This is serious notification that PPP loan fraud investigations in New York City are continuing aggressively in 2025, and it’s important to realize that, if FBI agents showed up at your Manhattan office or SBA auditor demanded records for your 2020 PPP loan, this can be the beginning of federal criminal prosecution. The Southern District of New York prosecutes these cases, they don’t mess around with pandemic fraud. Our firm has handled many PPP fraud cases across New York, we understand the federal system.
You got that PPP loan back in 2020 during lockdown, maybe it was for keeping employees on payroll when everything was chaos. Rules changed weekly, SBA guidance was confusing, your accountant said one thing, the forms said another. This is designed to help businesses survive pandemic, but now five years later federal prosecutors are calling it bank fraud. It’s important to note that in August 2025 a Nevada man got over 15 years federal prison for PPP fraud with $11 million in loans using fabricated tax records. Stephanie Hockridge, founder of Blueacorn, she got convicted in June 2025 for processing “tens of millions of dollars in fraudulent PPP loans” – faces up to 20 years when sentenced in October. This can be really serious.
The FBI agents appeared at your office asking to “talk” about your loan application. Or maybe SBA auditor sent letter requesting documentation – payroll records, tax returns, bank statements. Look, this is is the critical moment – you have about 48 to 72 hours to make the right decision. Do you talk to them yourself or get an NYC federal defense attorney immediately? Most business owners think they can explain everything, they had honest mistakes during pandemic chaos, weren’t sure what qualified as “payroll costs.” This is dangerous thinking.
PPP Prosecutions Continue Through 2025 and Beyond
It’s crucial to understand that Paycheck Protection Program ended in 2021 but prosecutions continue. Congress extended statute of limitations for PPP fraud from five to ten years in 2022. That means federal prosecutors can charge you through 2031 for loan you applied for in 2020. This is serious because DOJ allocated multi-year enforcement resources specifically for pandemic fraud – the Fraud Section has prosecuted over 200 defendants in more than 130 criminal cases, seized over $78 million in fraudulent proceeds.
Federal prosecutors in SDNY expect you to get a lawyer. It’s not suspicious, it’s your constitutional right. The Sixth Amendment gives you right to counsel when government agents start asking questions that could incriminate you. In this situation, statements you make to investigators can be used as evidence of intent to defraud. That casual conversation with the FBI agent, that can be twisted into admission of guilt.
Oh, I should mention the recent cases again – another defendant got 51 months in June 2025 for $900,000 scheme. These aren’t old cases finally reaching resolution, these are new prosecutions for conduct from 2020. Pandemic fraud prosecution is bipartisan political priority, there’s no electoral downside to prosecuting “PPP fraud,” so enforcement continues regardless of administration changes. The government distributed over $800 billion with minimal oversight, then prosecutes borrowers when chaos produced questionable applications.
Investigation Timeline and What Happens Next
Phase one is investigation. SBA audits flag inconsistencies in your application. FBI opens investigation, subpoenas documents from your bank and accountant, interviews employees. This lasts months, sometimes over year. You might not know you’re under investigation until agents contact you or you receive target letter. This is when counsel matters most – before you talk to investigators, before you turn over documents, before irreversible decisions.
It’s important to realize that not every investigation becomes criminal case. But once grand jury indicts you with 18 U.S.C. § 1344 (bank fraud), 18 U.S.C. § 1014 (false statements), 18 U.S.C. § 371 (conspiracy) – that’s 30 years, 30 years, 5 years maximum respectively. You’re arrested or surrender. Initial appearance and detention hearing. Most nonviolent fraud defendants get released pending trial.
Pretrial phase lasts six to eighteen months. Your attorney gets discovery, files motions to suppress evidence, motions to dismiss counts. Plea negotiations begin. Here’s reality – 90% of federal cases resolve through guilty pleas. Not because everyone’s guilty, because of trial penalty. Prosecutors offer three years if you plead, threaten ten if you go to trial and lose. This coercive power is why your constitutional right to trial exists more in theory than practice.
