NEW JERSEY CRIMINAL LAWYERS

Omaha PPP and EIDL Loan Fraud Lawyers

The DOJ is Vigilantly Investigating PPP Loan Fraud: Know What to Do If You’re Under Investigation

The Paycheck Protection Program (PPP) was intended to offer immediate financial assistance to small businesses that suffered loss during the COVID-19 pandemic. Regrettably, there are some individuals and companies who have taken advantage of this relief effort by submitting fraudulent applications or squandering funds intended for ineligible expenses. Therefore, the US Department of Justice (DOJ) has been keeping a close eye on loan fraud activities and launching investigations. If you or your enterprise is currently being investigated for PPP loan fraud, here’s what you need to know.

AGGRESSIVE TARGETING OF PPP LOAN FRAUD BY DOJ

Considering the monumental cost and publicity of PPP loan fraud cases, it is no wonder that they raise serious concern – particularly since they detract from the intended purpose of securing the livelihoods of small businesses facing daunting challenges due to COVID-19. As a result, the DOJ has escalated its efforts in tracking down offenders who deliberately make false claims on their PPP loan applications, as well as those who misappropriate grants.

There have also been specific targets among persons or firms charged with obtaining fraudulent forgiveness certifications for their loans under these programs.

DOJ’S PURSUIT OF CHARGES IN NUMEROUS PPP LOAN FRAUD CASES

A growing number of cases linked to PPP loan fraud allegations have gained momentum in recent months, with several federal agencies collaborating in tandem with the DOJ to investigate such fraudulent activities. These institutions include:

1. US Small Business Administration Office of Inspector General (SBA-OIG),
2. Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG),
3. Federal Bureau of Investigation (FBI), and
4. Internal Revenue Service Criminal Investigations (IRS-CI).

Their combined efforts allow them to access relevant evidence while leaving few stones unturned in their search for culprits.

POTENTIAL DEFENSES TO PPP LOAN FRAUD ACCUSATIONS

Indictments or legal charges resulting from PPP loan fraud allegations can bring with it severe consequences such as hefty fines, loss of eligibility for future financial relief opportunities, and even prolonged prison time. However, there are defenses that one might be able to use against these accusations.

PPP Compliance

It is crucial that small businesses prioritize compliance with the terms of the PPP program by demonstrating how they lawfully acquired a PPP loan, established a properly segregated account, and provided accurate financial reports on the fund’s disbursement. By taking this approach, small businesses can defend their operations and help resolve cases involving fraudulent activities more efficiently. Nevertheless, caution must be exercised while volunteering information to the DOJ since any offered admissions could be used in court.

Lack of Intent to Defraud

Federal law demands particular intent before charging an individual or company with criminal culpability. This provides an opportunity for defendants to argue that they had no intention of defrauding the government and were genuine in attaining their debt relief under the PPP program knowingly; if proven otherwise, civil violations could result in enormous penalties.

CHARGES UNDER PPP LOAN FRAUD INVESTIGATIONS

PPP Loan fraud investigations attract both civil and criminal charges derived from existing federal laws such as:

| Statute | Description |
| ———————— | ————————————————————————————— |
| 18 U.S.C. § 1014 | Criminal offense intended for influencing Small Business Administration |
| Bank Fraud | An attempt at scheming to defraud financial institution |
| Wire Fraud | The use of internet resources with untrue statements(pretenses) |
| 18 U.S.C. §1028A | Use of others identity will lead to felony offenses |
| 26 U.S.C § 7201 | A criminal proceeding if an individual willfully and rightly attempt to evade taxes |
| 18 U.S.C. §1001 | Criminal charges over any false statements made during a federal inquiry |
| 18 U.S.C. §371 & 1349 | Conspiracy charges resulting from multiple firms attempting fraudulently seizing funds |
| 31 U.S.C. §§3729 –3733 | Intended specifically for PPP loan application or forgiveness certification. |

THE BOTTOM LINE

PPP loans provided needed lifeline support for many small businesses, yet a few bad apples have misused the program’s laudable intent, leading to its widespread investigation by the DOJ and other affiliated agencies. The consequences of being charged with PPP loan fraud are not to be underestimated as they can be far-reaching, including imprisonment for prolonged periods along with enormous fines and penalties.

If you or your organization is under DOJ investigation concerning PPP Loan fraud deliberately or otherwise, it is crucial to seek legal help immediately for guidance through the litigation process to ensure that your rights are protected while getting the possible outcome.