you - they're so busy with billion-dollar cases, they wont bother with your PPP loan. That's backwards. For prosecutors who spend years building complex Wall Street fraud cases, PPP fraud is the simplest thing they handle. It's batting practice. After dealing with cryptocurrency exchanges and international money laundering, your falsified payroll documents are a vacation.

Heres proof of how serious they are. Rafael Martinez was the CEO of MBE Capital - a company that became a PPP lender. Martinez didnt just commit PPP fraud. He committed fraud AS A LENDER. His company issued almost $1 billion in fraudulent PPP loans and collected over $70 million in fees from the SBA. SDNY convicted him - first PPP lender prosecution in the country. 54 months in federal prison. If they'll prosecute the people who were supposed to be gatekeepers, what makes you think they'll overlook the people who submitted applications?

The skill mismatch works against you in ways you probably havent considered. Wall Street fraud cases require forensic accountants, years of document review, complex financial modeling to prove intent. PPP fraud has a complete digital paper trail - every application timestamped, every transfer recorded, every dollar traceable. The same investigative resources that would normaly be spread across a handful of complex cases can now handle dozens of PPP prosecutions simultaniously. Complex investigation skills meeting simple evidence is a mismatch. Its no contest.

And there's something else practitioners understand that the public dosent. SDNY prosecutors have career ambitions. They use high-profile convictions to build reputations. PPP fraud cases are easy wins that boost conviction statistics without straining resources. Every conviction goes on their record. Every case they close justifies their budget. You're not being prosecuted because you're important - you're being prosecuted becuase you're easy.

Public Employees, Restaurant Owners, NYPD Detectives

You might think prosecutors only go after the big fish. The $10 million frauds, the organized crime rings, the people who bought Lamborghinis with PPP money. That's not whats happening. They're going after everyone.

In one sweep, 17 New York City and State public employees were charged with PPP fraud. Not private business owners - government workers. People from the NYPD, the Department of Education, the Department of Corrections, DOT, Administration for Children's Services. If you're thinking "I work for the city, that protects me somehow" - it dosent. It actualy makes you a higher-priority target becuase the optics of prosecuting public employees sends a message about enforcement priorities.

It gets worse. Active NYPD detectives were charged for PPP fraud. John Bolden and Anthony Carreira - names in a federal complaint - alegedly helped over 65 people submit fraudulent PPP applications. Think about that. Cops thought they were untouchable. They're not. Nobody is. If NYPD detectives arent safe from PPP prosecution, what makes you think you are?

Certain industries are higher priority targets. The restaurant and hospitality industry claimed more PPP money in NYC than almost any other sector. That makes restaurant owners high-visibility targets. Donald Finley owned the Jekyll & Hyde theme restaurant in Manhattan and the Bayville Adventure Park on Long Island. He got 24 months in federal prison. Why? He used PPP money to buy a vacation home in Nantucket. They found out. Another restaurant owner got 57 months for $1.5 million in fraud. If you're in hospitality, you're in a target zone.

The pattern emerging from NYC prosecutions shows systematic targeting, not random enforcement. Real estate professionals. Healthcare workers. Anyone who filed multiple applications. Anyone whose claimed payroll didnt match their tax filings. The algorithm flags the discrepancies automaticaly, and human investigators follow up on the most obvious cases first. If your numbers dont add up, you're already on a list somewhere - you just dont know it yet.

Heres what makes the targeting especialy dangerous in New York. The city has one of the highest concentrations of accountants, bookkeepers, and financial service providers in the country. Many of those professionals helped multiple clients with PPP applications during those chaotic months in 2020. If even ONE of their other clients gets charged and cooperates, the professional becomes a target. And once prosecutors start investigating that accountant or bookkeeper, everyone they helped becomes part of the investigation. Your case isnt evaluated in isolation. It's evaluated as part of a network - and you have no control over whether someone else in that network decides to cooperate against you.

What NYC PPP Sentences Actually Look Like

Lets talk about what actualy happens when you get sentenced in New York federal court. Not hypotheticals - real cases from the past year.

Leon Miles. Brooklyn. $1.9 million in PPP fraud. He submitted an application claiming his company had 50 employees and $761,000 in monthly payroll. It didnt. He bought a Bentley with PPP money. Sentence: 72 months in federal prison. Six years. But that's not all - they also took the Bentley. Forfeiture order: $1,904,593. Plus restitution. Prison AND they take everything.

Donald Finley. The Jekyll & Hyde restaurant owner. He fraudulently obtained $3.2 million across 29 separate PPP and EIDL applications. He used the money for personal expenses including that Nantucket vacation home. The prosecutors traced exacty where every dollar went. Sentence: 24 months. Ordered to pay $3.2 million in restitution and a $15,000 fine. 500 hours of community service.

Heres the pattern. Another restaurant owner: 57 months. A nonprofit executive in SDNY: 27 months. A woman from Queens convicted of $9.2 million in COVID fraud across multiple schemes. The average sentence in SDNY for fraud: 59 months. That's nearly 5 years. And 2024-2025 sentences are running about 40% HARSHER then sentences handed down in 2021 and 2022 for the exact same conduct. Same fraud amount. Same circumstances. Different year. Worse sentence. COVID sympathy is completly gone. Judges now see PPP fraud as theft from taxpayers during a national emergency. The window for leniency closed.