The Intent Defense in PPP Cases
The government must prove you intentionally misrepresented facts on PPP loan application. Not that you made errors – that you knowingly submitted false information to obtain funds you weren’t entitled to receive. This intent requirement creates primary defense in PPP fraud cases: good faith mistake.
Consider early 2020’s confusion. CARES Act left eligibility questions unanswered. SBA issued FAQs, then revised them repeatedly. How do you calculate “payroll costs” for independent contractors? Can you include owner compensation? These were difference between eligibility and fraud charges. If you relied on accountant to calculate payroll andcontext accountant used methodology including compensation categories SBA later clarified were ineligible, that’s not intentional fraud.
It’s crucial to understand that criminal fraud requires proof you knew application was false. If reasonable people disagreed about SBA guidance – and in early 2020, they did – prosecutors can’t prove intentional fraud. Prosecutors charge you with 30-year maximum bank fraud, then offer five years to plead. That coercive dynamic forces innocent people to accept convictions.
Current Sentencing Reality in NYC Federal Court
If you get indicted, here’s what matters – real numbers from 2024 and 2025 cases, not theoretical maximums. The Nevada defendant who got 15+ years in August 2025? He obtained $11 million through multiple fraudulent applications, purchased 25 properties and luxury cars, laundered money using alias. That’s not ambiguous SBA guidance, that’s systematic money laundering.
| PPP Loan Amount | typical Sentence 2024-2025 | With Cooperation |
|---|---|---|
| Under $50,000 | Probation to 12 Months | probation likely |
| $100,000 to $500,000 | 18-36 months Prison | 12-24 Months |
| $900,000+ | 51+ Months prison | 30-40 months |
At other end, defendants who obtained small loans based on good faith errors and repaid before sentencing sometimes receive probation. Sentencing depends on loss amount – guidelines increase dramatically as loss increases. Acceptance of responsibility brings three-level reduction, often difference between prison and probation. This can be crucial factor.
Restitution before sentencing demonstrates remorse. First-time offenders receive lower sentences than those with priors. Cooperation investigating other cases brings significant reductions. Recent sentences show pattern – $11 million with money laundering got 15+ years, $900,000 scheme got 51 months, smaller amounts with mitigating factors get supervised release or short terms.
Constitutional Defenses and Suppression
When FBI agents searched your office, did they have warrant? If they searched without warrant or exceeded its scope, evidence gets suppressed under Fourth Amendment. Sometimes suppressing key evidence collapses government’s case. This is important constitutional protection.
When agents interviewed you, did they advise you of Miranda rights before custodial interrogation? Did they continue questioning after you invoked right to remain silent? Statements obtained in violation of Fifth Amendment get suppressed. If your confession was prosecution’s centerpiece and gets suppressed, case might collapse.
Did prosecutors rely on evidence from administrative subpoena that exceeded authority? Did investigators coerce your accountant into providing privileged documents? These aren’t technicalities – these are constitutional protections that exist because government power can be abused. It’s important to note that these defenses can be difference between conviction and acquittal.
Why You Need Defense Attorney Immediately
The “insufficient evidence” defense challenges government burden. Prosecutors must prove every element beyond reasonable doubt. If evidence shows errors but doesn’t prove intentional fraud – if your SBA interpretation was objectively reasonable even if wrong – government hasn’t met its burden. This is where experienced counsel matters.
Oh, I should mention again the timeline pressure. You have 48-72 hours after FBI contact to make critical decisions. What you say, what documents you provide, whether you cooperate – these decisions can be irreversible. We take comprehensive approach to defending these cases, we know SDNY prosecutors, we understand their tactics.
In this situation, having attorney who regularly appears in Southern District matters. We know the prosecutors, the judges, the court staff. We understand local practices and preferences. This institutional knowledge can be difference between criminal charges and civil resolution. It’s crucial to act fast because cooperation paradox I mentioned earlier – “I wasn’t sure if I calculated payroll correctly” becomes “I knew payroll was wrong but submitted anyway.”
