Oakland PPP Loan Fraud Lawyers

Oakland PPP Loan Fraud Lawyers

You got contacted about your PPP loan forgiveness application. Not fraud on your original PPP application from 2020 – fraud on the forgiveness application you submitted months or years later, when you documented your payroll expenses and requested SBA forgive the debt. You’re in Oakland, East Bay’s commercial center, which means you’re prosecuted in Northern District of California federal court – covering Oakland, San Francisco, San Jose, Sacramento, the entire Bay Area and Northern California where small businesses scrambled for pandemic relief without always understanding the forgiveness requirements SBA kept changing. FBI San Francisco field office or SBA Office of Inspector General contacts you two or three years after you received forgiveness, asking about payroll figures that don’t match your tax returns, independent contractors you included in payroll totals when they weren’t eligible, whether expenses you claimed were actually paid during the covered period. Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek. We’ve represented clients in federal fraud prosecutions for over 40 years, many, many, PPP forgiveness fraud cases across California including Northern District prosecutions in Oakland federal court.

The Forgiveness Trap

How Oakland Businesses Applied for Forgiveness

Most Oakland small businesses understand this sequence, particularly those in the Bay Area where tech companies, restaurants, retail stores, and service businesses dominate the commercial landscape and business owners scrambled to access pandemic relief during the chaos of 2020 and 2021. They received PPP funds in 2020, during peak pandemic uncertainty when businesses were closed or operating at drastically reduced capacity and needed emergency relief Congress authorized. They deposited the PPP loan into their business account. Months or sometimes a full year later, when SBA announced forgiveness applications were available, they gathered documentation – payroll records, 1099 forms for contractors, rent payments, utility bills – everything SBA said qualified for forgiveness during the covered period.

The False Statements That Create Criminal Liability

They submitted the forgiveness application through their lender’s portal, documenting their expenses and requesting SBA forgive the debt. Many Oakland business owners included every possible expense, stretched payroll calculations to include independent contractors who weren’t technically employees, rounded up salary figures to reach the forgiveness threshold, claimed expenses that weren’t paid precisely during the covered period but seemed close enough. Weeks or months later, SBA approved forgiveness. The debt disappeared. They reasonably believed the matter was closed, the forgiveness was final, they could move forward without federal scrutiny.

Why SBA Approval Doesn’t Protect You

That assumption, though seemingly logical to defendants who received official SBA forgiveness approval, doesn’t protect them from wire fraud prosecution in Northern District. If your forgiveness application contained false information at the time you submitted it – payroll you claimed didn’t match your quarterly tax filings with IRS, independent contractors you included weren’t employees eligible for payroll protection calculations, expenses you documented weren’t actually paid during the covered period – that forgiven PPP amount counts as fraud loss for sentencing purposes under federal sentencing Guidelines that federal judges in Northern District must follow. Federal prosecutors throughout Northern District of California don’t distinguish between original application fraud and forgiveness application fraud. What matters under 18 USC Section 1343 wire fraud statutes is that you obtained debt forgiveness from the federal government based on false statements transmitted electronically through your lender’s system to SBA across state lines. Each Oakland forgiveness fraud case prosecuted under identical wire fraud statutes as original application fraud cases, with identical maximum penalties and identical Guidelines calculations.

PPP Fraud

When Estimates Become Criminal Fraud

You calculated your payroll based on what seemed reasonable during pandemic chaos. Your Oakland business had irregular income in 2019, or you operated with independent contractors who performed essential functions, or your payroll infrastructure wasn’t sophisticated enough to generate precise quarterly calculations. You included independent contractors in your payroll protection calculations because they performed essential functions for your business. You rounded up employee counts or salary figures to reach the forgiveness threshold. Oakland business owners ask the same question – when does estimate become fraud?

The Constitutional Burden on Prosecutors

That’s the constitutional question at the center of every PPP prosecution. Federal prosecutors must prove criminal intent under federal sentencing Guidelines. They must demonstrate you knew the information was false when you submitted it. Wire fraud carries 20 years maximum. False statements to SBA under 18 USC Section 1014 carry 30 years maximum. Those statutory maximums are meaningless – federal sentencing operates through mandatory Guidelines based on loss amount, not statutory maximums. But the constitutional burden remains.

The FBI Investigation Process

FBI San Francisco agent calls or shows up at your business in Oakland. “We’re reviewing your PPP forgiveness documentation and need to verify some information.” That sounds routine. It’s federal criminal investigation designed to obtain statements proving criminal intent. When Oakland business owners respond without federal defense counsel, investigators already possess their complete financial history. They subpoenaed bank records months earlier, pulled tax returns through IRS summons, obtained the original forgiveness application from SBA’s database, examined quarterly 941 filings with IRS.

They know the discrepancies.

Federal Sentencing for PPP Forgiveness Fraud

You received $150,000 PPP loan and got it fully forgiven. Your forgiveness application claimed payroll expenses that were off by $45,000 from what your tax returns documented. How much prison time are you facing in Northern District? Federal sentencing operates through mandatory Guidelines based on loss amount. Loss amount in PPP forgiveness cases equals the forgiven amount you obtained through fraudulent application.

Sentencing Brackets

Small PPP fraud, $20,000 to $150,000, typically produces probation to 18 months imprisonment for first-time offenders. Your $150,000 falls at the top of this bracket. Medium PPP fraud, $150,000 to $550,000, results in 18 to 36 month sentences. Three factors determine where you land within your Guidelines bracket. Loss amount matters most. Criminal history matters second. Acceptance of responsibility matters third. 81% of pandemic fraud defendants sentenced as of December 2024 received prison time, not probation, according to Department of Justice data. Todd Spodek has defended federal fraud prosecutions for over 40 years. Call 212-300-5196.