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Ohio PPP and EIDL Loan Fraud Lawyers

Protecting Your Company: Responding to DOJ Investigations for PPP Loan Fraud

The Paycheck Protection Program (PPP) has provided vital relief for businesses struggling during the COVID-19 pandemic. However, it also became a target for fraudsters who seized the opportunity to commit fraudulent activities. As such, the Department of Justice (DOJ) is currently investigating evidence of PPP loan fraud and pursuing individuals and companies suspected of these offenses.

Facing a DOJ investigation can be overwhelming and stressful, particularly if your company is being targeted for PPP loan fraud. To help protect your rights and interests during this difficult time, familiarize yourself with the following information.

The DOJ is Aggressively Pursuing Suspected PPP Loan Fraudsters

Due to the massive cost of PPP loan fraud and its negative impact on American citizens struggling financially, the DOJ aggressively targets those committing such offenses. Such individuals or companies include those who submitted fraudulent applications, misused PPP funds or certifications, among others.

In a recent press release by the DOJ, it announced that “Our office will be aggressive in targeting anyone who defrauds this critical program.” The agency’s current focus is on bringing justice to those responsible for exploiting this essential incentive meant to help struggling businesses keep their doors open.

Charges Have Already Been Filed in Numerous PPP Loan Fraud Cases

Accordingly, several individuals have already faced charges filed by the DOJ as a result of using different methods to obtain PPP loans improperly. For instance, some formed shell companies containing falsified payroll information while others used funds meant for payroll purposes to pay personal expenses not related to their business operations. Others like some persons attempted obtaining multiple loans fraudulently.

Collaboration with Other Federal Agencies

Other federal agencies like U.S Small Business Administration Office of Inspector General (SBA-OIG), Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), Internal Revenue Service Criminal Investigations (IRS-CI), among others team up with the DOJ to combat PPP Loan fraud collectively.

Possible Defenses within Federal PPP Loan Fraud Investigations

Under suitable defense, companies accused of PPP loan fraud by the DOJ can mitigate the risks they face. Such defenses include Paycheck Protection Program compliance and those that apply to charges brought forward by several statutes.

Paycheck Protection Program Compliance

Providing evidence of complying with PPP terms, submitting genuine applications, establishing a segregated account earmarked for these funds only while preparing documentation for resource use transparency may lead to an amicable resolution. However, voluntary information disclosures must be tactful because inadvertently disclosing incriminating details could increase prosecution chances.

Lack of Intent to Defraud

The federal legal threshold for criminal culpability requires intent to defraud. Thus, if your company inadvertently obtained a PPP loan despite being ineligible to do so or submitted a fraudulent forgiveness certification unintentionally or wrongly used funds, demonstrating lack of intention could form grounds for defense against prosecution charges listed above. Nonetheless, even in such instances where there is no direct intent to defraud, civil fraud violations can still attract lawsuits resulting in hefty fines and loss of other program benefits.

Potential Charges in Federal PPP Loan Fraud Investigations

While the CARES Act introduced the Paycheck Protection Program (PPP), it did not encompass any penal provisions. Nevertheless, misleading information provided concerning funds misuse during application processes attracts unwanted attention from various federal regulatory bodies due to potential breaches emanating from existing federal laws — examples below:

Table 1: Potential Charges Arising from Misleading Information Provided during Application Processes
| Statute | Charge |
|———————|————————————————|
| 18 U.S.C. § 1014 | Making False Statements to the SBA |
| 18 U.S.C. § 1014 | Making False Statements to an FDIC-Insured Bank|
| 18 U.S.C. § 1344 | Bank Fraud |
| 18 U.S.C. § 1343 | Wire Fraud |
| 18 U.S.C. § 1028A | Aggravated Identity Theft |
| 26 U.S.C. § 7201 | Tax Evasion |
| 18 U.S.C. § 1001 | Making False Statements to Federal Agents |
| 18 U.S.C. § 371 | Conspiracy |
| 18 U.S.C. § 1349 | Attempt |
|31 U.S.C.§§3729-3733 | False Claims Act Violations |

Representation for Companies Facing DOJ PPP Loan Fraud Investigations

If your company is currently facing a DOJ investigation resulting from suspected PPP loan fraud, it is crucial to take this matter seriously and seek the legal aid of experienced attorneys that can protect your rights and interests.

Given the potential for severe penalties, ranging from hefty fines to loss of federal program eligibility, engaging competent legal representation can go a long way in identifying possible defenses in your case while negotiating on possible leniencies available from regulatory bodies like the DOJ.