The 10-Year Statute of Limitations Problem
Congress extended statute of limitations to 10 years for COVID fraud. This is serious because it means prosecutions can continue through 2030 or 2031. NYC prosecutors show no signs of slowing down in 2025. If anything, they’re increasing efforts as they get better at identifying fraud patterns.
This long timeline creates problems. Your memory fades, documents get lost, witnesses become unavailable. But government keeps all their evidence organized. They can wait years to charge you while interest and penalties accumulate. Some people think if they haven’t been charged yet they’re safe – that’s wrong thinking. We’re seeing people charged now for loans from 2020.
It’s important to realize that early intervention can be difference between civil resolution and criminal prosecution. Window for favorable resolution exists but it closes quickly. Once formal charges are filed, options become limited. Period.
Frequently Asked Questions
How to prove PPP loan fraud?
To prove PPP loan fraud, prosecutors must demonstrate you knowingly made false statements on your application – not just mistakes but intentional misrepresentations. They look for fabricated documents, inflated payroll numbers, businesses that didn’t exist before February 2020, using loan proceeds for personal expenses instead of payroll. It’s important to note that good faith errors based on confusing SBA guidance aren’t fraud. The government needs evidence of intent to deceive, which can be shown through false tax returns, fake employees, or clear misuse of funds like buying luxury cars or gambling.
What is the punishment for PPP loan fraud?
Punishment for PPP loan fraud varies based on amount involved and circumstances. Technically bank fraud carries up to 30 years federal prison and $1 million fine, but actual sentences in 2025 are much lower. Small loans under $50,000 with good faith errors often result in probation. Loans of $100,000-$500,000 typically bring 18-36 months prison. Larger frauds like the $11 million Nevada case from August 2025 resulted in over 15 years. Stephanie Hockridge faces up to 20 years for her role in processing fraudulent loans. Restitution is always required regardless of prison time.
Will PPP loans under $150,000 be audited?
Yes, PPP loans under $150,000 can be audited despite initial SBA statements suggesting otherwise. While loans over $2 million face automatic review, smaller loans get flagged through data analytics looking for red flags – businesses created after February 2020, residential addresses for supposed commercial operations, suspicious bank activity. The 10-year statute of limitations means audits can happen years later. We’re seeing investigations in 2025 for loans from 2020, including many under $150,000. Don’t assume small loan amount protects you from scrutiny.
What You Should Do Right Now
If FBI or SBA contacted you about PPP loan, you need to act within 48-72 hours. Don’t talk to investigators without attorney. Don’t think you can explain your way out of this. Don’t assume it will go away. This is serious federal investigation that can result in criminal charges.
Gather your documents – PPP application, bank statements, payroll records, tax returns. But don’t alter or destroy anything, that’s obstruction of justice, separate federal crime. Don’t discuss case with anyone except your attorney, not employees, not family, not friends. Absolutely don’t post about it on social media.
Contact experienced federal defense attorney immediately. At Spodek Law Group, we’ve defended federal fraud cases over 40 years. Todd Spodek has tackled complex federal matters, we understand PPP investigations, we know NYC federal prosecutors, we can protect your rights and work toward best possible outcome.
This is too serious to handle alone. The government has unlimited resources, experienced prosecutors, years to build their case. You need someone who knows this system fighting for you. We’ve represented defendants in cases ranging from wire fraud to securities fraud to pandemic relief fraud infront of Southern District judges.
Call 212-300-5196 right now if you’re under PPP investigation in NYC. Don’t wait, don’t hope it goes away, don’t try to handle it yourself. Your freedom, your finances, your future are at stake. It’s important to realize that early intervention can be difference between civil resolution and criminal prosecution. The window for favorable resolution exists but it closes quickly. This is your chance to take control of situation before it spirals into federal indictment.