The restitution aspect deserves more attention than it gets. Leon Miles didnt just go to prison - he owes $1.9 million in restitution that survives bankruptcy. It follows him forever. Wages garnished. Assets subject to seizure. Even after he serves 72 months, he comes out owing nearly $2 million to the federal government with no way to discharge the debt. The sentence dosent end when prison ends.

And heres something that surprises most people about federal sentencing. First-time offender status means less than you think. Federal judges in NYC have seen so many PPP cases at this point that they've lost patience with the "I didnt know any better" defense. The federal sentencing guidelines for fraud are driven primarily by loss amount, not by your personal history. If you fraudulently obtained $500,000, that's a base offense level that puts you at 5-7 years before any adjustments. Add enhancements for sophistication, for using a financial institution, for obstruction if you deleted evidence - sentences climb rapidley. The hope that being a first-time offender will save you from prison is not grounded in how NYC federal courts actualy operate.

The Evidence Trail NYC Created

Maybe you're thinking you can explain away inconsistencies. The numbers were confusing. The rules kept changing. You misunderstood what counted as payroll. You'll tell them it was an honest mistake.

Heres the problem. Every PPP application you submitted is digitally timestamped. Every bank transfer is permanantly recorded. The IRS cross-references your PPP claims with your tax filings automaticaly. Form 941 - your quarterly payroll tax return - gets compared to the employee count and payroll numbers you put on your PPP application. The algorithm dosent need a human to tell it somethings wrong. One mismatch and you're flagged for review before anyone even looks at your file.

But surely only the government has access to this information? Wrong. PPP loan data is publicly available. Anyone can look it up. Your competitor who wants to report you. Your ex-employee with a grudge. The business partner you had a falling out with. They all have access to the same database the FBI uses. The person who reports you might not even be a federal agent - it might be someone who knows your business and dosent like you.

You deleted your files. Problem solved, right? Banks have their own copies. So does the SBA. So does the IRS. So does your payroll company. Every entity you interacted with during the PPP process has records that exist independantly of yours. Deleting your records dosent make the evidence disappear. It just adds potential obstruction charges to your existing problems. The Bentley. The Nantucket house. The prosecutors found exacty where every dollar went becuase the trail exists wheather you have copies or not.

The digital-first nature of PPP created something prosecutors have never had before in white-collar fraud: a complete evidence package that requires minimal investigation. Traditional fraud cases require years of forensic accounting to trace money flows. PPP applications are self-documenting. You certified specific numbers under penalty of perjury. The government's database has those numbers. The IRS has your actual numbers. The comparison takes seconds. If they don't match, that's the case. That's why PPP fraud has become known among defense lawyers as the easiest white-collar case prosecutors have ever had.

Think about what this means for your defense. In a typical fraud case, there's ambiguity. Documents are incomplete. Records are missing. Intent is hard to prove. A skilled defense attorney can create reasonable doubt by pointing to gaps in the evidence. PPP fraud has none of those gaps. You signed a document saying you had a certain number of employees and a certain payroll. The IRS knows your actual numbers from Form 941. Either the numbers match or they don't. There's no ambiguity to exploit. There's no complexity to hide behind. The evidence speaks for itself, and it speaks very clearly.

Why Acting Now Matters More in New York

The worst thing you can do is nothing. Waiting to see what happens while evidence sits in federal databases and cooperating witnesses multiply is not a strategy. Its denial.

Cooperation credit diminishes the longer you wait. Early voluntary disclosure can affect your bail conditions, your plea offer, AND your sentencing - three separate leverage points that all get weaker with time. In SDNY, the difference between pre-indictment cooperation and post-indictment damage control can be 30 months or more. That's two and a half years of your life that depend on when you pick up the phone.

You might not think you have bargaining power. You do. Prosecutors want names. "Who helped you with the application?" That's the first question in 80% of PPP proffer sessions. Your accountant. Your bookkeeper. The "PPP specialist" who promised fast approval. Information has value - but only before they find it somewhere else. Once another defendant gives them the same names, your cooperation is worthless.

There's something else that practitioners understand. The person who helped you with your application probably helped other people too. If ONE of those other clients gets charged and cooperates, your name comes up. "Who else did you help?" Suddenly you're connected to people you've never met, all through one person who has every incentive to give up names to save themselves. The cooperation chain works against everyone in the network, and you have no control over whether someone else decides to flip. And in NYC, with two federal districts and hundreds of pending investigations, someone in your network is statisticaly likely to get caught.

At Spodek Law Group, Todd Spodek has handled hundreds of federal fraud cases. The clients who call before the subpoena have options. Voluntary disclosure. Cooperation agreements. Structured restitution. The clients who call after the subpoena arrives are fighting for survival - limiting damage instead of preventing it. Which position would you rather be in?

Call 212-300-5196 before you talk to anyone else. Not becuase we're trying to scare you into hiring a lawyer. Becuase once you understand how the NYC federal system actualy works - two districts, Wall Street prosecutors, sentences averaging five years - you'll realize that doing nothing is the most dangerous choice you can make.

Spodek Law Group. The Woolworth Building, 233 Broadway Suite 710, New York. We put this information on our website becuase most people have no idea how exposed they really are in New York City. Our goal isnt to frighten you. It's to make sure you understand the reality of federal PPP prosecution in the most aggressive jurisdiction in America before its too late to do anything about it.

In NYC, every week you wait is leverage you lose.